Bench Marking Final

8/3/2019 Bench Marking Final

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What is Benchmarking?

Benchmarking can somewhat philosophically be defined asfollows.

Benchmarking is the practice of being humble enough to admitthat someone else is better at something, and being wiseenough to learn how to match them and even surpass them atit.

This definition captures the essence of benchmarking, namelylearning from others. The core of the current interpretation of

benchmarking is:

Measurement, of own and the benchmarking partnersperformance level, both for comparison and for registeringimprovements.

Comparison, of performance levels, processes, practices, etc.

Learning, from the benchmarking partners to introduceimprovements in your own organization.

Improvement, which is the ultimate objective of anybenchmarking study.


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WHAT IS BENCHMARKING?

The continuous process of measuring our products,

services and practices against our toughestcompetitors of those renowned as leaders.

WHY BENCHMARK?

To effect radical improvements and not justincremental ones. Exposing managers to practices that they would

never have developed on their own. Accelerating change and enhancing an awareness of

world standards. Benchmarking offers a goal. After all yourbenchmark partner has achieved it.


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BENCHMARKING ENCOURAGES MANAGEDCHANGE

The gap between internal and external practices createsthe need for change.

Understanding industry best practices identifieswhatmust change

Externally benchmarked practices provide a picture of the

potential results from change.


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WHAT TO BENCHMARK?

Key business priorities

Performance improvement areas

Process outputs

Topics successfully benchmarked


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TEN STEP BENCHMARKINGPROCESS

STEP - 1 IDENTIFY SUBJECT FOR BENCHMARKING

A product or service you produce or purchase; a work orbusiness practice you use; or a factor which is critical to thesuccess of your operation.

STEP - 2 IDENTIFY BENCHMARKING PARTNERSBEST COMPANY: A company with which you are directly

competing with or a company which is' considered anindustry leader in a specific area.

STEP - 3 DETERMINE METHODOLOGY FOR DATACOLLECTION AND COLLECT DATA

STEP - 4 DETERMINE CURRENT PERFORMANCE GAPCURRENT COMPETITIVE GAP : The difference between your

performance and that of the best in the Industry.

STEP - 5 PROJECTION OF FUTURE PERFORMANCE

LEVEL


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STEP 1: IDENTIFY SUBJECT FOR BENCHMARKING

SUBJECT FOR BENCHMARKING:A product or service you produce

or purchase; a work or business practice you use; or a factor which iscritical to the success of your operation.

GUIDELINE A: Prepare a list of subjects to be benchmarkedby brainstorming

Some of the questions that may be asked. for facilitating brainstorming

are:

What products or services are you providing to your customer? What factors are responsible for customer satisfaction? What problems have been identified in your operation? In what areas are you feeling competitive pressure?

What process measurements are you tracking? What areas are your major cost of quality expenditures? What subjects have been Benchmarked by departments similar


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STEP - 1 : IDENTIFY SUBJECT FOR BENCHMARKING (Contd..)

GUIDELINE B : SELECTION OF SUBJECT

Selection of the topic for benchmarking may be done by answering the followingquestions:

How critical is it to achieving customer satisfaction? How applicable is it to the decisions I make? How important are my decisions? How significant is the problem to be solved? How important is it the development of plans &. strategy for my area?

GUIDELINE C : DETERMINE THE MEASUREMENTS

It is important to select measurements that are true indicators of performance.Developing good measurements is key to successful Benchmarking. Many of them'are expressed in terms of a ratio :

Defects per machine Percentage on time delivery. Percentage yield Order lead time Return on assets


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STEP 1: IDENTIFY SUBJECT FOR BENCHMARKING (Contd..)

Measurements are to be customers measures of success. These

measures provide the basis for determining how well one ismeeting customers expectations. They are typically grouped into

three categories

Quality ( error rates, Number of complaints)

Cost ( Labour cost, Material supply cost)

Cycle Time ( Production time, Delivery time)

In case of absence of appropriate numerical measurement use case

study approach. Case study is simply a method of evaluating a

subject in a manner that will allow you to draw lessons forapplication to your operation -eg Planning Process.


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STEP 2: IDENTIFY BENCHMARKING PARTNERSWHO ARE THE BEST COMPANIES?

Customers People in your department Other members in your

company with similarfunctions

Members of your Trade

association Trade journals fromcompanies who havereceived recognition orIndustry awards.

Consultant

Companies with excellentfinancial Reports Companies with many

patent awards Business Directories Trade Shows & Seminars

Newspapers magazinearticles Reports from Securities

analysis. Top rated firms in industrial

surveys.

BEST COMPANY: A company with which you are directly competing with

or a company which is' considered an industry leader in a specific area.

GUIDELINE A: Prepare a list of companies whom you considercompetitors or industry leaders. For this you may ask


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STEP 2: IDENTIFY BENCHMARKING PARTNERSWHO ARE THE BEST COMPANIES? (contd..)

GUIDELINE B: Shortlist and Cross check based onfollowing criteria

How reliable is the information about thecompetitor?

Is the competitor really in a business similar tomine?

Is he willing to share?


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STEP 3 DATA COLLECTION METHODOLOGY (contd..)

GUIDELINE C : Search for existing data

Before conducting original research one should searchthoroughly for existing data that is from data from studiesalready completed. Data may be:

Internal to your companySalesmen , Customer service Personnel , Suppliers

Public Domain

Newspapers. Magazines

Trade publications

Trade shows

Professional Organizations

User Groups

University Research Papers

Government Documents

Annual Reports

Patent records

Internet


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STEP 3 DATA COLLECTION METHODOLOGY (contd..)

