Quality presentation on benchmarking

1. Presented by - MEDHAVEESH (12MEU053)
MOHIT KAUSHIK (12MEU054)
NITIN GUPTA (12MEU062)
PRASHANT SHARMA (12MEU064)
PRINCE NASWA (12MEU067)
SHALABH SINGHAL (12MEU079)
SUDHANSHU GARG (12MEU086)
VISHNU DUA (12MEU095)

2. Outline
• Benchmarking meaning
• Benchmarking definition
• Benchmarking features and concept
• Why Benchmarking
• Advantages and Disadvantages
• Benchmarking Methodology
• Benchmarking Process
• Benchmarking Types

3. The Essence of Benchmarking
“moving from where we are to where we want to be”

4. What is benchmarking?
• Benchmarking is the process of improving
performance by continuously identifying,
understanding, and adapting outstanding practices
found inside and outside the organization.
Client
CompanyA
CompanyB
CompanyC
Co.D
Company P Company Q
Company R
Company S
Company T

5. What is benchmarking?
• Benchmarking is the process of comparing one's business
processes and performance metrics to industry bests
and/or best practices from other industries.
• Why are others better ?
• How are others better ?
• What can we learn ?
• How can we catch up ?
• How can we become the
best in our industry ?
Client
CompanyA
CompanyB
CompanyC
Co.D

6. Operational Definition of Benchmarking
Benchmarking is a technique of identifying,
understanding and adapting superior practices
from organizations locally and world wide to
improve performance and achieve
priority business results.
A structured technique
Comparing business processes,
not only performance measures
Learn from others External focus Improvement, not evaluation

7. Benchmarking and Industries

8. Benchmarking and Organization Size
Moreover a tendency of benchmarking activity is a function of
size. A larger organization is more likely to be benchmarking
than a smaller one.

9. Benchmarking Examples
Las Vegas CasinosEmployee theft reductionIBM
L. L. BeanWarehousing operationsXerox
Indy 500 pit crewsFaster plane turnaround timeSouthwest Airlines
Target FirmImprovement SoughtInitiator

10. Benchmarking Features
Continuous method of measuring and comparing a firm’s business
processes against those of another firm
Discover performance gaps between one’s own processes and those of
leading firms.
Incorporate leading firm’s processes into one’s own strategy to fill the gaps
and improve performance

11. Benchmark
• A benchmark is an organization recognized for its exemplary
operational performance.
Toyota for Processes
Intel for Design
Motorola for Training
Honda for Rapid product development

12. What to Benchmark?

13. Resources
* Tangible
* Intangible
Capabilities
Teams of
Resources
Sources of
Core
Competencies
Competitive
Advantage
Strategic
Competitiveness
Above-Average
Returns
Competitive
Advantage
Gained through
Core Competencies
Discovering
Core
Competencies
Value
Chain
Analysis
Valuable
Rare
Costly to Imitate
Nonsubstitutable
*
*
*
*
* Outsource
Criteria of
Sustainable
Advantages
Discovering Core
Competencies

14. Commonly Benchmarked Performance Measures
Financial Ratios
Productivity Ratios
Customer-related Results
Operating Results
Human Resource Measures
Quality Measures
Market Share Data
Structural Measures

15. Why Benchmarking?
 Benchmarking is a more efficient way to make
improvements. Managers can eliminate trials and
errors.
 Benchmarking speeds up organization’s ability to
make improvements. Today, time is of the essence.
 Benchmarking has the ability to bring your
performance up as a whole significantly.
 Learn from others experiences
 Set realistic but ambitious target

16. Why Benchmarking?
Benchmarking
Performance
Improvement
Creative
Thinking
Keep pace
with science
and
technology
changes
Meeting
customer
expectations
Cope with
competitive
markets
Innovation in
management
methods
Meeting
Quality
standards

17. Three Major Advantages of Benchmarking
• Product and Process Improvement:
By implementing benchmarking activity, organizations can
improve their operation process
• Time & Cost Reduction:
Bench marking is time and cost efficient because it involves
imitation and adaptation rather than pure invention
• Competitive Strategy
By implementing benchmarking activity, organizations can
improve their operation process.

18. Disadvantages
o The most resistant criticism of Benchmarking comes
from the idea of copying others.
o It is not a strategy nor is it intended to be a business
philosophy. Therefore, it is a time taking technique.
o Benchmarking is not “instant pudding”. It will not
improve performance if proper infrastructure of
Total Quality Management is not in place.

19. Levels Of Benchmarking In
Competitive Environment
Internal benchmarking - Within one’s organisation.
Competitive benchmarking - Analysis the performance and
practices of best in class companies.
Non-competitive benchmarking – Is learning something
about a process a company wants to improve by
benchmarking.
World class benchmarking - Ambitious and looking towards
recognized leader.

20. 20
Benchmarking Methodology
Competitive
• Industry leaders
• Top performers with
similar operating
characteristics
Functional
• Top performers
regardless of industry
• Aggressive innovators
utilizing new
technology
Internal
• Top performers
within company
• Top facilities
within company
Best Practice
Overlap

21. ABenchmarkingProcess
5. PROJECT FUTURE PERFORMANCE LEVELS
•LEADERSHIP POSITION ATTAINED
•PRACTICES FULLY INTEGRATED INTO PROCESS
10. RECALIBRATE BENCHMARKS
9. IMPLEMENT SPECIFIC ACTIONS AND
MONITOR PROGRESS
8. DEVELOP ACTION PLANS
7. ESTABLISH FUNCTIONAL GOALS
6. COMMUNICATE BENCHMARK FINDINGS
AND GAIN ACCEPTANCE
4. DETERMINE CURRENT PERFORMANCE "GAP"
3. DETERMINE DATA COLLECTION METHOD
AND COLLECT DATA
2. IDENTIFY COMPARATIVE COMPANIES
1. IDENTIFY WHAT IS TO BE BENCHMARKED
PLANNING
ANALYSIS
INTEGRATION
ACTION
MATURITY

