Presented By:Ayesha IshaqSharrel PalousSaman Zahid

What is Benchmarking?

“Improving ourselves by learning from

others.”

What is benchmarking? Benchmarking is a continuous, systematic process for

evaluating products, services and work processes or organizations that are recognized as representing the best practices, for the purpose of organizational improvement (Spendolini 1992, 10-11)

Benchmarking is the search for industry best practices that lead to superior performance (Camp, 1989).

Benchmarking is the continuous process of measuring products, services, and practices against the toughest competitors or those companies recognized as industry leader (Xerox Corporation, 1986).

A predefined position, used as a reference point for taking measures against (Andersen & Pettersen, 1996).

. Source: Spendolini, M. (1992). The Benchmarking Book. New York: American Management Association.Camp, R.C. (1989). Benchmarking. The Search for Industry Best Practices That Lead to Superior Performance. Milwaukee, Wisconsin: ASQC Quality PressAndersen, P. & Pettersen P.-G. (1996). The Benchmarking Handbook: Step-by-Step Instructions. London: Chapman & Hall

In simple terms..Benchmarking is an on-going search

for the best practices that produce superior performance when adapted and implemented in one’s organization.

Emphasis should be placed on the continuous elements of benchmarking. In most cases benchmarking activities are related to quality improvement. Source: http://www15.uta.fi/yksikot/entrenet/hankerekisteri/hanke5_benchmarking.htm pril 24, 2015]

Brief history: The word 'benchmarking' is borrowed

from land surveying, where it indicates a fixed reference point for comparison.

In a quality context, Benchmarking has a different meaning – it refers to a quality improvement methodology. While external comparisons (e.g. reconnaissance, competitive analysis, industry analysis, etc.) have been used for centuries, this approach was significantly extended by Xerox during the 1980's. Source: http://www.dhutton.com/samples/sampbench.html [accessed April 24, 2015]

History: G.H. Watson outlines the development of benchmarking in

five phases:         Phase 1 1950-1975       Reverse Engineering 

        Phase 2 1976-1986       Competitive Benchmarking         Phase 3 1982-1988       Process Benchmarking         Phase 4 1988+              Strategic Benchmarking         Phase 5 1993+              Global Benchmarking

Reverse engineering was tearing things apart, examining them, improving them, and putting them back together. 

Benchmarking really began in its modern form with the introduction of competitive benchmarking began with Rank Xerox, and its implementation of benchmarking in beginning around 1976. 

This was followed by process benchmarking which included looking for ideas outside of the direct competition.  Strategic benchmarking involves fundamentally changing the business, not just the process

Global Benchmarking is the newest and involves comparing your organization on a global scale.

The xerox case: evolution of benchmarking The company that invented photocopier in 1959 and

maintained a virtual monopoly for many years thereafter, like “Coke” or “Kleenex,” “Xerox” became a generic name for all photocopiers.

By 1981, however, the company’s market shrank to 35% as IBM, Kodak developed high-end machines and Canon, Richo, and Savin dominated the low-end segment of the market. 

The company was suffering from the “not invented here” syndrome, as Xerox managers did not want to admit that they were not the best.

The company instituted the benchmarking process, but it met with resistance at first. People did not believe that someone else could do it better. When faced with the facts, reaction went from denial to dismay to frustration and finally to action.

Source: https://totalqualitymanagement.wordpress.com/2009/09/16/the-evolution-of-benchmarking-xerox-case/

[accessed April 24, 2015]

Once the process began, the company benchmarked virtually every function and task for productivity, cost, and quality. Comparisons were made for companies both in and outside the industry. For example, the distribution function was compered to L.L. Bean, tje Freeport, Main Catalog seller outdoor equipment and clothing and everyone’s model of distribution effectiveness.

Results included:◦ Quality problems cut by two-thirds◦ Manufacturing costs cut in half◦ Development time cut by two-thirds◦ Direct labor cut by 50 percent and corporate

staff cut by 35 percent while increasing volume

The term ‘benchmarking’ was used to describe this process.

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.

Benchmarking Concept

Creative

Adaptation

Breakthrough Performance

What is our performance

level?

