what is benchmarking? benchmarking is the process of measuring an organization’s internal...
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What is Benchmarking?
Benchmarking is the process of
measuring an organization’s internal processes
then identifying, understanding, and adapting
outstanding practices from other organizations
considered to be best-in-class.
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What is Benchmarking?
Learning from others what they do
right and then imitating it to avoid
“reinventing the wheel”
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What is Benchmarking?
Measuring yourself against
the “best in class”
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Diagram of Benchmarking Concept
What is our
performance level? How do we do it?
What are others’ performance levels?
How did they get there?
Creative Adaptatio
n
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.
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Key Elements
Measuring using metrics- Expressed numerically, with target
in mind
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Key Elements
Recognizing differences in processes
- Need to thoroughly understand their own processes as well as those of the
best in class’s company
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Key Elements
Comparing self to external competition
- Reduces chance of being caught off guard
- Encourages competition- Personnel more motivated to attain
goals
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Key Elements
Imitation/Adaptation vs. Invention- Provides a working model
on an improved process
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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
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Handout #1
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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?
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Reasons to BenchmarkAssists 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
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Requirements
Buy-in
Training
Timeliness
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6 Steps of the Benchmarking Process
Decide what to benchmarkUnderstand current performancePlanStudy othersLearn from the dataUse the findings
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Decide What to BenchmarkWhich 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?
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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 company’s vision
Help get the most “bang for the buck”
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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
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Plan
The benchmarking team decides:
- what type of benchmarking to perform- what type of data to collect- the method of collection
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Types of Benchmarking
Internal
Competitive
Generic/Process/Functional
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Internal BenchmarkingEvaluates 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
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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.
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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
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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
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Study Others
How are best-in-class processes practiced?
What are the measurable results?
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Learn From the DataIs there a gap between the organization’s 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?
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Three Types of Gaps
Negative
Parity
Positive
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Identifiable Benchmark Gaps
Must be described and quantified
Processes must have inputs, activities, and outputs
Level of detail must allow for eventual quantification
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Additional Gap Analysis
Necessary to determine root causes
Gaps come from process practices, general business practices, and the organizational and operational structure
Changeable
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<<<< BREAK >>>>
Handout #2
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Use the FindingsBenchmarking 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.
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Goals and Objectives
After acceptance, the new goals and objectives set are based on benchmark findings
Depends on the organization’s planning process
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Development and Executionof Action Plans
Specify tasksSequence tasksDetermine resource needsEstablish task scheduleAssign responsibility for each taskDescribe expected resultsSpecify methods for monitoring results
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Adapting to Change
Process practices are easier to change
Business practices are harder to change
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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
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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
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Exercise #4 in Textbook (p. 221)
What difficulties are typically encountered when benchmarking direct competitors?
Describe several ways to work around these problems.
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Quiz
Please clear your desks ……
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Works CitedThe 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
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Other ResourcesAmerican Productivity & Quality Center (APQC)
http://www.asq.org/index.htmlBenchmarking 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