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BENCHMARKING LECTURE.ppt
- 2. What is Benchmarking? Benchmarkingis the process of measuring an organization’s internal processes then identifying, understanding, and adapting outstanding practices from other organizations considered to be best-in-class.
- 3. What is Benchmarking? •Learning from others what they do right and then imitating it to avoid “reinventing the wheel”
- 4. “Benchmarking is thepractice of being humble enough to admit that someone else is better at something and wise enough to try and learn how to match and even surpass them at it.” - APQC, 1998 BENCHMARKING THOUGHTS
- 5. DIAGRAM OF BENCHMARKING CONCEPT Whatis our performance level? How do we do it? What are others’ performance levels? How did they get there? Creative Adaptation Breakthrough Performance Figure 8-1 Benchmarking Concept (pg. 208) Reprinted with the permission of the Institute of Industrial Engineers, 3577 Parkway Lane, Suite 200, Norcross, GA 30092, 770-449-0461. Copyright © 199
- 6. KEY ELEMENTS Measuringusing metrics - Expressed numerically, with target in mind
- 7. KEY ELEMENTS Recognizingdifferences in processes - Need to thoroughly understand their own processes as well as those of the best in class’s company
- 8. KEY ELEMENTS Comparingself to external competition - Reduces chance of being caught off guard - Encourages competition - Personnel more motivated to attain goals
- 9. KEY ELEMENTS Comparingself to external competition - Reduces chance of being caught off guard - Encourages competition - Personnel more motivated to attain goals
- 10. KEY ELEMENTS Imitation/Adaptationvs. Invention - Provides a working model on an improved process
- 11. KEY ELEMENTS ContinuousImprovement - Technologies and ideas become obsolete; businesses need to keep abreast of what is current - Some benchmarking may need to be done continually
- 12. FARZANA SULEMAN ROLL NO.MS13-IBF-16
- 13. WHY USE BENCHMARKING Survival lies in following best and not in lagging behind. Bench marking is time and cost efficient because it involves imitation and adaptation rather than pure invention. Prevents the “Re-inventing the wheel”. For Quantum-leaps in performance To identify opportunities to improve performance To learn from others’ experiences To facilitate cultural changes To set realistic but ambitious targets To uncover strengths in one’s own organization Better prioritize and allocate resources
- 14. WHY USE BENCHMARKING •An effective ‘wake-up call’ and helps to make a strong case for change • Practical ways in which step changes in performance can be achieved by learning from others who have already undertaken comparable changes • The impetus for seeking new ways of doing things and promotes a culture that is receptive to fresh approaches and ideas • Opportunities for staff to learn new skills and be involved in the transformation process from the outset.
- 15. WHEN NOT TOBENCHMARK Target is not critical to the core business functions Customer’s requirement is not clear Key stakeholders are not involved No plan for implementing findings Fear of sharing information with other organizations
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- 17. 1. PLANNING Determinethe purpose and scope of the project Select the process to be benchmarked Choose the team Define the scope Develop a flow chart for the process Establish process measures Identify benchmarking partners
- 18. 2. COLLECTING DATA Conduct background research to gain thorough understanding on the process and partnering organizations Use questionnaires to gather information necessary for benchmarking Conduct site visits if additional information is needed Conduct interviews if more detail information is needed
- 19. 3. ANALYSIS Analyzequantitative data of partnering organizations and your organization Analyze qualitative data of partnering organizations and your organization Determine the performance gap
- 20. 4. IMPROVING PRACTICES Report findings and brief management Develop an improvement implementation plan Implement process improvements Monitor performance measurements and track progress Recalibrate the process as needed
- 21. Specific steps ofBenchmarking vary from company to company but the fundamental approach is same . One company’s benchmarking may not work at another orgnaization due to differing operating concerns
- 22. MOTOROLLA INC.’S BENCHMARKINGMODEL 1. Decide what to Benchmark 2. Select companies to benchmark 3. Obtain data and collect information 4. Analyze data and form action plans 5. Recalibrate and start the process again
