BENCHMARKING

Benchmarking
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 Benchmarking:
Benchmarking is the process of continually searching for the
best methods, practices and processes, and either adopting or
adapting their good features and implementing them to
become the “best of the best”
 How is benchmarking used?
 Compare performance of an existing process against other
companies’ best-in-class practices
 Determine how those companies achieve their performance
levels
 Improve internal performance levels

Source: Presentation on Improvement Strategy by Mr. J. M. Pant, 2009

Benchmarking Concept

What is our What are others

performance level? performance levels?
How do we do it? How did they get there?

Creative
Adaptation

Breakthrough
performance
Reasons to Benchmark

 Tool to develop strengths and reduce weaknesses

 Gives motivation to compete
 Time and cost efficient
 Allows goals to be set objectively
Steps of Benchmarking
 Decide what to benchmark
 Understand current performance
 Planning
 Studying others
 Learn from data
 Use the findings
 Decide what to benchmark
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 Applied to business or production process

 Critical success factors
 To limit the scope of study
 Broad and Shallow
 Narrow and Deep
 Technique used
 Pareto Analysis
Understand current performance
 Documenting the process
 Quantifying the process
 Techniques used
 Flow diagram
 Cause-and-effect diagram
 Team should have process owner
Planning
 Learning process
 Steps of planning:
 Type of benchmarking
 Type of data collection
 Method of data collection
 Timetables
 Techniques used:
 Gant charts
 PERT
Hierarchy of Best Practices
Studying others
 Types of information to be studied
 How best-in-class practices are practiced
 Measurable results of these practices

 Information is gathered
 Internal source
 Original research (through questionnaire, site
visits and focus group)
 Data available in public domain
Learn from data
 Study reveals three outcomes
 Negative gap
 Parity
 Positive gap
 Two ways to prove superiority:
 Practices can be analyzed quantitatively
 Through market analysis
 Gap must be described and quantified
 Analyze the root causes of gap
Use the findings
 When study reveals Negative gap
 Change the process to close the gap
 Communicate the findings to people in organization
concern
 Findings must be translated into goals and objectives
 Two groups must agree:
 Process Owners (People who will run the process)
 Process Enablers (Upper Management who incorporates
the changes in planning process and provides necessary
resources)
Steps for Action Plan
 Specify tasks
 Sequence the tasks
 Determine resources needs
 Establish task schedule
 Assign responsibility for each task
 Describe expected results
 Specify method for monitoring results
 Types of Benchmarking (1/2)
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1. Competitive Benchmarking:
 Organization survival depends on its performance
relative to its competitors performance
 Through surveys, reports, customers, suppliers etc.
2. Process Benchmarking:
 Process of working is benchmarked
 E.g.: Domino’s 30 min service
3. Internal Benchmarking:
 Comparison within organization; of similar activities
 Data is easy to obtain
 Types of Benchmarking (2/2)
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4. Product Benchmarking
 Product is benchmarked
 E.g.: Tata Nano
5. Best Practices Benchmarking
 Process of seeking out and studying the best
internal and external practices
6. Strategic Benchmarking
 Identify the winning strategies and imitate them
 Criticisms
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1. It is the idea of copying others

2. Benchmarking is a improvement tool and not
panacea or business strategy
3. It is not substitute of innovation
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