Mail Survey

Personal Interviews

Telephone Interviews

Focus Groups

Reverse Engineering

Plant Tours

Quotations

GUIDELINE D : Review the methods for conducting original research

GUIDELINE E : Select the method for conducting research ReviewThe purpose of the projectList of questions

Considering the relevance of the project, a balance sheet of each of thedifferent methods is to be prepared as addressed below:

Time availability for the projectComplexity of information to be gathered

Availability of specialized skills


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STEP 4: DETERMINE THE CURRENTCOMPETITIVE GAP

CURRENT COMPETITIVE GAP : The difference betweenyour performance and that of the best in the Industry. It isgenerally expressed in terms of percentage.

GUIDELINE A : Tabulate the Data Review the Data to ensure that it is complete and consistent

with the questions asked during the process of data gathering. Tabulate the Data & calculate appropriate statistics . Mean . Maximum . Minimum . Range

In case of large volumes of data one may develop theappropriate graphs. In case the purpose of study was to gather information on

business practices and methods as opposed to quantitativedata, one will need to synthesize the raw data to capture the keymessages.


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STEP 4: DETERMINE THE CURRENT COMPETITIVE GAP (Contd..)

GUIDELINE E: Determine the reasons for the gap

This should be evident provided the study has beenproperly done.

In case our performance is superior to that of thebenchmark the cost of exceeding the benchmark is tobe evaluated. This may need a cost benefit analysis.

GUIDELINE F : Develop a list of benchmark drivers. From the information gathered develop a list of

factors that appear to be driving the benchmarkperformance. This list is helpful for establishment offunctional goals.

Business Practices; Work processes Standards; Environment Economics; Culture


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STEP 5 : DETERMINE THEPROJECTED COMPETETIVE GAP

PROJECTED COMPETETIVE GAP:The difference between ones expected future performance andthat of the best in the industry. It relates to observed trends & isgenerally expressed in terms of percentages.

Estimate what will be the Benchmark level for the next 3 to 5years.

Project ones own expected performance over the same periodbased on knowledge of ones own plans and goals.

Document all assumptions.

Determine whether the gap is widening or closing. Estimatesize of the gap


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STEP 6 : COMMUNICATE BENCHMARK FINDINGS (Contd..)

GUIDELINE C : ORGANISING THE ANALYSIS The report should be structured as

SummaryKey Results; Conclusion; Recommendation

Study ProcessRespondent Selection; Methods employed to gather data

Analysis Techniques

AttachmentQuestionnaire; Data Base (Raw Data)Glossary; Exhibits

For the report Provide Key Results & Conclusion at the beginning Maintain an objective point of view throughout the

communication. Analysis should be based on data and not on opinion.

GUIDELINE D : OBTAIN ACCECPTANCE


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STEP 7 : DETERMINE THE FUNCTIONALGOALS

Functional goal: This is a statement of planned performancerelative to the benchmarked subjects.

Eg: Reduce order lead time by 10 days.

GUIDELINE A : Prepare a list of current functional goals Review your current goals Prepare a list of your current functional goals by referring to Statement of annual objectives . Operating Plans Strategic Plans

Departmental standards.


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STEP 8 ACTION PLANS

DESCRIPTION OF SPECIFIC EVENTS THAT ARE

REQUIRED TO TAKE PLACE IN ORDER TO ACHIEVEFUNCTIONAL GOALS

Each item requiresDescription; Timeframe;Responsibility Resource Required

GUIDELINE A: PREPARATION OF ACTION PLANS TOSUPPORT GOALS

Review data of Step -3 On Business practices & work processesunderstand the way the Benchmarked partner is achieving theresults.

Develop a Force Field: which defines the areas that influence theachievement of the goals

Determine the Key Drivers Use brainstorming to develop a list of possible actions


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STEP 8 ACTION PLANS (Contd..)

GUIDELINE C : OBTAIN APPROVAL FORACTION PLANS

Review with management & obtain approval

Proposal should include Statement of Goals Specification of Deliverables Milestones

Accountability Budgetary requirements Dependencies Contingency plan / alternatives.


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STEP 9 : IMPLEMENTATION OF ACTIONPLANS AND MONITORING PROGRESS

GUIDELINE A : IMPLEMENTATION OFACTION PLAN

Ensure that all concerned parties understand the role

that they will play in implementation of action plan.

GUIDELINE B : MONITORING RESULTS

Review progress versus milestone on a periodicbasis.


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STEP 10 : PLAN FOR RECALIBRATION

Competition is constantly changing. Re- calibration is theprocess of reevaluating the benchmarks to determine theirvalidity.

GUIDELINE A : DETERMINE THE PLAN FORRECALIBRATION

Determine how often and how extensively you will recalibrate

GUIDELINE B : RECALIBRATE

Revisit each of the 9 Steps and update Cycle through the entire process Do not skip any step


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QUESTIONS TO PONDER

BEFORE BENCHMARKING

What is our organisational strategy?

Who are our customers? What do they want?

Which processes have the latest impact on

increasing customer satisfaction? How does that process support

organisational goals?


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Legal Aspects of BM study

Still, it might be pertinent to display some caution,especially when benchmarking using suppliers,customers, or competitors as benchmarking partners.

In the latter case, under no circumstances should the

benchmarking study focus on issues like:Prices or pricing policies.

Marketing strategies.

Production capacities.

Product standards.Other commercial or sensitive information.


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