22. Modes of benchmarking process used by the demonstrator
organizations for the benchmarking exercises
Identify key process
Document / Map Sub Processes
Identify Critical Success Factors (CsFs)
Measure CsFs
Analyze Results Identify Gaps in Performance
Identify Best
Practice
Select Benchmarking
Partners/Arranged Visits

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The Seven Step Benchmarking Model
Activity What is included
Step 1: Identify what to benchmark  Clarify the benchmark objectives
 Decide whom to involve
 Define the process
 Consider the scope
 Set the boundaries
Agree on what happens in the process
 Flowchart the process
Step 2: Determine what to measure  Examine the flow chart
 Establishes the process measures
 Verify that measures match objectives
Step 3: Identify who to benchmark  Conduct general research
 Choose level to benchmark

24. Friday, 13 May 2016 Xavier Institute of Management, Jabalpur 24
The Seven Step Benchmarking Model
Step 4: Collect data  Use a questionnaire
 Conduct a benchmark site visit
Step 5: Analyze data and determine the gap  Quantitative data
 Qualitative analysis
Step 6: Set goals and develop an “Action
Plan”
 Set performance goals
 Develop an action plan
Step 7: Monitor the process  Track the changes
 Make benchmarking a habit

25. Friday, 13 May 2016 Xavier Institute of Management, Jabalpur 25
Factors For Success Of Benchmarking
Benchmarking must have the full support of senior management
and they should actively involve with this process.
For Benchmarking, team and process training is very imp.
Benchmarking should be a team activity.
Benchmarking is an ongoing process.
Benchmarking efforts must be organized, planned, and carefully
managed.
Correct use of benchmarking can lead you to the competitive
edge in today’s business market place.

26. Gap Analysis
• When done well, benchmarking prominently
reveals gaps between the performance of the
bench marker and that of a “best practices”
leader, and that leads to developing
sustainable competitive advantage.

27. Gap Analysis (Spider chart)
Current performance of the host
Current performance of the partner
Current
performance of the
host for variable ‘K’.
Best of the best
(current
performance of
the partner for
variable ‘A’.
Total customer
satisfaction

28. Friday, 13 May 2016 Xavier Institute of Management, Jabalpur 28
Areas Of Benchmarking
Operational Strategies:
• Inventory management
• Inventory control
Supply chain management:
• Warehousing and distribution
• Transportation
Marketing management:
• Customer service levels
• Purchasing
• Billing and collection
• Purchasing practices
H.R. Practices:
• Talent Acquisition / Search
• Training and Development
• Compensation management etc.

29. Types of Benchmarking
There are several other classifications for benchmarking, based
on partner type, adoption level and target process, etc.
Following are the most used types:
– Internal
– External
• Competitive
• Functional
• Generic

30. Competitive benchmarking is the most difficult type of
benchmarking to practice. For obvious reasons, organizations
are not interested in helping a competitor by sharing
information. This form of benchmarking is measuring the
performance, products, and services of an organization
against its direct or indirect competitors in its own industry.
Competitive benchmarking starts as basic reverse engineering
and then expands into benchmarking.
Competitive benchmarking is an analysis of strategies,
processes and practices with competitors and companies in
the same industry. Therefore, it is industry or business type
specific. It is especially beneficial to organizations managing a
specialized type of operation.
1-Competitive Benchmarking

31. Functional benchmarking - a company will focus its
benchmarking on a single function to improve the operation
of that particular function. Complex functions such as Human
Resources, Finance and Accounting and Information and
Communication Technology are unlikely to be directly
comparable in cost and efficiency terms and may need to be
disaggregated into processes to make valid comparison.
2-Functional Benchmarking

32. Benchmarking, originally described as a formal process by
Rank Xerox, is usually carried out by individual companies.
Sometimes it may be carried out collaboratively by groups of
companies (e.g. subsidiaries of a multinational in different
countries). One example is that of the Dutch municipally-
owned water supply companies, which have carried out a
voluntary collaborative benchmarking process since 1997
through their industry association.
3-Collaborative Benchmarking

33. Performing a financial analysis and comparing
the results in an effort to assess your overall
competitiveness and productivity.
4-Financial Benchmarking

34. TOP-10 Benchmarking Organizations
Organization Ranking
Xerox 1
U.S. Army 2
Corning 3
Abu Dhabi Food Control Authority 4
Internal Revenue Service 5
United Technologies 6
DynMcDermott 7
Dubai Municipality 8
Dubai Chamber of Commerce and Industry 9
Allergan 10

35. Top-10 Benchmarked Business
Processes
Business Process Ranking
EMPLOYEE RECOGNITION 1
PROCESS IMPROVEMENT MANAGEMENT 2
PROCUREMENT PURCHASING 3
MANAGEMENT OPERATIONS POLICY LEADERSHIP 4
BENCHMARKING 5
EMPLOYEE DEVELOPMENT TRAINING 6
MARKETING 7
ASSET MANAGEMENT 8
BALANCED SCORECARD 9
CORPORATE GOVERNANCE 10

36. Conclusion
Now a days, more than 60% companies in the world uses this
technique for fixing their target for continuous improvement. For
them it is an important tool. But to be effective it must be used
properly. It breaks down (waste money, time and energy and some
times morale too) if process owners and managers feel threatened or
do not accept and act on the findings. Finally, benchmarking is not a
substitute for innovation; however, it is a source of ideas from
outside the organization.

37. THANK YOU