5. benchmarking

8/3/2019 5. Benchmarking

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By:

Mukul kashyap

B. Lingeswaran



1. Introduction to benchmarking.

2. Benchmarking objectives

3. Benchmarking fundamentals

4.Classification of benchmarking5. Various phase of benchmarking process :y Phase 1: Planningy Phase 2: Analysisy Phase 3: Integrationy

Phase 4: Actiony Phase 5: Maturity

(Cont.)



6. The 10-step benchmarking process Step 1: what to benchmark

Step 2: whom to benchmark Step 3a: collect data

Step 3b: conduct the site visit

Step 4: analyze the performance gap

Step 5: project performance levels Step 6: communicate findings

Step 7: establish functional goals

Step 8: develop action plan

Step 9: implement plan and monitor results Step 10: recalibrate benchmarks

7. Success factors and management considerations

8. References



y Benchmarking is an important ingredient in strategicplanning and operational improvement. To remaincompetitive, long-range strategies requireorganizations to adapt continuously to the changing

market place. To energize and motivate its people, anorganization must:

Establish that there is a need for change

Identify what should be changed Create a picture of how the organization should

look after the change



Embarking on a benchmarking activity requiresacceptance of the following fundamentals:

Know the operation. Assess strengths and weaknesses. Thisshould involve documentation of work process steps andpractices as well as a definition of the critical performancemeasurements used.

Know industry leaders and competitors. Capabilities can bedifferentiated only by knowing the strengths and weaknesses of

the leaders. Incorporate the best and gain superiority. Adapt and integrate

these best practices to achieve a leadership position.



BENCHMAR KING

Practices Levels : The initiatingfirm focuses its observation and

investigation of business processes with a goal of identifying and

observing the best practices fromone or more benchmark firms.

Performance Levels : It allows theinitiator firm to assess their

competitive position by comparingproducts and services with those of

target firms.



Phase 1: Planning

Decide what to benchmark. All functions have a productor output. These are priority candidates to benchmark foropportunities to improve performance.

Identify whom to benchmark. World-class leadershipcompanies or functions with superior work practices, wherever they exist, are the appropriate comparisons.

Plan the investigation, and conduct it. Collect datasources. A wide array of sources exists, and a good startingpoint is a business library. An electronic search of recently published information on an area of interest can berequested. Begin collecting. Observe best practices.



Phase 2: Analysis

It is important to have a full understanding of internal business processes before comparing them toexternal organizations. After this, examine the bestpractices of other organizations. Then measure the

gap.

Project the future performance levels. Comparingthe performance levels provides an objective basis on which to act and helps to determine how to achieve a

performance edge.



Phase 3: Integration

Redefine goals and incorporate them into the planningprocess. Communicate benchmarking findings and gainacceptance from upper management. Revise performance goals. Remember, the competition will not stand still whileorganizations improve. Thus, goals that reflect projectedimprovement are necessary. On the basis of the benchmarking findings, the targetsand strategies should be integrated into business plans andoperational reviews and updated as needed.



Phase 4: Action

Best practices are implemented and periodically recalibrated as needed.

Develop and implement action plans. Monitor progress.

Recalibrate the benchmarks.



Phase 5: Maturity

Determine when a leadership position is attained.Maturity is achieved when best practices areincorporated in all business processes; whenbenchmarking becomes a standard part of guiding work; and when performance levels are continually improving toward a leadership position. Assessbenchmarking as an ongoing process.



STEP 1: WHAT TO BENCHMARK

y The first step in determining what to benchmark isidentifying the product or output of the business

process or function. Fundamental to this is thedevelopment of a clear mission statement detailing thereason for the organizations existence, including key outputs expected by its customers and critical to

fulfilling the mission successfully



STEP 2: WHOM TO BENCHMARK

y Determining whom to benchmark against is a searchprocess that starts with consideration of, in broad

terms, an operations primary competitors and thenextends to leading companies that are not competitors. While the process is one of comparison, the goal is toidentify and understand where things done differently can produce breakthrough results.



STEP 3A: COLLECT DATA

y Internal: Some organizations have a company library,but everyone has access to a public library. Using onlinecomputer capability, a search of everything publishedon the teams topic during the last 5 years can be

conducted.

y External: Sources such as professional associations,public seminars, lectures, trade shows, and speechesbefore public audiences are all available.

y Original: It may be necessary to contact directly somepotential benchmarking partners through phone ormail surveys.



