BENECHMARKING -DEFINITION

The continuous process of

measuring products, services, and
practices against the companys
toughest competitors or those
renowned as industry leaders

BENCHMARKING THOUGHTS
Benchmarking is the practice of
being humble enough to admit that
someone else is better at something
and wise enough to try and learn how
to match and even surpass them at
it.
1998

- APQC,

BENCHMARKING
In sharp contrast to the

conventional approach of setting

the future goals extrapolated from
the internal practices and past
trends.
Since external environment and
market conditions change rapidly;
goal setting which is internally
focused cant be true reflection of
customers expectations.

BENCHMARKING
Customers expectations are highly

liquid and are driven by standards

set by best performer.
Any product or service just below
these standards may not catch the
eyes of customer.

Why use Benchmarking

Survival lies in emulating best and

not in lagging behind

Bench marking is time and cost
efficient because it involves
imitation and adaptation rather
than pure invention. Prevents the
Re-inventing the wheel.
Quantum-leaps in performance

Why use Benchmarking

An effective wake-up call and helps to make a strong

case for change

Practical ways in which step changes in performance

can be achieved by learning from others who have

already undertaken comparable changes

The impetus for seeking new ways of doing things and

promotes a culture that is receptive to fresh

approaches and ideas

Opportunities for staff to learn new skills and be

involved in the transformation process from the outset.

POTENTIAL OF BENCHMARKING IN
PAKISTAN
Local industry is not yet well developed

and is sprouting its wings.

Cultural growth and professionalism is
inchoate.
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.

POTENTIAL OF BENCHMARKING IN
PAKISTAN
These aspects include

Organizational culture
Marketing strategies
Operational activities
Financial aspects
Human resource
Or any other aspect

Types of Benchmarking
Internal benchmarking
External benchmarking
Functional benchmarking:

Internal benchmarking
ADVANTAGES:

sharing opinions
between
departments
within the same
organisation

Easier to implement
Easier to access data

DISADVANTAGES:
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
Helps to measure
ones own performance
Helps to search for
best practices

Disadvantages
Takes time
Requires support
Legal/ethical isssues
Industrial espionage

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:
Discovering innovative

practices

Disadvantage:
Not suitable for every

organisation

Other Types of Benchmarking

Product Benchmarking
Process Benchmarking
Strategic Benchmarking
How companies compete, identify the winning
strategies that have enable high-performing
companies to be successful in their marketplaces.

Parameter Benchmarking

Gap Analysis (Spider chart)

METHODOLOGY OF BENCHMARKING

AT&T
Vs

XEROX

BENCHMARKING ESSENTIALS

Clearly defined purpose

Continual analysis &
reassessment
BM methodology must be
appropriate
Significance of results must be
clear
Conclusions must be justified by
the data
Never compromise integrity for

BENCHMARKING ESSENTIALS
Investigation must be systematic
A high code of ethics is essential
Successful benchmarking requires a

planned approach
Requires senior management commitment
Must establish & enforce milestones
Must report findings to senior
mangment

BENCHMARKING ESSENTIALS
Internal training for company

personnel
Access to a benchmarking database
Professional BM analysts to support

studies
The process must be
institutionalized!

BARRIERS TO BENCHMARKING
1. Fear of being seen as copying
2. Fear of losing competitive advantage
by sharing information
3. Arrogance we are the best, why
benchmark?
4. Benchmarking trap benchmark that
which is convenient, but may not be
important.
Adapted from Watson 1992

BARRIERS TO BENCHMARKING
5. Impatience A quintessential trait
6. Excuses are too easy:
We are too small
We are too busy
We are too different
Nobody else does what we do
We do it better than anyone else
Adapted from Watson 1992

BENCHMARKING OBSERVATIONS
1. Key is to Adapt not adopt Deming
2. Benchmarking does not come as a
natural process for many
competitiveness does, but not
benchmarking, because
benchmarking requires a team
approach.

Legal & Ethical Guidelines

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

EXAMPLRY SPIDER CHART

FOR BENCHMARKING