- 23. AT&T’S BENCHMARKING MODEL 1.Decide what to Benchmark 2. Develop a Benchmarking plan 3. Select a method to collect data 4. Collect data 5. Select companies to Benchmark 6. Collect data during site visit 7. Compare processes ,identify gaps, make recommendations, 8. Implement recommendations 9. Recalibrate Benchmark
- 24. THREE TYPES OFGAPS Negative Parity Positive
- 25. TYPES OF BENCHMARKING Internal benchmarking External benchmarking Functional benchmarking:
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- 27. INTERNAL BENCHMARKING sharing opinions between departments withinthe same organisation ADVANTAGES: Easier to implement Easier to access data DISADVANTAGES: External ideas blocked
- 28. EXTERNAL BENCHMARKING Comparisonwith external organisations to discover new ideas, methods, products and services. The gap between internal and external practices displays the way where to change and if there is any need to change. Advantages Helps to measure one’s own performance Helps to search for best practices Disadvantages Takes time Requires support Legal/ethical isssues Industrial espionage
- 29. FUNCTIONAL BENCHMARKING: Comparative research toseek world-class excellence by comparing business performance not only against competitors but also against the best businesses operating in different industry Advantages: Discovering innovative practices Disadvantage: Not suitable for every organisation
- 30. OTHER TYPES OFBENCHMARKING Product Benchmarking Process Benchmarking Strategic Benchmarking How companies compete, identify the winning strategies that have enable high-performing companies to be successful in their marketplaces. Parameter Benchmarking
- 31. GAP ANALYSIS (SPIDERCHART) Current performance of the host Current performance of the partner Current performance of the host for variable ‘K’. Best of the best (current performance of the partner for variable ‘A’. Total customer satisfaction
- 32. – Clearly definedpurpose – Continual analysis & reassessment – BM methodology must be appropriate – Significance of results must be clear – Conclusions must be justified by the data – Never compromise integrity for the sake of findings BENCHMARKING ESSENTIALS
- 33. BENCHMARKING ESSENTIALS Investigationmust 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 managment
- 34. Internal trainingfor company personnel Access to a benchmarking database Professional BM analysts to support studies The process must be institutionalized! BENCHMARKING ESSENTIALS
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- 36. 1. Fear ofbeing seen as “copying” 2. Fear of losing competitive advantage by sharing information 3. Arrogance – “we are the best, why benchmark?” 4. Benchmarking trap – benchmark that which is convenient, but may not be important. Adapted from Watson 1992 BARRIERS TO BENCHMARKING
- 37. 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
- 38. 1. Key isto “Adapt not adopt” – Deming 2. Benchmarking does not come as a natural process for many – competitiveness does, but not benchmarking, because benchmarking requires a team approach. BENCHMARKING OBSERVATIONS
- 39. LEGAL & ETHICALGUIDELINES Keep it legal; Be willing to give what you get; Respect confidentiality; Keep information internal; Use benchmarking contacts;
- 40. EXAMPLRY SPIDER CHART FORBENCHMARKING
- 42. POTENTIAL OF BENCHMARKINGIN PAKISTAN Local industry is not yet well developed and is sprouting its wings. Cultural growth and professionalism is inchoate. The leading enterprises are foreign based whether pharmaceuticals, automobiles or other FMCGs. These transnational companies have nurtured a professional culture.
- 43. POTENTIAL OF BENCHMARKINGIN PAKISTAN The professional culture has paid TNCs in Pakistan through huge revenues. MNCS have small market share volume wise and high share price wise. National companies share is greater volume wise and fewer revenues wise.
- 44. POTENTIAL OF BENCHMARKINGIN PAKISTAN A list of top ten pharmaceutical companies in Pakistan is filled with the MNCs Same situation exists in the beverages, automobile, electronics and FMCGs.
- 45. POTENTIAL OF BENCHMARKINGIN PAKISTAN Since TNCs are leading in the competition, they can be benchmarked by the striving national companies. Every aspect of the business where TNCs outperform their local competitors can be benchmarked.
- 46. POTENTIAL OF BENCHMARKINGIN PAKISTAN These aspects include Organizational culture Marketing strategies Operational activities Financial aspects Human resource Or any other aspect