Bench marking

WHAT IS BENCHMARKING ?

Benchmarking is the continuous, Systematic process

of measuring one’s output and or work processes

against the toughest competitors or those recognized

best in the Industry

WHAT IS BENCHMARKING ?

Benchmarking is a process of measuring and comparing

an organization's business process against leaders

anywhere in the world, to gain information which will

help the organisation to improve its performance.

Evolution of Bench marking

So

ph

isti

cati

on

Time

1st GenerationReverse Engineering

2nd GenerationCompetitive Bench marking

3rd GenerationProcess Bench marking

4th GenerationStrategic Bench marking

5th GenerationGlobal Bench marking

Bench marking Process

Benchmarking Process

4 questions

What should we benchmark?Whom should we benchmark?How do we perform the process?How do they perform the process?

Benchmarking Process

BM must for Key Business Processes (KBPs)

Product developmentCustomer ServiceInventory ControlResearch & Development etc

Benchmarking Process

BM must for Critical Success Factors (CSFs)

Cost ManagementProduct QualityProduct DesignOrganisation Image etc

Benchmarking process

Benchmark Practices

How to close the Gap►Improved Knowledge►Improved Practices►Improved Process

Employee participation

Organization Communication

Management Commitment

Benchmark Gap► How much

► Where► When

Benchmarking Standards

Benchmarking Process

Adopt

Improve

Adapt

5 stages of Benchmarking

Implement AnalyseDecideWhat to

BM

IdentifyBMPartners

Gatherinfo

Bench mark Process

PLAN:

• Select the process

• Form Team

• Understand & document process

• Establish performance measure

SEARCH:

• Listing Criteria for partner selection

• Conduct general / secondary research

• Decide the level to Benchmark

• Identify potential partners & contactCon’td

The Strategy

OBSERVE :

• Questionnaire sent to partner

• Telephone contact

• Direct observation / site visit

ANALYSE :

• Sort information & data

• Quality control information & data

• Normalise data if necessary

• Identify gaps in performance Level

• Identify causes for gapsCon’td

The Strategy

ADAPT :• Identify improvement opportunities

• Set target for improvement

• Develop implementation plan, monitor the progress

• Write final report

Approaches to Benchmarking

Internal & External BenchmarkingPerformance or Competitive BenchmarkingFunctional and Generic BenchmarkingStrategic BenchmarkingProcess BenchmarkingInternational Bench marking

Relationship between different types of Benchmarking

ProcessBenchmarking

CompetitiveBenchmarking

StrategicBenchmarking

ProductBenchmarking

Functional/Generic

Internal/external

INTERNAL BENCHMARKING

Establishing good practice organisation

Comparison of similar functions in different

operating units within the organisation

Example:

Tata Steel’s Colliery divisions benchmarking their maintenance practices with that of the Maintenance division inside the Steel Works at Jamshedpur.

External Benchmarking

Comparison of organisation functions and key processes against

Good Practice Organisation

Example:

Search for improvement or breakthrough

Opportunities in business processes

Process Benchmarking

Focus on specific operations or processes

Examples

1 in higher education-enquiry management, enrolment

2 in Logistics- delivery, safety

3 in hotels—housekeeping, customer care,

FUNCTIONAL BENCHMARKING

Comparison of similar functions against external best in any industry

Example:

Hindustan Max – GB Ltd , a pharmaceutical company, benchmarking their maintenance function with that of Tata Steel.

GENERIC BENCHMARKING

Comparison of functions which are generic in nature in any industry

Example :

■ Hospital in the U.S. routinely benchmark their patient management against hotel’s guest management.

■ Mobil benchmark their customers service

with 5 – star hotels.

Performance or CompetitiveBenchmarking

Organizations using performance measures tocompare themselves against similar organizations

Example

FMCG’s comparing with each other for Market share, Retention rates, profits, costs

StrategicBenchmarking

Used where organizations seek to improve theiroverall performance by focusing on specific strategiesor processes

Example

Benchmarking against organizations which havewon awards or some other distinctions

WHAT TO BENCHMARK ?

Products & Services

Work Processes

Support Functions

Organizational Performance

Strategies

WHAT TO BENCHMARK?

Product &Services

•Finished Goods•Product &Services Features

WHAT TO BENCHMARK?

Work Processes

ManufacturingSupplyingOrderingMaintenance

WHAT TO BENCHMARK ?

Support Functions

Human Resource Department

Financial Management

Marketing

WHAT TO BENCHMARK ?

Organizational Performance

SalesProfitabilityCostQualityManpower

WHAT TO BENCHMARK ?

Strategies

Cost Leadership

Differentiation

Benchmarking PartnerBenchmarking Partner

A benchmarking partner is any person or

organisation that participates in open

exchange of information for the purpose

of learning from each other in areas of interest.

Benchmarking Partner

1 Design a list of criteria for focused search of partners2 Conduct general / secondary research3 Decide the level to benchmark4 Identify potential partners and establish contact

STEPS

CRITERIA FOR SELECTION OF BENCHMARKING PARTNER

IT INCLUDES:

- Similarity of process

- Geographical location

- Size of the organsiation

- Product

- Technology

- Management style

- Company culture

- Easy accessibility of information

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