BENCHMARKING

A comparison between organization and

best industry practices
Used by manufacturing and service
organizations. Such as Xerox, AT&T,
Motorola, Ford, and Toyota
A comment element in quality standards.
Such as Chrysler, Ford, and General Motors
Quality System Requirements
Also MBNQA requires that applicants
benchmark external organizations
BENCHMARKING
Benchmarking is a systematic search for
 Best practices,
 Innovative ideas,
 Highly effective operating procedures

Two keys in benchmarking

 Measuring
 Understanding differences
REASONS

 Competition
 Goals based on external information
 Time and cost efficient
PROCESS
Decide what to benchmark
Understand current performance
Plan
Study others
Learn from the data
Use the findings
Deciding What to Benchmark
 Mission
 Critical success factors
Questions for benchmarking area
1. Which processes are causing the most trouble?
2. Which processes contribute most to customer
satisfaction and which are not performing up to
expectations?
3. What are the competitive pressures impacting the
organization the most?
4. What processes or functions have the most potential for
differentiating our organization from the competition?
Deciding What to Benchmark
Scopes for benchmarking study
 Broad and Shallow (What is done):
developing strategies, setting goals, and
reorganizing functions
 Narrow and Deep (How is it done):
changing how people perform their jobs.

Pareto analysis, cause-and- effect diagram,

flow diagram
Understanding Current
Performance
 Understanding and documents (Inputs
and Outputs) (Flow diagram, cause-
and-effect diagram)
 Capable of identifying and correcting
problems
 Measuring
 Accounting
Planning
 Understanding and documenting
internal processes
 Choosing a benchmarking team
 Deciding benchmarking type
 Deciding data type
 Deciding data collection method
 Preparing timetables
Planning
Benchmarking types
 Internal: easy data collection, generating
immediately improve ideas, defining
common problems to focus external
activities
 Competitive
 Process (functional or generic): easy finding
benchmark partners
Planning
PERT and Gant charts for timetables

Identifying best firms depend on

organization’s needs.
Searching Data collection
internally trade journals&internet
competitor benchmarking databases
industry wide public sources
national organizations business contacts
global organizations
Studying Others
Benchmarking information
 Description of best practices
 Measurable results of best practices

Techniques for conduction original research

 Questionnaires
 Site visits
 Focus groups
Learning from the Data
Questions
 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?
Learning from the Data
Outcomes from benchmarking
 External > Internal (negative gap)
 External = Internal (parity)
 External < Internal (positive gap)

Proving superior
 Comparing by understanding and measuring
 Market analysis
Using the Findings
Negative gap => change the process to close
the gap
Communicate people for improvement
Findings => goals and objectives

Two groups must agree on the change

 Process owners (run the process)
 Upper management (plan process and
provide resources)
Using the Findings
Action plan:
1. Specify tasks
2. Sequence tasks
3. Determine resource needs
4. Establish task schedule
5. Assign responsibility for each task
6. Describe expected results
7. Specify methods for monitoring results