Chapter 8

Benchmarking

By
Manoj P 211101055
Monish B 211101058
Introduction

 Book definition: Benchmarking is a

systematic method by which
organizations can measure themselves
against the best industry practices
 Benchmarking is a standard that
companies compare themselves to and
strive to be that good
 Benchmarking Concept
What is our performance What are others' performance
level? levels?
How do we do it? How did they get there?

Creative
Adaptation

Breakthrough
Performance
 Benchmarking Concept

 Concept has been around for a while

 2 Key elements
 1) Units of measure (to measure performance)
 2) Managers need to understand why their company's
performance differs
 Reasons to Benchmark

 Promotes continuous improvement

 Makes companies search for the best practices,
innovative ideas, and highly effective operating
procedures
 Can notify a company if it has fallen behind the
competition
 Inspires managers to compete
 Allows goals to be set objectively
Reasons to Benchmark

 Weaknesses
 Organizations must continue to innovate
as well as imitate.
6 General Steps to
Benchmarking
1) Decide what to
benchmark
2) Understand current
performance
3) Plan
4) Study others
5) Learn from the data
6) Use the findings
Deciding What to Benchmark

 Think about the mission and critical

success factors
 Decide the scope
 Devise charts that will pin point the exact
problem
 Decide on a numerical measure to show
improvement
Understanding Current
Performance
 Understand and document current
processes
 Form a benchmarking team
 Decide on a way to numerically measure
findings
Planning
 Decide what type of  Identify which
benchmarking to organizations to use
perform (internal, as your benchmarks
competitive, or  Make a timetable to
process) adhere to for each
 Choose the type of task
data to be collected  Have a desired
 Devise a method of output for the study
collection
Studying Others

 Use internal sources

 Apply data in the public domain
 Utilize original research
 Combining all or some of these
 Learning from the Data
 Is there a gap between the organization’s
performance and the performance of the best-
in-class organization?

 What is the gap? How much is it?

 Why is there a gap? What does the best-in-

class do differently that is better?

 If best-in-class practices were adopted, what

would be the resulting improvement?
Using the Findings

 When a benchmarking study reveals a

negative gap in performance, the
objective is to change the process to
close the gap
 Two groups must agree on the change:
 Process owners (those who run the
process)
 Upper Management (incorporating
changes and providing resources)
Using the Findings

 Goals and objectives should be

consistent with the execution of the
action plan so that the end result is
process superiority

 The best results are obtained when the

process owners fully participate in the
design and execution of the plan
Using the Findings

 The next step is to repeat the

benchmarking process

 The benchmarking process must be

used continuously to pursue emerging
new ideas
Downsides

 Idea of copying others

 How can an organization be superior if it
does not innovate to get ahead? How can
an organization even survive if it loses
track of its external environment?
 Not a strategy or business philosophy
 It is an improvement tool
 Not a substitute for innovation
 It is a source of ideas from outside
How to overcome?

 Avoid –
 Benchmarking for the sake of it
 Focusing entirely on comparisons of
performance measures rather than the
processes and activities that enable the
achievement of good practice
 Expecting that benchmarking will be quick
or easy
 Questions?

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