what is benchmarking? need for benchmarking and types of bechmarking.

1. Ishita Devgan
Shrey Sharma
Kritika Singh
Anukartee Singh

2. BENCHMARKING: WHAT IS IT?
 It can be defined as a process for improving
performance by constantly identifying, understanding
and adapting best practices and process followed
inside and outside the company and implementing
the results.
 The main emphasis of benchmarking is not on “best
performance” but on improving a given business
operation or a process by exploiting “best practices”

3.  “ Benchmarking is an ongoing outreach activity; the
goal of the outreach is identification of the best
operating practices that, when implemented,
produce superior performance”
- Bogan and English , Benchmarking for best
practices.

4.  Benchmark refers to a measure of best practice
performance.
 Benchmarking is the systematic search for best
practices, innovative ideas and highly effective
operating procedures. It measures performance
against that of the “ best-in-the-class” organization.

5. THE EVOLUTION OF BENCHMARKING
 The benchmarking processes may have evolved in
the 1950s when W.EDWARDS DEMING taught the
idea of quality control to the Japanese.
 The method was rarely used in the United States
until the early 1980s, when IBM, Motorola and Xerox
became the best known example for using
benchmarking processes.

6. THE EVOLUTION OF BNCHMARKING
TIME TYPE DESCRIPTION
First generation Reverse Engineering RE is the process of
discovering the
technological principles
of a device, object or
system through the
analysis of its structure,
function & operation
Second generation Competitive
benchmarking
Continuous process of
comparing a firm’s
practices and
performance measures
with that of its most
successful competitor

7. TIME TYPE DESCRIPTION
Third generation Process benchmarking The initiating firm
focuses onits
observation and
investigation of business
processes with a goal of
identifying and observing
the best practices from
one or more
benchmarked firms
Forth generation Strategic benchmarking Involves observing how
others compete
Fifth generation Global benchmarking Benchmarking with the
partners across the
globe

8. ADVANTAGES OF BENCHMARKING
 Identify current position and determining priorities for
improving environment performance
 Allowing comparisons
 Encouraging regular monitoring of progress
& a process for continuous improvement
 Increasing competitiveness of organization

9. TYPES OF BENCHMARKING

10. STRATEGIC BENCHMARKING
 It is used where businesses need to improve overall
performance by examining the long term strategies
and general approaches that have enabled high
performers to succeed.
 It involves considering high level aspects such as
core competencies.
 This type of benchmarking is suitable when the
company has to realign business strategies that
have become inappropriate.

11. PERFORMANCE BENCHMARKING
 Also know as COMPETITIVE BENCHMARKING
 It is used when organizations consider their positions
in relation to performance characteristics of key
products and services.
 Benchmarking partners are usually drawn from the
same sector.
 This type of benchmarking is suitable for assessing
relative levels of performance in key areas or
activities in comparison with others in the same
sector to find ways of closing gaps in performance.

12. PROCESS BENCHMARKING
 It is used by the organization when the focus is on
improving specific critical processes and operations
 Benchmarking partners are sought from best
practice organization and are drawn from the same
sector.
 This type of benchmarking is suitable for achieving
improvements in key processes to obtain quick and
short term benefits.

13. FUNCTIONAL BENCHMARKING
 Also known as GENERIC BENCHMARKING
 It can lead the organization to innovation & dramatic
improvements.
 It is used when organizations look to benchmark with
partners drawn from different business sectors or
areas of activity.
 This type of benchmarking is suitable for improving
activities or services for which counterparts do not
exist.

14. INTERNAL BENCHMARKING
 It involves seeking partners from within the same
organization & from business units located in
different regions.
 The main advantages are access to sensitive data &
information, availability of standardized.
 This type of benchmarking is suitable when several
business units within the same organization
exemplify good practice and management and want
to spread this expertise quickly throughout the
organization.

15. EXTERNAL BENCHMARKING
 It involves analyzing outside organizations that are
known to be the best in the class.
 It provides opportunities of learning from those who
are at the “learning edge”.
 This type of benchmarking is suitable where
examples of good practices can be found in other
organization and there is a lack of good practices
within internal business units.

