Business Process Benchmarking: FINALS - 1st SEM, A.Y. 2019 - 2020

EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED
QUALITY MANAGEMENT SYSTEM

City of Dasmariñas,Cavite
Chapter 4:
Business Process Benchmarking

[ BSAC 1-2 ] BMC1 11
FINALS – 1st SEM, A.Y. 2019 - 2020
Prepared by:
Engr. John Paolo P. Severino, MBA
SBAA - Faculty / Industrial Engineer
VIRTUE EXCELLENCE SERVICE

Definition of BENCHMARKING
Benchmarking is a process of comparison of two or
more products, services process or organizational
practices. It is also known as “standard or point of
reference”.
Business Process Benchmarking is comparing a

business process with the best process in that area.

Example of BENCHMARKING

Illustration of BENCHMARKING

1. Internal Benchmarking there are maybe be a number of teams or divisions
within an organization. There is no need to look outside for the best practices.
For instance,
Programs Monitoring and Status

In-
Resources
Program Activities Char Status
July August Sept. Oct. Nov Dec Needed
ge
Extrusion
Maintain overall On
Monthly
1 reject percentage 2.00% 1.25% 1.96% 0.84% 2.17% 0.74% PRD
Summary going
of 1.5%VIRTUE
monthly EXCELLENCE SERVICE
Report
2. Competitive Benchmarking is to improve the performance to the
level of the competitors. When an organization is performing well,
they will definitely advertise and make their performance indicators
public.
For instance,
a. Schools that are making high percentage rate of Board Passers.
b. The competitor's performance data is collected from published
data.
3. Functional Benchmarking it compare the methods of
organizations with similar process.
For instance, there may be two different kinds of service

organizations,
Service 1: Diagnostic centre, where the test are conducted on patients.
Service 2: Car maintenance, where the vehicle are received, checked
and despatched.

Identifying Process to Benchmark

1. Select Processes An organization consists of a finite number
of process. The appropriate processes are these which when
improved will give the highest return on investment. (see FPD
Bonding Process or CBA)
2. Determine vital measure the process selected for

benchmarking, the measure are to be documented. Each
process could be measured by a number. (see Prod.&Eff
report).
Identifying Process to Benchmark

3. Prioritize Processes A duly constituted team for prioritization
should carry out an objective study. The team for finding out the few
vital processes, which can yield higher returns, could carry out a
Pareto analysis.
 Depending upon the availability of the resources, the processes could be
taken up one after another for benchmarking.
For instance,

Reason for Failure of Benchmarking

1. Lack of Commitment The team does not push it further for getting the approval of
the management and implementation of the required change. (e.g. Job Description, see
CV)
For instance,
Before the project is started,
- the team members should estimate how much time they will take,
- how much it will cost the organization (e.g. product/service price
or quotations),
- how much change may be required in the process and the individual
concerned.

2. Wrong Selection of Process If too many processes are selected or if a process with low
potential for returns is selected first for benchmarking, then the firm may not able to continue
benchmark due to failure. “People always measure return on investment” (see PRD CIP-
calibration)
3. Not being Cost Effective The benchmarking team be happy to go on tour or for meetings
and make project proposals, but they may not put in adequate time to study the current process
in the firm which are to be benchmarked.
Industrial visits are not bad, but then before the visits, it need to conduct survey or talk to
various people in the organization in the areas for improvement.


4. Wrong Selection of Team Members The team selection is very crucial for the
success of benchmarking. It is ideal if the team consists of members who are
working on the process to be benchmarked in addition to cross-functional
experts.
Of course, the team should be headed or supported by a senior person, so that

recommendation could be put forth fearlessly. (e.g. to boost the morale of
employee)
If the benchmarking exercise fails, it can be also due to the wrong selection of
people for the benchmarking team.

5. Under Estimating the Time Required The rule of thumb is that a
team of four or five individuals will require one third of their time for
five to six months to complete a benchmarking project.
Thus, depending upon the complexity of the problem and the level of
improvement proposed to be made, the efforts required will also vary.
If efforts needed are under estimate then the project might fail in the
middle. (e.g. Gantt Chart)

6. Lack of Involvement of Management The
benchmarking project will become successful only if the
top management is involved in the benchmarking
exercise.
Unless, the top management takes a keen (having an

ability to think clearly) interest to finding out the
progress made by the benchmarking team.
Plan-Do-Check-Act (PDCA) for Measurement

PDCA was popularized by Dr. W.
Edwards Deming, an American
engineer, statistician and management
consultant. Deming is often considered
the father of modern quality control
(QC).


