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King Fahd University of Petroleum & Minerals

Construction Engineering & Management Dept.

CEM 515
Term Paper

Benchmarking
Prepared For:
Dr. Abdulaziz A. Bubshait
Prepared By:
Abdullah I. Abuzaid
June, 2009
Outline
Introduction
Definition
Origins
Important of Benchmarking

Benchmarking Process
Benchmarking Methodology
Types of Benchmarking
Criticisms of Benchmarking
Advantages & Disadvantages
Conclusion
Introduction
Introduction
Benchmarking is a topic of general interest in quality
management.
Benchmarking has reached widespread diffusion and is now
considered as one of the most powerful tools for promoting
process improvements and re-engineering in many
prominent organizations.
Benchmarking is a popular method for developing
requirements and setting goals.
Introduction

Definition
There are many definitions according to different perceptions and
applications of the technique and philosophy.

Benchmarking defined as a process for improving performance of


any organization by continuously identifying, understanding &
adopting outstanding practices and processes inside or outside the
organization.

Benchmarking is basically learning from others.


Introduction
Origins
The term 'benchmarking' was first adapted to business
practices by Xerox in 1979.

Xeroxs aim was to evaluate itself, to identify its strengths and


weaknesses and adapt to constantly changing market
conditions.
Introduction
Important of Benchmarking
Benchmarking allows you to discover the gaps in your performance
when compared with someone else.

The Benchmarking used for wield rang in organization for many


aspects with deferent ranking as showing in the table below:
Benchmarking Process
Benchmarking Process
Basic Steps
1. Planning
Data
Planning
2. Analysis Gathering and
Analysis

3. Integration
4. Action and Monitoring
Action and Integration
Monitoring

Benchmarking Process
Benchmarking Process

1.Planning
Establish benchmarking roles and responsibilities.
Decide what you wish to benchmark.
Identify the process to benchmark.
Decide against whom you need to benchmark
Document the current process.
Identify outputs required.
Determine data collection methodologies.
Benchmarking Process
2. Analysis
Normalise the performance data.
Construct a comparison matrix to compare your current
performance data with your partners data.
Identify outstanding practices.
Analys the gaps.
Analys factors that create the gaps.
Isolate process enablers .
Benchmarking Process
3. Integration
Define Set stretching targets
Vision an alternative process
Consider the barriers to change
Plan to implement the changes

4. Action and Monitoring


Implementation planning
Roll-out of new modus operandi (changes)
Collecting data
Evaluating progress
Iterative change
Benchmarking Process
Questionnaire to
Apply Benchmarking

The questionnaire to determine


if organisation is ready for
benchmarking or not.

Questionnaire
American Productivity and Quality Centre
(APQC)
Benchmarking
Methodology
Benchmarking Methodology
Examples of Typical Methods:
1. Identify your problem areas
2. Identify other organizations that have similar processes
3. Identify organizations that are leaders in these areas
4. Survey organizations for measures and practices
5. Selecting appropriate benchmarks
6. Finding the source for benchmarking
7. Visit the "best practice" organizations to identify leading edge practices
8. Implement new and improved business practices
Benchmarking Methodology
Estimated Time and Effort for Benchmarking
Process:

Chart of the estimation of


time and effort for the basic
improvement stages of
Organization.
Types of Benchmarking
Types of Benchmarking

There are several different types of benchmarking in


which a organization can engage.

They may come in different forms and names


depending on individual perspectives.

The type of benchmarking selected depends on the


measures needed and the methods used to collect the
data.
Benchmarking Process
The main types of benchmarking:
1. Internal good practice benchmarking.
2. Competitive benchmarking.
3. Functional benchmarking.
4. Generic benchmarking.
5. Strategic benchmarking.
6. Performance benchmarking.
7. Process benchmarking.
8. External benchmarking.
9. International benchmarking.
Criticisms of
Benchmarking
Criticisms of Benchmarking

As with any new concept there are those who are in favour
of the idea and those who oppose or criticize it.
Some of criticisms of benchmarking

1. benchmarking is that it can be considered as spying on the


competition.
This is not truth:
Benchmarking is not spying on the competition but keeping up
with what they and the rest of the industry are doing.
Criticisms of Benchmarking

2. Benchmarking is copycatting .
This is not truth:
Copycatting and Benchmarking are not one and the same.
Copycatting leads to lessened creativity and stale ideas.
Benchmarking is not supposed to take the place of managers
bringing insight and original strategies into the organization.
Copycatting is an easy trap for managers to fall into, it is
important for managers to realize that benchmarking will never
be an excuse for managers to stop being creative and
innovative.
Criticisms of Benchmarking

3. Some organizations do not utilize benchmarking because they


feel that if its not broke, dont fix it.

4. Many organizations shy away from benchmarking because they


do not understand what benchmarking is and they feel that
they do not have anything to gain.
Advantages
&
Disadvantages
Advantages & Disadvantages

Advantages :
The advantage of benchmarking is not to compare key
figures but to compare how tasks are performed.

There are many advantages of the benchmarking:


1. Learn from others experience & practices.
2. It allows examination of present processes
3. Aids change & improvement.
4. It gives a chance for study & measurement of a competitor for the
purposes of process or product quality improvement.
Advantages & Disadvantages
Advantages :

5. Benchmarking often proves particularly successful when


comparing processes.

6. Helps the organizations to stay in the business with high


performance

7. Delight the customer of the organizations.

8. Continuous of Improvement and apply benchmarking increased


the opportunity to be world class leader
Advantages & Disadvantages
Advantages :

9. Sharing the best practices between benchmarking partners.

10. It Iidentifies opportunities for improvement

11. Provides the momentum necessary for implementing change

12. Involves for looking in detail at how other organizations carry


out the same or similar processes.

13. The capability to use for everyone and can be applied to (almost)
any company, any private organization, any public organization.
Advantages & Disadvantages
Disadvantages:
The advantage of benchmarking is limited and the organization
can eliminate the number of disadvantages to gain the benefits
of benchmarking.
There are some disadvantages of benchmarking:
1. Poorly defined benchmarks may lead to wasted effort and
meaningless results.
2. Incorrect comparisons will effect the result of required improvement
and what is best for someone else may not suit to other.
3. Some organizations have reluctance to share the information.
4. Benchmarking cannot change all required improvement at once.
Conclusion
Conclusion
The benchmarking is becoming more commonly used and it is a more
efficient way to make improvements.

Benchmarking speeds up organizations ability to make improvements.

Benchmarking is not just making changes and improvements for the sake
of making changes, benchmarking is about adding value.

When an organization looks at benchmarking they must look at all aspects


of the business, its products, and its processes.

Benchmarking will not work unless you know yourself.


Thank you