Benchmarking

BENCHMARKING

 

CONCEPT:

 

Ø    Benchmarking is a systematic method by which organizations can measure themselves against the best industry practices.

 

Ø    Benchmarking is a systematic search for the best practices, innovative ideas, and highly effective operating procedures.

 

BENCHMARKING CONCEPT

 

 

REASONS TO BENCHMARK :

 

Ø  It is a tool to achieve business and competitive objectives.

Ø  It can inspire managers (and Organizations) to compete.

Ø  It is time and cost effective.

Ø  It constantly scans the external environment to improve the process.

Ø  Potential and useful technological breakthroughs can be located and adopted early.

 

PROCESS OF BENCHMARKING

The following six steps contain the core techniques of Benchmarking.

 

1Decide what to benchmark

Ø  Benchmarking can be applied to any business or production process.

Ø  The strategy is usually expressed in terms of mission and vision statements.

Ø  Best to begin with the mission and critical factors.

Ø  Choosing the scope of the Benchmarking study.

Ø  Pareto analysis – what process to investigate.

 

Ø  Cause and Effect diagram – for tracing outputs back.

 

2Understand current performance

Ø   Understand and document the current process.

Ø   Those working in the process are the most capable of identifying and correcting problems.

Ø   While documenting, it is important to quantify.

Ø   Care should be taken during accounting information.

 

3Plan

Ø   A benchmarking team should be chosen.

Ø   Organizations to serve as the benchmark need to be identified.

Ø   Time frame should be agreed upon for each of the benchmarking tasks.

 

4Types of benchmarking

·        Internal

·        Competitive

·        Process

 

5Study Others

Benchmarking studies look for two types of information

 

Ø    How best the processes are practiced

 

Ø    Measurable results of these practices Three techniques for conducting the research are

Ø    Questionnaires

Ø    Site visits

Ø    Focus groups

 

6Learn from the data

Answering a series of questions like

 

Ø    Is there a gap between the organization’s performance and the performance of the best-in-class organizations?

Ø    What is the gap? How much is it?

Ø    Why is there a gap? What does the best-in-class do differently that is better?

Ø    If best-in-class practices were adopted, what would be the resulting improvement?

Benchmarking studies can reveal three different outcomes

Ø    Negative gap

Ø    Parity

Ø    Positive gap

 

7Using the findings

The objective is to close the gap. For this

Ø    Findings must be communicated to the people within the organization

Ø    Action plans must be developed to implement new processes

Groups that must agree on the change

Ø    Process owners

Ø    Upper management

Steps for the development and execution of action plans are

1.                 Specify tasks

2.                 Sequence tasks

3.                 Determine resources needs

4.                 Establish task schedule

5.                 Assign responsibility for each task

6.                 Describe expected results

7.                 Specify methods for monitoring results

 

PITFALLS AND CRITICISMS OF BENCHMARKING :

 

Ø    Idea of copying others

Ø    It is not a cure or a business philosophy

Ø    Some process have to be benchmarked repeatedly

Ø    It is not a substitute for innovation.

 

SIGNIFICANCE:

 

Ø    • Benchmarking is a systematic method by which organizations can measure themselves

 

Ø    against the best Industry practices

Ø    • It promotes superior performance by providing an organized framework through which

Ø    organization learn how the “ best in class” do things.

Ø    • It helps for continuous improvement.

Ø    • Benchmarking inspire managers (and organization) to compete.

Ø    • Through Benchmark process organization can borrow ideas, adopt and refine them to

 

Ø    gain competitive advantages.

 

Application:

 

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 outsidethe organization.

 

These 4 questions formed the basis on which Boeing, Digital equipments company, Motorola and Xerox jointly developed a benchmarking template.