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What is Benchmarking?

Benchmarking is the process of


measuring an organizations internal processes
then identifying, understanding, and adapting
outstanding practices from other organizations
considered to be best-in-class.
What is Benchmarking?

Learning from others what they do right


and then imitating it to avoid
reinventing the wheel
What is Benchmarking?

Measuring yourself against

the best in class


Diagram of Benchmarking Concept

What are others


What is our performance performance levels? How
level? How do we do it? did they get there?

Creative
Adaptation

Breakthrough
Performance
Figure 8-1 Benchmarking Concept (pg. 208)
Reprinted with the permission of the Institute of Industrial Engineers, 3577 Parkway Lane, Suite 200,
Norcross, GA 30092, 770-449-0461. Copyright 1995.
Key Elements

Measuring using metrics


- Expressed numerically, with target in mind
Key Elements

Recognizing differences in processes


- Need to thoroughly understand their own
processes as well as those of the
best in classs company
Key Elements

Comparing self to external competition


- Reduces chance of being caught off guard
- Encourages competition
- Personnel more motivated to attain goals
Key Elements

Imitation/Adaptation vs. Invention


- Provides a working model
on an improved process
Key Elements

Continuous Improvement
- Technologies and ideas become obsolete;
businesses need to keep abreast
of what is current
- Some benchmarking may need to be done
continually
Handout #1
What Can We Learn from
Benchmarking?
Who in your field performs best?

What ideas can your organization


adapt?

Who would be best for you to


benchmark with?
Reasons to Benchmark
Assists businesses cultivate strong points and
diminish problem areas

Lets ambitions be set impartially, taken from outside


information

Includes emulation and revision instead of new


innovation

Probable, valuable knowledge can be established and


implemented early on
Requirements
Buy-in

Training

Timeliness
6 Steps of the Benchmarking Process
Decide what to benchmark
Understand current performance
Plan
Study others
Learn from the data
Use the findings
Decide What to Benchmark
Which process are causing the most trouble?

Which processes contribute most to customer


satisfaction and which are not performing up to
expectations?

What are the competitive pressures impacting the


organization the most?

What processes or functions have the most potential


for differentiating our organization from the
competition?
Critical Success Factors
Strategy that defines how a company
positions itself and competes

Expressed in mission and vision statements

Includes list of critical activities that must be


accomplished to realize companys vision

Help get the most bang for the buck


Understand Current Performance
Thoroughly understand the and
document the current process

Flow charts and cause-and-effect


diagrams are helpful

Pay attention to inputs and outputs


Plan

The benchmarking team decides:

- what type of benchmarking to perform


- what type of data to collect
- the method of collection
Types of Benchmarking
Internal

Competitive

Generic/Process/Functional
Internal Benchmarking
Evaluates progressions or procedures inside the
business or company over time with recognized
objectives in mind

Benefits - the simplicity of data gathering and the


designation of parts for upcoming outside inspections

Disadvantage - a decreased likelihood that it will


generate important process advancement innovations
Competitive Benchmarking
Evaluates the organization's procedures
to those of close rivals.

An expert or another outside party,


rather than the company itself, gathers
and evaluates the data because of its
proprietary quality.
Generic/Process/Functional
Benchmarking
Investigates actions that are or can be used in the
majority of businesses

One inconvenience is in realizing how processes


transform across industries

Can frequently bring about an organization's radically


changing its thoughts about its working competence
and in the reengineering of industry processes

Innovations from other kinds of organizations can be


applied across industries
Generic/Process/Functional
Benchmarking
(continued)
Examines comparable practices and
procedures in businesses or companies in
additional industries

Presents a chance for innovative advances by


investigating high-performance methods
across an array of trades and businesses
Study Others
How are best-in-class processes
practiced?

What are the measurable results?


Learn From the Data
Is there a gap between the organizations
performance and the performance of the best-in-
class organizations?

What is the gap? How much is it?

Why is there a gap? What does the best-in-class do


differently that is better?

If best-in-class practices were adopted, what would


be the resulting improvement?
Three Types of Gaps
Negative

Parity

Positive
Identifiable Benchmark Gaps
Must be described and quantified

Processes must have inputs, activities,


and outputs

Level of detail must allow for eventual


quantification
Additional Gap Analysis
Necessary to determine root causes

Gaps come from process practices,


general business practices, and the
organizational and operational structure

Changeable
<<<< BREAK >>>>
Handout #2
Use the Findings
Benchmarking must generate outcomes.

Individuals who can formulate the modifications must


be notified.

Process Owners and Upper Management must concur


on the modifications.

There are seven stages for progression and


implementation of action plans.
Goals and Objectives
After acceptance, the new goals and
objectives set are based on benchmark
findings

Depends on the organizations planning


process
Development and Execution
of Action Plans
Specify tasks
Sequence tasks
Determine resource needs
Establish task schedule
Assign responsibility for each task
Describe expected results
Specify methods for monitoring results
Adapting to Change

Process practices are easier to change

Business practices are harder to change


Disadvantages
Best in class is a moving target

Not the only answer

Not helpful for processes that do not offer much


opportunity to improve

Not helpful if process owners and managers feel


threatened by findings or do not act upon them
Potential Problems with
Benchmarking
Benchmarking is restricted to your individual trade

It may confine the focal point to what is currently


being done

Useless if used for procedures that do not present a


great deal of opportunity for progress

Process owners and managers may feel intimidated


or may not admit/act on results
Exercise #4 in Textbook (p. 221)
What difficulties are typically
encountered when benchmarking direct
competitors?

Describe several ways to work around


these problems.
Quiz

Please clear your desks


Works Cited
The Benchmarking Exchange. (2008) What is benchmarking?
Retrieved February 11, 2008 from
http://www.benchnet.com/wib.htm

Answers.com Business & Finance. Business encyclopedia:


benchmarking. Retrieved February 11, 2008 from
http://www.answers.com/topic/benchmarking?cat=biz-fin

Besterfield, D. H., Besterfield, G. H., Besterfield-Michna, C., &


Besterfield-Sacre, M. (2003). Total quality management (3rd
ed.) New Jersey: Pearson Education International
Other Resources
American Productivity & Quality Center (APQC)
http://www.asq.org/index.html
Benchmarking and Best Practices Presentation
http://www.asq.org/articles/aqc-
proceedings/public_proceedings/54_2000/14094.pdf
The Benchmarking Exchange and Best Practices Homepage
http://www.benchnet.com/
Benchmarking: The search fo rIndustry Best Practices That Lead
to Superior Performance by Robert C. Camp

The Benchmarking Book by Michael J. Spendolini