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BENCHMARKING

Department of Human Resource Management Faculty of Commerce and Management Studies University of Kelaniya

Group Members
G.M.U.I. Gunasinghe A.K.S. Gunawardena S.J.L. Madusanka P.A.P.K. Panangala B.C.R. Perera BM/2007/079 BM/2007/083 BM/2007/146 BM/2007/171 BM/2007/176

R.M.A.N.I. Rajakaruna
D.K.D. Rangani R.P.S.R. Shashikala

BM/2007/202
BM/2007/214 BM/2007/248

T.S.M. Silva
M.D.S. Sharmila

BM/2007/253
BM/2007/316

Outline
Introduction of Benchmarking Purpose of Benchmarking Types of Benchmarking Process of Benchmarking Advantages of Benchmarking Drawbacks of Benchmarking Conclusion

Introduction
Benchmarking is the systematic process of comparing business processes and performance metrics to industry best practices in terms of quality time and cost dimensions and making such comparisons the basis to do things better, faster, and cheaper.

Purpose of Benchmarking
Comparing an organizations performance to the best organizations performance Comparing an organizations business process with similar process Comparing product and services Identify the best practices to implement Projecting trends

Types of Benchmarking

Benchmarking

Internal Benchmarking

Competitive Benchmarking

Functional Benchmarking

Generic (Best Practice) Benchmarking

Internal Benchmarking

Defined it as performance comparison of units or departments within one organization. Most Appropriate for the Several business units within the same organization .

Competitive Benchmarking

Direct comparison of a company's own performance against its competitors. Most Appropriate for the assessing relative level of performance in key areas or activities in comparison with others in the same sector and finding ways of closing gaps in performance.

Functional benchmarking
A company will focus its benchmarking on a single function in order to improve the operation of that particular function It compares specific business functions amongst at least two different organizations in the same or different industry Higher chances of breakthrough as the functions are similar and comparison is with best in class.

Generic Benchmarking
Method of comparing the performance and processes of organizations in unrelated industries. It involves analysis across industries It can often result in an organization's drastically altering its ideas about its performance capability.

Benchmarking Process
To be successful, company needs to evaluate its performance in a consistent manner. Need to measure their processes and performance against recognized, industry leaders or against best practices To achieve the objectives of the organizations ,need a process. It is indeed invaluable in an organization's for continuous improvement.

Stages of the Benchmarking process

Planning
stage What are included? 01 1.Identify what is to be benchmarked 2.Identify comparative companies

Identify what is to be benchmarked


Identify the activities that need to be benchmarked. Considering core activities that have the potential to give the competitive edge to the organization The total process flow needs to be given due consideration.

Identify comparative companies


Choose an appropriate benchmark against which their performance can be measured. Measures and practices used in comparative companies should be identified. In order to carry out the benchmarking process; should appointed a leader, as to ensure the smooth, timely implementation of the project.

Data collection
Involves creating a plan for collecting data from selected targets

Factors which must consider when collecting data: Determine what are the simplest and the most difficult data sources. Decide which combination of the four types of sources (internal, published, external, original research) Proceed by preparing an introduction survey from a checklist of topics to be covered. Then send the preliminary survey to the contact person . Prepare a site visit plan and send a summary of the topics that will be covered to the contact person. Obtaining information from a competitor, avoid any possibility of misrepresentation

Analysis
Analysis consist of two aspects Determine competitive gap Project future performance levels There are five phases in this step Data analysis Data presentation Root cause analysis Result projection Enabler identification

Implement plans and monitor results


Executing the approved best-practice procedures Closely observed the process in which deviations from the plan will be corrected So the ultimate goals are achieved

CONT
Have timeline charts been created?
Have control charts been created? Has any variance from the plan been manage with effectively? Has final evaluation been made of the benchmarking process?

Advantages Of Benchmarking
Compare themselves with others to identify own comparative strength and weaknesses. To understand and evaluate the current position of a business or organisation. Generate both incremental changes and wideranging strategic reforms for an organisation. Enabling organizations to outperform their competitors. Educational process, allowing companies to see what other operators are doing. Improve the day to day management of the business.

Disadvantages of Benchmarking
Increase the diversity of information so the potential for information overload May reduce managerial motivation when comparing with a better resourced rival Remains inadequate to measure the overall effectiveness Does not consider the circumstances under which the competitors attained such standards. Danger of complacency and arrogance Only a means to an end, and it is worthless if not accompanied by a plan to change

Conclusion
It is clearly evident, benchmarking can add value to the organization's workflow and structure, by identifying areas for improvement and adaptation. It is indeed invaluable in an organization to seek for continuous improvement.

CONT..
Successful benchmarking requires three basic ingredients a real problem with management willing to solve it access to benchmarking partners who have previously resolved that problem a knowledgeable benchmarking team with the ability to use quality tools and research practices to investigate process problems to their root cause