Dr.K.Baranidharan

Present by…

RECOGNITION/REWARD/PERFORMANCE APPRAISAL

Presented by

Dr.K.Baranidharan

BENCHMARKING

ECE

BENCH MARKING

• The word ‘benchmark’ is a reference or measurement standard used for comparison.

• Benchmarking is the process of determining who is very best, who sets the standard, and what that standard is.

• Benchmarking is a systematic method by which organisations can measure themselves against the best industry practices.

• Measuring an organisation’s performance against that of best-in-class companies, determining how the best-in-class achieved those performance level.

• It is a tools for continuous improvement.

• “The process of identifying, understanding, and adapting outstanding practices and processes from organisations anywhere in the world to an organisation to improve its performance”.American Productivity and Quality Centre (APQC)

“Benchmarking is the search for industry best practices that lead to superior performance”

by Robert Camp

Benchmarking

Valuable TQM tool which accomplishes objectives of customer satisfaction and continuous improvement.Motivates an organization & fosters a new in-depth understanding about the functioning of the organization.Reduces cycle time as small or big tasks get done faster.Constantly redefines standards which must be achieved to remain competitive.Increases productivity.

OBJECTIVE

• To determine what and where improvements are called for

• To analyze how other organizations achieve their high performance levels, and

• To use this information to improve performance.

Purpose of Benchmarking

• Comparing an organization’s performance to the best organization’s performance

• Comparing an organization’s business process with similar process

• Comparing product and services• Identify the best practices to implement• Projecting trends

The Evolution of BenchmarkingEvolved in the early 1950s, when W. Edward Deming taught the Japanese the idea of quality control.

ExampleToyota Motor Corporation’s following the footsteps of Ford Motor Corporation with the adaptation of the Ford’s Just-in-case System into Toyota’s Just-in-Time System.

Term “Benchmarking” emerged in 1980s by ROBERT CAMP, logistics engineer who initiated Xerox’s benchmarking program.Use of benchmarking worldwide continues to grow since Robert Camp wrote the first book on benchmarking in 1989.

Benchmarking Process Model

Search

Observe

Analyze

Adapt Plan

Steps in Bench Marking Process

1. Plan

• Select the process

• Form Team

• Understand & document process

• Establish performance measure

2. Search

• Listing Criteria for partner selection

• Conduct general / secondary research

• Decide the level to Benchmark

• Identify potential partners & contact

3. Observe

• Questionnaire sent to partner

• Telephone contact

• Direct observation / site visit

4. Analyze

• Sort information & data

• Quality control information & data

• Normalize data if necessary

• Identify gaps in performance Level

• Identify causes for gaps

5. Adapt

• Identify improvement opportunities

• Set target for improvement

• Develop implementation plan, monitor the progress

• Write final report

• Customer service levels• Inventory management• Inventory control• Purchasing• Billing and collection• Purchasing practices• Quality process• Warehousing and distribution• Transportation

AREAS TO BENCHMARK

Types Of Benchmarking

InternalExternalPerformance or CompetitiveFunctionalGenericStrategicProcess

Internal Benchmarking

Comparison of similar functions in different operating units within the organization

Example

• Tata Steel’s Colliery divisions benchmarking their maintenance practices with that of the Maintenance division inside the Steel Works at Jamshedpur.

External Benchmarking

Comparison of organization functions and key processes against external good practice organization.

Performance or Competitive

Organizations using performance measures to compare themselves against similar organizations

Example• FMCG’s comparing with each other for

Market share, Retention rates, profits, costs.

Functional Benchmarking

Comparison of similar functions against external best in any industry

Example

• Hindustan Max – GB Ltd , a pharmaceutical company, benchmarking their maintenance function with that of Tata Steel.

Generic BenchmarkingComparison of functions which are generic in nature in any industry

Examples

• Hospital in the U.S. routinely benchmark their patient management against hotel’s guest management.

• Airlines benchmark their customers service with 5 star hotels.

Strategic Benchmarking

Used where organizations seek to improve their overall performance by focusing on specific strategies or processes

Example• Benchmarking against organizations

which have won awards or some other distinctions

Process Benchmarking

Focus on specific operations or processes

Examples• In higher education - Enquiry

Management, Enrolment• In Logistics - Delivery, Safety.• In hotels - Housekeeping, Customer Care.

Issues in Benchmarking

Finding suitable partners.Difficulties in comparing data (50% of organizations found this)Resource constraints (Time, Finance and Expertise)Staff resistance.

Benchmarking Tools• Matrix technology

• Comparison tables

• Graphs: Pie chart, Bar chart / Histogram

• SWOT analysis Potential/resources-analysis

• Price/performance ratio

• Potential analysis

• Life cycle analysis

• market growth/market share portfolio

• market attractiveness

• Portfolio attractiveness customer

• Technology/resource strength

• Market position

• Contribution margin

• customer satisfaction portfolio

• Revenue share

• Spider web diagram

Benefits of Benchmarking Improves organizational quality

Leads to lower cost

Creates buy-in for change

Exposes employees to new ideas

Broadens organization’s perspective

A catalyst for learning

Increase employee satisfaction

Test the internal operating target

Raise the level of potential performance

Sharing of best practices

Understanding world-class performance in-depth

Encourage and stimulate innovation

Pitfalls and Criticisms of Benchmarking

The most persistent criticism of benchmarking comes from the idea of copying others.

Benchmarking isn’t very helpful if it is used for processes that don’t offer much opportunity for improvement.

Benchmarking is also not a substitute for innovation

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

• Confidentiality of data may be a risk

EjemplosXerox, Hewlett Packard, Ford y General

Motors

Dr.K.BaranidharanTHANK YOU