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BENECHMARKING -DEFINITION

The continuous process ofmeasuring products, services, andpractices against the companystoughest competitors or thoserenowned as industry leaders

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Benchmarking is the practice of beinghumble enough to admit that someone

else is better at something and wiseenough to try and learn how to match andeven surpass them at it.

- APQC, 1998

BENCHMARKING THOUGHTS

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BENCHMARKINGBENCHMARKING

In sharp contrast to theconventional approach of settingthe future goals extrapolated from

the internal practices and pasttrends.

Since external environment andmarket conditions change rapidly;

goal setting which is internallyfocused cant be true reflection ofcustomers expectations.

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BENCHMARKINGBENCHMARKING

Customers expectations are highlyliquid and are driven by standards

set by best performer.Any product or service just below

these standards may not catch the

eyes of customer.

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Why use BenchmarkingWhy use Benchmarking

Survival lies in emulating best andnot in lagging behind

Bench marking is time and costefficient because it involvesimitation and adaptation ratherthan pure invention. Prevents the

Re-inventing the wheel.Quantum-leaps in performance

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Why use BenchmarkingWhy use Benchmarking

An effective wake-up call and helps to makea strong case for change

Practical ways in which step changes in

performance can be achieved by learning fromothers who have already undertakencomparable changes

The impetus for seeking new ways of doing

things and promotes a culture that is receptiveto fresh approaches and ideas

Opportunities for staff to learn new skills andbe involved in the transformation process fromthe outset.

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Local industry is not yet well developedand is sprouting its wings.

Cultural growth and professionalism isinchoate.

The leading enterprises are foreignbased whether pharmaceuticals,automobiles or other FMCGs.

These transnational companies havenurtured a professional culture.

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The professional culture has paid TNCsin Pakistan through huge revenues.

MNCS have small market share volumewise and high share price wise.

National companies share is greatervolume wise and fewer revenues wise.

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A list of top ten pharmaceuticalcompanies in Pakistan is filled with

the MNCs

Same situation exists in the

beverages, automobile, electronicsand FMCGs.

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Since TNCs are leading in thecompetition, they can be

benchmarked by the strivingnational companies.

Every aspect of the business

where TNCs outperform their localcompetitors can be benchmarked.

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These aspects include

Organizational cultureMarketing strategiesOperational activitiesFinancial aspectsHuman resourceOr any other aspect

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Types of BenchmarkingTypes of Benchmarking

Internal benchmarking

External benchmarking

Functional benchmarking:

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Internal benchmarkingInternal benchmarking

sharing opinions

betweendepartmentswithin the sameorganisation

ADVANTAGES:

Easier to implement

Easier to access data

DISADVANTAGES:

External ideas blocked

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External BenchmarkingExternal Benchmarking

Comparison withexternal organisationsto discover new ideas,

methods, products andservices.

The gap betweeninternal and externalpractices displays the

way where to changeand if there is anyneed to change.

Advantages

Helps to measureones ownperformance

Helps to search forbest practices

Disadvantages

Takes time

Requires support

Legal/ethical isssues

Industrial espionage

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Functional Benchmarking:Functional Benchmarking:

Comparativeresearch to seekworld-class

excellence bycomparing businessperformance notonly againstcompetitors but also

against the bestbusinesses operatingin different industry

Advantages:

Discovering innovativepractices

Disadvantage:

Not suitable for every

organisation

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Other Types of BenchmarkingOther Types of Benchmarking

Product Benchmarking

Process Benchmarking

Strategic Benchmarking

How companies compete, identify the winning

strategies that have enable high-performingcompanies to be successful in their marketplaces.

Parameter Benchmarking

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Gap Analysis (Spider chart)Gap Analysis (Spider chart)

Current per r ance the h st

Current per r ance the partner

Current

per

r ance

the h

st

rvariable K.

est

the best(current

per

r ance

the partner

rvariable A.

tal customersatis

action

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METHODOLOGY OF BENCHMARKINGMETHODOLOGY OF BENCHMARKING

AT&TVs

XEROX

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Clearly defined purpose

Continual analysis & reassessment

BM methodology must be appropriate

Significance of results must be clear

Conclusions must be justified by thedata

Never compromise integrity for thesake of findings

BENCHMARKING ESSENTIALS

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BENCHMARKING ESSENTIALSBENCHMARKING 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

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Internal training for company

personnel

Access to a benchmarking database

Professional BM analysts to support

studies The process must be institutionalized!

BENCHMARKING ESSENTIALS

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1. Fear of being seen as copying

2. Fear of losing competitive advantage bysharing information

3. Arrogance we are the best, whybenchmark?

4. Benchmarking trap benchmark that

which is convenient, but may not beimportant.

Adapted from Watson 1992

BARRIERS TO BENCHMARKING

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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

BARRIERS TO BENCHMARKING

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1. Key is to Adapt not adopt Deming

2. Benchmarking does not come as a naturalprocess for many competitiveness does,but not benchmarking, because

benchmarking requires a team approach.

BENCHMARKING OBSERVATIONS

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Legal & Ethical GuidelinesLegal & Ethical Guidelines

Keep it legal;

Be willing to give what you get;

Respect confidentiality;

Keep information internal;

Use benchmarking contacts;

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