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8/8/2019 Bench Marking Lecture
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BENECHMARKING -DEFINITION
The continuous process ofmeasuring products, services, andpractices against the companystoughest competitors or thoserenowned as industry leaders
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Benchmarking is the practice of beinghumble enough to admit that someone
else is better at something and wiseenough to try and learn how to match andeven surpass them at it.
- APQC, 1998
BENCHMARKING THOUGHTS
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BENCHMARKINGBENCHMARKING
In sharp contrast to theconventional approach of settingthe future goals extrapolated from
the internal practices and pasttrends.
Since external environment andmarket conditions change rapidly;
goal setting which is internallyfocused cant be true reflection ofcustomers expectations.
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BENCHMARKINGBENCHMARKING
Customers expectations are highlyliquid and are driven by standards
set by best performer.Any product or service just below
these standards may not catch the
eyes of customer.
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Why use BenchmarkingWhy use Benchmarking
Survival lies in emulating best andnot in lagging behind
Bench marking is time and costefficient because it involvesimitation and adaptation ratherthan pure invention. Prevents the
Re-inventing the wheel.Quantum-leaps in performance
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Why use BenchmarkingWhy use Benchmarking
An effective wake-up call and helps to makea strong case for change
Practical ways in which step changes in
performance can be achieved by learning fromothers who have already undertakencomparable changes
The impetus for seeking new ways of doing
things and promotes a culture that is receptiveto fresh approaches and ideas
Opportunities for staff to learn new skills andbe involved in the transformation process fromthe outset.
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Local industry is not yet well developedand is sprouting its wings.
Cultural growth and professionalism isinchoate.
The leading enterprises are foreignbased whether pharmaceuticals,automobiles or other FMCGs.
These transnational companies havenurtured a professional culture.
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The professional culture has paid TNCsin Pakistan through huge revenues.
MNCS have small market share volumewise and high share price wise.
National companies share is greatervolume wise and fewer revenues wise.
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A list of top ten pharmaceuticalcompanies in Pakistan is filled with
the MNCs
Same situation exists in the
beverages, automobile, electronicsand FMCGs.
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Since TNCs are leading in thecompetition, they can be
benchmarked by the strivingnational companies.
Every aspect of the business
where TNCs outperform their localcompetitors can be benchmarked.
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These aspects include
Organizational cultureMarketing strategiesOperational activitiesFinancial aspectsHuman resourceOr any other aspect
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Types of BenchmarkingTypes of Benchmarking
Internal benchmarking
External benchmarking
Functional benchmarking:
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Internal benchmarkingInternal benchmarking
sharing opinions
betweendepartmentswithin the sameorganisation
ADVANTAGES:
Easier to implement
Easier to access data
DISADVANTAGES:
External ideas blocked
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External BenchmarkingExternal Benchmarking
Comparison withexternal organisationsto discover new ideas,
methods, products andservices.
The gap betweeninternal and externalpractices displays the
way where to changeand if there is anyneed to change.
Advantages
Helps to measureones ownperformance
Helps to search forbest practices
Disadvantages
Takes time
Requires support
Legal/ethical isssues
Industrial espionage
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Functional Benchmarking:Functional Benchmarking:
Comparativeresearch to seekworld-class
excellence bycomparing businessperformance notonly againstcompetitors but also
against the bestbusinesses operatingin different industry
Advantages:
Discovering innovativepractices
Disadvantage:
Not suitable for every
organisation
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Other Types of BenchmarkingOther Types of Benchmarking
Product Benchmarking
Process Benchmarking
Strategic Benchmarking
How companies compete, identify the winning
strategies that have enable high-performingcompanies to be successful in their marketplaces.
Parameter Benchmarking
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Gap Analysis (Spider chart)Gap Analysis (Spider chart)
Current per r ance the h st
Current per r ance the partner
Current
per
r ance
the h
st
rvariable K.
est
the best(current
per
r ance
the partner
rvariable A.
tal customersatis
action
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METHODOLOGY OF BENCHMARKINGMETHODOLOGY OF BENCHMARKING
AT&TVs
XEROX
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Clearly defined purpose
Continual analysis & reassessment
BM methodology must be appropriate
Significance of results must be clear
Conclusions must be justified by thedata
Never compromise integrity for thesake of findings
BENCHMARKING ESSENTIALS
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BENCHMARKING ESSENTIALSBENCHMARKING ESSENTIALS
Investigation must be systematic
A high code of ethics is essential
Successful benchmarking requires a
planned approach
Requires senior management
commitment
Must establish & enforce milestones
Must report findings to senior
mangment
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Internal training for company
personnel
Access to a benchmarking database
Professional BM analysts to support
studies The process must be institutionalized!
BENCHMARKING ESSENTIALS
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1. Fear of being seen as copying
2. Fear of losing competitive advantage bysharing information
3. Arrogance we are the best, whybenchmark?
4. Benchmarking trap benchmark that
which is convenient, but may not beimportant.
Adapted from Watson 1992
BARRIERS TO BENCHMARKING
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5. Impatience A quintessential trait
6. Excuses are too easy:
We are too small We are too busy
We are too different
Nobody else does what we do
We do it better than anyone else
Adapted from Watson 1992
BARRIERS TO BENCHMARKING
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1. Key is to Adapt not adopt Deming
2. Benchmarking does not come as a naturalprocess for many competitiveness does,but not benchmarking, because
benchmarking requires a team approach.
BENCHMARKING OBSERVATIONS
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Legal & Ethical GuidelinesLegal & Ethical Guidelines
Keep it legal;
Be willing to give what you get;
Respect confidentiality;
Keep information internal;
Use benchmarking contacts;
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