STEPS IN BENCHMARKING

Figure: 3

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 Steps in Benchmarking
1. A benchmarking planning team is formed. The team's initial task is to identify what is to be
benchmarked, identify comparative organizations, and determine data collection methods.

2. The team collects data internally on its own work methods and externally from other
organizations.

3. The data are analyzed to identify performance gaps and the cause of differences.

4. An action plan that will result in meeting or exceeding the standards of others is prepared and
implemented.

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 Suggestions for Improving Effectiveness of
Benchmarking

1. Link benchmarking efforts to strategic objectives.

2. Have the right-sized team—between six and eight people is most effective.
3. Involve those individuals who will be directly affected by benchmarking efforts.
4. Focus on specific, targeted issues rather than broad, general ones.
5. Set realistic timetables.
6. Choose benchmarking targets carefully.
7. Observe proper protocol when gathering benchmarking information by dealing with
the appropriate individuals.
8. Don't collect excessive, unnecessary data.
9. Look at the processes behind the numbers, not just at the numbers themselves.
10. Identify benchmarking targets and then be sure to take action.

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 Techniques for Allocating Resources
 After goals (or ends) have been established, next step of planning is to determine
how those goals are to be accomplished i.e. focus is on "means”.

 Before managers can organize and lead in order to implement goals, they must
have resources.

 Resources are the assets of the organization:

I. Financial (debt, equity, retained earnings, and other financial holdings);
II. Physical (equipment, buildings, raw materials, or other tangible assets); human
(experiences, skills, knowledge, and competencies of people);
III. Intangible (brand names, patents, reputation, trademarks, copyrights, registered
designs, and databases); and
IV. Structural/cultural (history, culture, work systems, working relationships, level of
trust, policies, and structure).

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TECHNIQUES FOR ALLOCATING RESOURCES

How are these resources allocated effectively and efficiently so that organizational
goals are met?

Although managers can choose from a number of techniques for allocating resources
we discuss four techniques here:

1. budgeting,
2. scheduling,
3. breakeven analysis, and
4. linear programming.

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 BUDGETING
 A budget is a numerical plan for allocating resources to specific activities.

 Managers typically prepare budgets for revenues, expenses, and large capital
expenditures such as equipment.

 It's not unusual, though, for budgets to be used for improving time, space, and
use of material resources.

 These types of budgets substitute nondollar numbers for dollar amounts. Such
items as person-hours, capacity utilization, or units of production can be
budgeted for daily, weekly, or monthly activities.
TYPES OF BUDGETS

Figure: 4

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 Suggestions for improving budgeting
 Monetary budgets would be a useful tool for allocating resources and guiding
work in such diverse departments as manufacturing and marketing research
or at various levels in an organization.

 Budgets are one planning technique that most managers, regardless of

organizational level, help formulate.

 It's an important managerial activity because it forces financial discipline

and structure throughout the organization.

 However, many managers don't like preparing budgets because they feel the
process is time consuming, inflexible, inefficient, and ineffective.
 How can the budgeting process be improved?

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 Scheduling

 If you observed a group of supervisors or department managers for a few

days, you would see them regularly allocating resources by detailing what
activities have to be done, the order in which they are to be completed, who
is to do each, and when they are to be completed.
 These managers are doing what we call scheduling. In this section, we'll
review some useful scheduling devices including Gantt charts, load charts,
and PERT network analysis.

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 Scheduling

 Scheduling is when a group of supervisors or managers regularly allocate resources

by detailing:
 What activities have to be done, the order in which they are to be completed, who is
to do each, and when they are to be completed.
 In this section, we'll review some useful scheduling techniques:
i. Gantt charts,
ii. load charts, and
iii. PERT network analysis.

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 GANTT CHART
The Gantt chart was developed during the early 1900s by Henry Gantt, an associate
of the scientific management expert Frederick Taylor.

The idea behind a Gantt chart is simple. It's essentially a bar graph with time on the
horizontal axis and the activities to be scheduled on the vertical axis.

The bars show output, both planned and actual, over a period of time. The Gantt
chart visually shows when tasks are supposed to be done and compares that with the
actual progress on each.

It's a simple but important device that lets managers detail easily what has yet to be
done to complete a job or project and to assess whether an activity is ahead of,
behind, or on schedule.

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 GANTT CHART
A scheduling chart developed by Henry Gantt that shows actual
and planned output over a period of time.

Figure: 5

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 LOAD CHART

A Load chart is a modified

GANTT Chart.

