BENCHMARKING -DEFINITION

“The continuous process of

measuring products, services, and
practices against the company’s
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.”
- APQC, 1998
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 can’t be true reflection of
customer’s 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.
Types of Benchmarking

 Internal benchmarking

 External benchmarking

 Functional benchmarking:
Internal benchmarking
ADVANTAGES:

sharing opinions  Easier to implement

between  Easier to access data
departments
within the same
organisation DISADVANTAGES:

 External ideas blocked

External Benchmarking
Advantages
– Comparison with  Helps to measure
external organisations one’s own performance
to discover new ideas,  Helps to search for
methods, products and best practices
services.
– The gap between
internal and external Disadvantages
practices displays the  Takes time
way where to change  Requires support
and if there is any
 Legal/ethical isssues
need to change.
 Industrial espionage
Functional Benchmarking:

Comparative Advantages:
research to seek
world-class  Discovering innovative
excellence by practices
comparing business
performance not Disadvantage:
only against
competitors but also  Not suitable for every
against the best organisation
businesses operating
in different industry
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)
Total customer
satisfaction

Current
performance of
the host for
variable ‘K’.

Best of the best

(current
performance of
the partner for
variable ‘A’.

Current performance of the host

Current performance of the partner

METHODOLOGY OF BENCHMARKING

AT&T
Vs

XEROX
 BENCHMARKING ESSENTIALS

– Clearly defined purpose

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