Plan Phase During this phase, we analyze the problems
that we want to be solved and the right measure is the one
that can help the organization to prove a point. Listed
below the to the following order;
 Definition of problems
 Setting goals
 Choice of Methods
 Ask question five times: why did the problem occur? Always
making complete answer.

Do (Measure) Phase The organization collects data in this phase as per
approved procedures on a pilot basis. The procedure will address the
following:
 What will be measured?
 Who will measure?
 When it will be measured?
 How? The detailed instruction for measuring.
For instance, Marketing Manager decide to measure customer satisfaction

based on feedback forms given to the customers and ask them to evaluate
the product or services based on their experience.

Check Phase During this phase the results are counter checked through
other means. The feedback obtained from customers through feedback form
is compared with feedback obtained orally through communication. An
analysis has to be made to validate the methodology adopted.
After checking, see if the action has improved:

 Checked whether the standard is being obeyed?
 Check what's working and what's going wrong?
 At every step, ask why?
 Write the answer. Improved and practice the defined mmethod.


Act Phase If the results confirm the reality then the measures can be confirmed
during the Act phase. Time to act more assertively (confident in behaviour or
style).
Things going as planned? Then continue!
 Well actually, there are some problems? Then act to correct and prevent the
errors!
 Improve the work system
 Repeat the solutions that worked.
At the end of the fourth phase, the PDCA concept suggests that the cycle
restarts again, to seek a continuous and uninterrupted improvement
Examples of Measures Quality Measures in Production

Customer Satisfaction - Cost of scrap / rework
- Total number of customers
- Number of accidents
- Number of new customers
- Achieve target output
- Number of repeat customers
- Warranty cost - Cost of miscellaneous materials
- Cycle time achieved - Actual production time as a
- Time taken to accommodate design percentage of planned time
changes - Value of Work-In-Process
- Mean time to repair
- Number of complaints as a
percentage of order

Examples of Measures
Human Resource Management
- Employee satisfaction index (ESI) or Key
Performance Indicator (KPI)
- Training cost per employee
- Number of mentors
- Number of complaints from employees
- Employee attrition rate (turnovers)
- Training days per employee per year
- Number of employee suggestion received and
implemented

End of Chapter 4
Thank You.

Business Process Benchmarking: FINALS - 1st SEM, A.Y. 2019 - 2020

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EMILIO AGUINALDO COLLEGE ISO 9001: 2015 CERTIFIED

QUALITY MANAGEMENT SYSTEM

Business Process Benchmarking

VIRTUE EXCELLENCE SERVICE

Business Process Benchmarking is comparing a

VIRTUE EXCELLENCE SERVICE

VIRTUE EXCELLENCE SERVICE

VIRTUE EXCELLENCE SERVICE

Programs Monitoring and Status

For instance, there may be two different kinds of service

VIRTUE EXCELLENCE SERVICE

Identifying Process to Benchmark

2. Determine vital measure the process selected for

Identifying Process to Benchmark

VIRTUE EXCELLENCE SERVICE

Reason for Failure of Benchmarking

Reason for Failure of Benchmarking

VIRTUE EXCELLENCE SERVICE

Reason for Failure of Benchmarking

Of course, the team should be headed or supported by a senior person, so that

Reason for Failure of Benchmarking

Reason for Failure of Benchmarking

Unless, the top management takes a keen (having an

Plan-Do-Check-Act (PDCA) for Measurement

VIRTUE EXCELLENCE SERVICE

Plan-Do-Check-Act (PDCA) for Measurement

Plan-Do-Check-Act (PDCA) for Measurement

For instance, Marketing Manager decide to measure customer satisfaction

Plan-Do-Check-Act (PDCA) for Measurement

After checking, see if the action has improved:

VIRTUE EXCELLENCE SERVICE

Plan-Do-Check-Act (PDCA) for Measurement

Examples of Measures Quality Measures in Production

VIRTUE EXCELLENCE SERVICE

VIRTUE EXCELLENCE SERVICE

VIRTUE EXCELLENCE SERVICE

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