Instead of listing activities on

the vertical axis, load charts list
either departments or specific
resources.
This arrangement allows
managers to plan nd control
capacity utilization. In other
words, load charts schedule
capacity by work areas.

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 PERT NETWORK
PERT Network Analysis
Gantt and load charts are useful as long as the activities being scheduled are
few in number and independent of each other.
But what if a manager had to plan a large project such as a departmental
reorganization, the implementation of a cost-reduction program, or the
development of a new product that required coordinating inputs from
marketing, manufacturing, and product design people?
Such projects require coordinating hundreds and even thousands of activities,
some of which must be done simultaneously and some of which can't begin
until preceding activities have been completed.
If you're constructing a building, you obviously can't start putting up the walls
until the foundation is laid. How, then, can managers schedule such a
complex project? The Program Evaluation and Review Technique (PERT) is
highly appropriate for such projects.
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 PERT NETWORK

A PERT network is a flowchart like diagram that depicts the sequence of

activities needed to complete a project and the time or costs associated with
each activity. With a PERT network, a manager must think through what
has to be done, determine which events depend on one another, and
identify potential trouble spots.
PERT also makes it easy to compare the effects alternative actions might
have on scheduling and costs.
Thus, PERT allows managers to monitor a project's progress, identify
possible bottlenecks, and shift resources as necessary to keep the project on
schedule.

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 PERT NETWORK
 Events are end points that represent the completion of major activities.
 Activities represent the time or resources required to progress from one event to
another.
 Slack time is the amount of time an individual activity can be delayed without
delaying the whole project.
 The critical path is the longest or most time-consuming sequence of events and
activities in a PERT network.
 Any delay in completing events on this path would delay completion of the entire
project. In other words, activities on the critical path have zero slack time.

Figure: 5
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 Linear Programming
Linear programming can't be applied to all resource allocation problems as it
requires that there be limited resources, that the goal be outcome optimization, that
there be alternative ways of combining resources to produce a number of output mixes,
and that there be a linear relationship between variables.

What kinds of problems can be solved with linear programming?

Some applications include
i. Selecting transportation routes that minimize shipping costs,
ii. Allocating a limited advertising budget among various product brands,
iii. Making the optimal assignment of people among projects, and
iv. Determining how much of each product to make with a limited number of
resources.
For complex linear programming problems, there are computer software programs
designed specifically to help develop optimizing solutions.

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 Linear Programming

Figure 6

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 CONTEMPORARY PLANNING TECHNIQUES

 Today's managers face the challenges of planning in an environment

that's both dynamic and complex.
 Two planning techniques that are appropriate for this type of
environment are:
 Project management and scenario planning.
 Both techniques emphasize flexibility, something that's important to
making planning more effective and efficient in this type of
organizational environment.

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 Scenario Planning
Scenario planning is creating stories of possible future scenarios that are
considered to be vital to the future of the organization

Although scenario planning is useful in anticipating events that can be

anticipated, it's difficult to forecast random events.
For instance, an earthquake in Taiwan in 1999 that destroyed a large portion
of the country's chip-manufacturing facilities was a wild card for global
computer makers.

Other random events that surfaced in the last decade would be the rapid
spread of AIDS and the sudden popularity of the Internet.
And there certainly will be random events that materialize in the twenty-first
century. As difficult as it may be for managers to anticipate and deal with
these random events, they're not totally vulnerable to the consequences.

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 Suggestions for Scenario Planning

Identify potential unexpected events.

Determine if any of these events would have early indicators.

Set up an information-gathering system to identify early indicators.

Have appropriate responses (plans) in place if these unexpected

events occur.

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 PROJECT MANAGEMENT

 Project management is the task of getting a project's activities done on time, within
budget, and according to specifications.
 Manufacturing organizations such as DaimlerChrysler and Boeing to software design
firms such as Purple Moon and Microsoft, do their work using projects.
 It is a one-time-only set of activities that has a definite beginning and ending point in
time and vary in size and.
 Organizations are using project management because of its flexibility and rapid
response to perceived market opportunities.
 When organizations undertake projects that are unique, have specific deadlines,
contain complex interrelated tasks requiring specialized skills, and are temporary in
nature, these projects often do not fit nicely and neatly into the standardized planning
procedures.
 Instead, managers use project management techniques to effectively and efficiently
accomplish the project's goals.

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 PROJECT PLANNING PROCESS

Today, the project management process can take place online as a number of
Internet-based project collaboration software packages are available.
For instance, one package, OnProject.com, described as an Internet
workspace, allows users to share and manage information associated with
projects. Even suppliers and customers can be part of the process.

Figure 7

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