16. INTERNATIONAL BECHMARKING
 This is used when the best practitioners are located
in other countries. This is due to globalization and
advances in information technology.
 There is a need for careful analysis & interpretation
due to national differences.
 This type of benchmarking is suitable where the aim
is to achieve world class status or simply because
there are insufficient “national” businesses against
which to benchmark.

19. PREREQUISITES FOR BENCHMARKING
Benchmarking will not improve performance if the
proper infrastructure for a total quality program is not
in place.
The requirements are:-
 Involve the employees who will ultimately use the
information and improve the process.
 Relate process improvement to strategy and
competitive positioning.
 Define your own process before gathering data or
you will be overwhelmed and will not have the data
to compare your process with.

20.  Perceive benchmarking as an ongoing process. It is not a one
time project with a finite start and complete date.
 Expand the scope of the company studied. Confining the
benchmarking firm to your own area ,or industry , competitor is
probably to narrow and approach in identifying excellent
performer
 Perceive benchmarking as a means to process improvement
rather than then and in its self.
 Set goals for closing the gap between what is existing process
and what van be benchmarked.
 Empower employees to achieve improvements that they
identify and for which they solve problems and develop action
plans.
 Maintain momentum by avoiding the temptation to put study
results and action plans on the back burner. Credibility is
achieved by quick and enthusiastic action.

21. CODE OF CONDUCT FOR BENCHMARKING
Benchmarking can be fraught with potential problems
ranging from simple misunderstanding to serious legal
problems. In order to minimize problems it is strongly
recommended to follow the simple code of conduct
scripted by the international benchmarking clearing
house.
 Legality
 Exchange
 Confidentiality
 Use of information
 Contact
 Preparation
 Completion
 Understanding

22. BENCHMARKING DOS AND DONTS
DOS DON’TS
 Obtain management
commitments
 Obtain resource
commitments
 Follow code of conduct
 Provide summary
reports
 Debrief as soon as
possible
 Be flexible
 Have too broad a scope
 Proceed without
process modeling
 Use questionnaires for
“process”
 Have separate
implementation team
 Design lengthy
questionnaire
 Give up!

23. COST OF BENCHMARKING
THERE ARE THREE TYPES OF COSTS
 VISIT COST:- these include hotel rooms, travel costs
, meals, token gift and lost labor time
 TANK COST:- the members of the benchmarking
team will be investigating time in researching
problems
 BENCHMARKING DATA BASED COSTS:-
organizations that institutionalized benchmarking into
their daily procedures find it is useful to create and
maintain a data base of best practices and the
companies associated with each best practice.

24. GUIDELINES FOR SUCESSFUL
BENCHMARKING
Successful benchmarking requires the following :-
 Thorough understanding of one’s own processes.
 Emphasis on industry best practices.
 Selection of appropriate benchmarking partners and
techniques.
 The benchmarking partner’s willingness to share
information
 Maintaining confidentiality of critical information
 Involvement of management and employees in the
analysis of best practices,
 Emphasis on practices and processes not on end
results.

25.  Benchmarking should be a continuous process as
the competition is always changing.
 Commitment towards the adoption and
implementation of best practices.
 Selection and empowerment of benchmarking
teams.
 Willingness to change as per the findings of the
benchmarking study.
 The adaptability of the practices should be tested
and the implementation results should be verified.
 Strict adherence to the benchmarking.

26. LIMITATION TO BENCHMARKING
 Benchmarking is a tough process that needs a lot of
commitment to succeed.
 It is a time consuming and expensive.
 More often than not benchmarking processes end
with the “they are different from us” syndrome or
competitive sensitivity that prevents the free flow of
necessary information.

27. COMMON PITFALLS IN BENCHMARKING
 Lack of management commitment and involvement
 Not applied to critical areas first
 Inadequate resources
 No involvement of the line organization.
 Scope not well defined.
 To many performance measures.
 Critical success factors & performance drivers not understood or
identified.
 Potential partners ignored
 Poorly designed questionnaires.
 Inappropriate data collection method.
 Too much & inconsistent data.
 Analysis paralysis; excess precision.
 Management resistance to change.
 No repeat benchmarking.