How do we do it?

What are others' performance

levels?

How did they get there?

Benchmarking Process

CollectingData

Analysis

ImprovingPractices

Plan

Collect

AnalyzeImplement

Measure

Source: National Institute of Standards and Technology Quality Program http://www.quality.nist.gov

6 General Steps to Benchmarking

1) Decide what to benchmark

2) Understand current performance

3) Plan4) Study others5) Learn from the

data6) Use the findings

Source: American Productivity and Quality Center http://www.apqc.org

1. PlanningDetermine the purpose and scope of

the projectSelect the process to be

benchmarkedChoose the teamDefine the scopeDevelop a flow chart for the processEstablish process measures Identify benchmarking partners

2. Collecting DataConduct background research to

gain thorough understanding on the process and partnering organizations

Use questionnaires to gather information necessary for benchmarking

Conduct site visits if additional information is needed

Conduct interviews if more detail information is needed

3. AnalysisAnalyze quantitative data of

partnering organizations and your organization

Analyze qualitative data of partnering organizations and your organization

Determine the performance gap

4. Improving PracticesReport findings and brief

managementDevelop an improvement

implementation plan Implement process improvementsMonitor performance

measurements and track progressRecalibrate the process as needed

Types of Benchmarking

Internal benchmarking

External benchmarking

Functional benchmarking

Other types

Internal benchmarking

Sharing opinions between departments

within the same organization

ADVANTAGES: DISADVANTAGES:

Easier to implementEasier to access data

External ideas blocked

External Benchmarking

Comparison with external organisations to discover new ideas, methods, products and services.

The gap between internal and external practices displays the way where to change and if there is any need to change.

Advantages Disadvantages

•Helps to measure one’s own performance

•Helps to search for best practices

•Takes time

•Requires support

•Legal/ethical issues

Functional Benchmarking: Comparative

research to seek world-class excellence by comparing business performance not only against competitors but also against the best businesses operating in different industry

Advantages: Disadvantage:

•Discovering innovative practices

•Not suitable for every organisation

Other Types of Benchmarking

•When organizations seek to improve their overall performance by focusing on certain strategies

•Example: benchmarking against companies that have won awards/distinctions

Strategic benchmarkin

g

•When organizations compare themselves with similar organizations based on performance

• It focuses on elements of cost, technical quality, service features, speed, reliability, profits and other performance comparisons (FMCG companies)

Performance benchmarkin

g

•Focuses on specific processes or operations

•Example: in logistics – delivery, safety

•In hotels – housekeeping, customer care

Process benchmarkin

g

Three Major Advantages of Benchmarking

•By implementing benchmarking activity, organizations can improve their operation process

Product & Process

Improvement

•It is time and cost efficient because it involves imitation and adaptation rather than pure invention.

Time & Cost Reduction

•Provides ability to compare and learn from the best practices and gain competitive advantage

Competitive Strategy

Advantages:Team Building Benchmarking cannot be successful without the full

involvement of everyone in contact with a project.  It creates a united front for an organization and gives those who work within it a common goal to accomplish.  It also includes the ideas and concerns of those affected.

Comprehensibility Unlike some methods, benchmarking is easy to

understand.  This is due largely to the fact that benchmarking produces a direct comparison to another organization.  After determining whom to follow, you study what they do, and emulate it.  There is no misunderstanding of the overall goal of being the best.

.

Flexibility Benchmarking is flexible and can be interdisciplinary.  Benchmarking can

be used on almost any organization, public, private, or, non-profit.  It can be fitted to a large multinational corporation or a local shop, from a federal agency to the government of a small village.

Identifying the best does not necessarily mean that a competitor has the best solution.  It may be a company who just does something well.  When Rank Xerox needed to make its shipping better, it relied on L.L. Bean.  This sort of out-of-the-box thinking can create new standards rather than emulating someone else's practices

Creativity Sometimes an organization might know where their goals are, but the

path to meet them is not clear.  Furthermore, even if another organization is perceived to be doing something the best, it does not mean it couldn't be done better.  After clearly defining goals, however, it can be easier to come up with new, innovative ways of getting there.  It could also create news ways of obtaining information or making partnerships, such as Remington, a shotgun shell manufacturer, getting information on how to make shinier shells from Maybelline lip stick containers.