STEP 3B: CONDUCT THE SITE VISIT

y Typically, a benchmarking site visit team consists of a smallnumber of individuals, perhaps four, each of whom plays aspecific role in the meeting. One individual is designated as

the team presenter, and he or she should be prepared topresent professionally the project teams current f lowchartsand related process information. Another team membershould be prepared to ask the questions that have beenforwarded to the partner. A third team member is the scribe

and should have a laptop computer to record the responsesto all questions. A fourth member can fill a number of support roles. If some specialized knowledge is required tounderstand the information presented, the team may invitesuch a specialist to attend.



STEP 4: ANALYZE THE PERFORMANCE GAP

y The team must now analyze all the informationcollected. The specific task here is to analyze the datato determine if the processes benchmarked are at

parity, ahead of, or behind others. Said differently, theteam needs to identify gaps or differences inperformance that exist between the teams process andthat of the best-in-class and that of world-class

organizations. This analysis should include whichinputs, outputs, processes, or steps within a process aresuperior, and by what measure each of thesecomponents is superior.



STEP 5: PROJECT PERFORMANCE LEVELS

y In the analysis step, the relative position today isdefined, but industry practices are not static. Bothindustry and competitors continue to pursue

improvement. Therefore one must not only analyzethe gap as it exists at the time of measurement but alsoproject where the benchmark and gap are likely to bein the future.



STEP 5: PROJECT PERFORMANCE LEVELS (Cont.)

At this point in the project, management has the right to ask the team thefollowing: How does the organization compare today with the industrys best? How will this organization gain a performance advantage? What will it mean to the operation? The organization?

How much will it cost to convert?

To answer these questions, the benchmarking team needs to ask thefollowing: What were the historical performance trends? What is the current performance gap?

How will industry performance change? Will the performance gap widen, narrow, or remain the same? What are the implications for the subject business? How can the organization gain a significant performance advantage?



STEP 6: COMMUNICATE FINDINGS

To obtain acceptance, the team must ensure thatmanagement understands the findings, thinks theteam is creditable, and accepts its recommendations.

This is achieved as follows :

Decide Who Needs to Know. Select the Best Presentation Vehicle.

Organize Findings.

Present Recommendations.



STEP 7: ESTABLISH FUNCTIONAL GOALS

y After management approves the recommendations, theimpacts of practice changes must be identified andcommunicated to the affected individuals. To answer thathow implementing these recommendations mean to the

organization , the team must complete the followingthree tasks:

ReviseOperational Goals.

Analyze the Impact onOthers.

Secure Management A pproval.



STEP 8: DEVELOP ACTION PLAN

y The benchmarking team must now assessimplementation priorities, develop an action plan, and when approval for the action has been secured, proceedto implementation. Taking the following steps enhances

the teams opportunity for success. Set Implementation Priorities.

Show Revisions to the Performance Gap.

DevelopAction Plans.



STEP 9: IMPLEMENT PLAN AND MONITOR RESULTS

y A few considerations are appropriate here to help the

benchmarking team understand the progress of itsimplementation efforts. The team should first pilot onebest practice before a wholesale implementation isbegun. That pilot may be as simple as a simulation of the

new process, in which paper is passed around torepresent the various steps in order to understand theflow of information and the activities that would beperformed. In a more complex process, an actual trial run would be conducted in which data or material aresubjected to the new work methods. In the latter case, itis always a good idea to push the pilot hard to determineif the new process can withstand the pressure of high- volume, complex transactions.



y Successful benchmarking is not done by separatestaffs. There are, however, individuals who act in acompetency capacity to help ensure that thebenchmarking process is followed. But the actualbenchmarking is done by process owners or processrepresentatives, with assistance.

y To get the most out of benchmarking, Theimplementation phase of benchmarking should be thecreative phase.



y Behavioral Benefits. Benchmarking is essentially alearning experience. It helps an organization focus anddrive for consensus on what needs to be done and how toachieve it, not argue over what should be done.Benchmarking can provide the stimulus for improvement

by people at all levels through an externally focused,competitive situation to achieve world-class performance with increased customer satisfaction

y Competitiveness. The bottom-line benefit of benchmarking is improved competitiveness and increased

value in the eyes of customers.E

ffective use of benchmarking to develop and implement improvementactions can help organizations achieve superior customerservice levels. This, in turn, will lead to increased marketshare and improved financial results.



y Juran's quality handbook (5th edition)

5. benchmarking

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