Scribd
Upload
48 views

Benchmarking Lecture

The document discusses benchmarking, which is defined as a systematic process for comparing an organization's performance metrics and practices against industry leaders to identify areas for improvement. The key points covered include: - The six general steps to benchmarking are deciding what to measure, understanding current performance, planning the study, studying other organizations, learning from collected data, and using findings to implement changes. - Benchmarking promotes continuous improvement, helps organizations identify best practices, and inspires competition. It allows goals to be set objectively based on industry standards. - When benchmarking reveals performance gaps, action plans should be created to specify tasks, responsibilities, and expected results to close those gaps and achieve superior processes.

Uploaded by

hamza younas
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
48 views

Benchmarking Lecture

The document discusses benchmarking, which is defined as a systematic process for comparing an organization's performance metrics and practices against industry leaders to identify areas for improvement. The key points covered include: - The six general steps to benchmarking are deciding what to measure, understanding current performance, planning the study, studying other organizations, learning from collected data, and using findings to implement changes. - Benchmarking promotes continuous improvement, helps organizations identify best practices, and inspires competition. It allows goals to be set objectively based on industry standards. - When benchmarking reveals performance gaps, action plans should be created to specify tasks, responsibilities, and expected results to close those gaps and achieve superior processes.

Uploaded by

hamza younas
Copyright
© © All Rights Reserved
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 31

Chapter 8

Benchmarking

Rana Muhammad Zawar Khan


Introduction

 Book definition: Benchmarking is a


systematic method by which
organizations can measure themselves
against the best industry practices
 Benchmarking is a standard that
companies compare themselves to and
strive to be that good
Benchmarking

 What is your definition of benchmarking?

 What is the process for benchmarking?


Benchmarking Concept
What is our performance What are others' performance
level? levels?
How do we do it? How did they get there?

Creative
Adaptation

Breakthrough
Performance
Benchmarking Concept

 Concept has been around for a while


 2 Key elements
 1) Units of measure (to measure performance)
 2) Managers need to understand why their company's
performance differs
Reasons to Benchmark

 Promotes continuous improvement


 Makes companies search for the best practices,
innovative ideas, and highly effective operating
procedures
 Can notify a company if it has fallen behind the
competition
 Inspires managers to compete
 Allows goals to be set objectively
Reasons to Benchmark

 Weaknesses
 Organizations must continue to innovate
as well as imitate.
6 General Steps to
Benchmarking
1) Decide what to
benchmark
2) Understand current
performance
3) Plan
4) Study others
5) Learn from the data
6) Use the findings
Deciding What to Benchmark

 Think about the mission and critical


success factors
 Decide the scope
 Devise charts that will pin point the exact
problem
 Decide on a numerical measure to show
improvement
Understanding Current
Performance
 Understand and document current
processes
 Form a benchmarking team
 Decide on a way to numerically measure
findings
Planning
 Decide what type of  Identify which
benchmarking to organizations to use
perform (internal, as your benchmarks
competitive, or  Make a timetable to
process) adhere to for each
 Choose the type of task
data to be collected  Have a desired
 Devise a method of output for the study
collection
Studying Others

 Use internal sources


 Apply data in the public domain
 Utilize original research
 Combining all or some of these
Learning from the Data
 Is there a gap between the organization’s
performance and the performance of the best-
in-class organization?

 What is the gap? How much is it?

 Why is there a gap? What does the best-in-


class do differently that is better?

 If best-in-class practices were adopted, what


would be the resulting improvement?
Learning from the Data

 Studies can reveal 3 outcomes:


 Negative gap
 External
process better than internal
processes
 Parity
 Process performance approximately equal
 Positive gap
 Internal
process better than that found in
external organizations
Learning from the Data

 At least two ways to prove a superior


practice:
 Analyzed quantitatively
 Summary measures and ratios (activity costs,
return on assets, or customer satisfaction
levels)
 Market analysis
 Does the market prefer one process over
another?
 Price outside services
Using the Findings

 When a benchmarking study reveals a


negative gap in performance, the
objective is to change the process to
close the gap
 Two groups must agree on the change:
 Process owners (those who run the
process)
 Upper Management (incorporating
changes and providing resources)
Using the Findings

 Generic steps of Action Plans:


1. Specify tasks
2. Sequence tasks
3. Determine resource needs
4. Establish task schedule
5. Assign responsibility for each task
6. Describe expected results
7. Specify methods for monitoring results
Using the Findings

 Goals and objectives should be


consistent with the execution of the
action plan so that the end result is
process superiority

 The best results are obtained when the


process owners fully participate in the
design and execution of the plan
Using the Findings

 The next step is to repeat the


benchmarking process

 The benchmarking process must be


used continuously to pursue emerging
new ideas
Pitfalls & Criticisms

 Idea of copying others


 How can an organization be superior if it
does not innovate to get ahead? How can
an organization even survive if it loses
track of its external environment?
 Not a strategy or business philosophy
 It is an improvement tool
 Not a substitute for innovation
 It is a source of ideas from outside
Pitfalls & Criticisms

 Avoid –
 Benchmarking for the sake of it
 Focusing entirely on comparisons of
performance measures rather than the
processes and activities that enable the
achievement of good practice
 Expecting that benchmarking will be quick
or easy
Questions for Discussion

 What are the six core techniques of the


benchmarking process?
1. Decide what to benchmark
2. Understand current performance
3. Plan
4. Study others
5. Learn from the data
6. Use the findings
Questions for Discussion

 Efficiency has been defined as “doing


things better” and effectiveness as
“doing better things.”

 Describe how benchmarking can be


used to improve both efficiency and
effectiveness…
Questions for Discussion

 Explain how an organization might


benefit from benchmarking organizations
in a completely different industry…
Questions for Discussion

 Identify and explain the three types of


benchmarking…

 In what circumstances would each type


be most appropriate?
Questions for Discussion

 How are critical success factors


important in benchmarking?
Questions for Discussion

 Benchmarking studies are a search for


two types of information –
 An understanding of best-in-class
processes
 The metrics that result

 Which piece of information is more


important and why?
Questions for Discussion

 Why is it important to understand internal


processes before studying those of other
organizations?

 What tools are useful in examining


internal processes?
Questions for Discussion

 Who in the class has experience in the


benchmarking process?
Thanks for your time!

You might also like