Evolution Benchmarking evolves with the consumer and doesn't require a large up-

front cost.  As things change in the world, so does who is the best.  Because benchmarking involves constant reiteration, evaluating and changing, it changes as the market or consumer does. 

Benchmarking can also have a beneficial effect on aspects needed to support continuous improvement, such as:

Raised awareness about performance and greater openness about relative strengths and weaknesses;

Learning from others and greater confidence in developing and applying new approaches;

Greater involvement and motivation of staff in change programmes

Increase in willingness to share solutions to common problems and build consensus about what is needed to accommodate changes;

Better understanding of the ‘big picture’ and gaining a broader perspective of the interplay of the factors (or enablers) that facilitate the implementation of good practice; and

Increasing collaboration and understanding of the interactions within and between organizations.

What to benchmark: • Manufacturing• Supplying • Ordering • Maintenance

Work processes

• HR management• Financial management• Marketing

Support functions

• Sales, Profitability, • Cost, quality and manpower

Organizational

performance

Benchmarking does not..Copy... Instead, you must adapt the

information to fit your needs, your culture, and your system. And, if you copy, you can only be as good as your competitor, not better.

Steal... To the contrary, it is an open, honest, legal study of another organization’s business practices

Stop... Rather, it is a continuous process that requires recalibration.

DisadvantagesIt does not measure the overall effectiveness

of the processBenchmarking reveals the standards attained

by competitors but does not consider the circumstances under which the competitors attained such standards.

Many organizations tend to relax after excelling beyond competitors' standards, allowing arrogance to develop.

Finally, many organizations make the mistake of undertaking benchmarking as a stand-alone activity. Benchmarking is only a means to an end, and it is worthless if not accompanied by a plan to change

Source: http://www.brighthub.com/office/entrepreneurs/articles/82292.aspx

Performance attributes for Food Quality

Product Quality

• Sensory properties and Self life

• Food Safety• Food nutrition• Packaging

Process Quality

• Production system

• Product handling and transportation

• Environmental aspects

Source: http://www.worldbusinesscapabilitycongress.com/wp-content/uploads/2013/01/Muhammad-Moazzam_Massey-University_Paper_Benchmarking-Agri-food-Supply-Chain-Networks-A-Conceptual-Framework.pdf

Benchmarking gives us the chance of gainingBetter Awareness of Ourselves(Us) What we are doing? How we are doing it? How well we are doing it?Better Awareness of the Best

(Them) What they are doing? How they are doing it? How well they are doing it?

POTENTIAL OF BENCHMARKING IN PAKISTAN

Local industry is not yet well developed and is sprouting its wings.

Cultural growth and professionalism is immature.

The leading enterprises are foreign based whether pharmaceuticals, automobiles or other FMCGs.

These transnational companies have nurtured a professional culture.

POTENTIAL OF BENCHMARKING IN PAKISTAN

The professional culture has paid TNCs in Pakistan through huge revenues.

MNCS have small market share volume wise and high share price wise.

National companies share is greater volume wise and fewer revenues wise.

POTENTIAL OF BENCHMARKING IN PAKISTAN

A list of top ten pharmaceutical companies in Pakistan is filled with the MNCs

Same situation exists in the beverages, automobile, electronics and FMCGs.

POTENTIAL OF BENCHMARKING IN PAKISTAN

Since TNCs are leading in the competition, they can be benchmarked by the striving national companies.

Every aspect of the business where TNCs outperform their local competitors can be benchmarked like Nestle

POTENTIAL OF BENCHMARKING IN PAKISTAN

These aspects that can be benchmarked include: ◦Organizational culture◦Marketing strategies◦Operational activities◦Financial aspects◦Human resource

Or any other aspect

Legal & Ethical Guidelines

Keep it legal;Be willing to give what you get;Respect confidentiality;Keep information internal;Use benchmarking contracts;