What is Benchmarking?

Benchmarking is 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.

What is Benchmarking?

Learning from others what they do

right and then imitating it to avoid

“reinventing the wheel”

What is Benchmarking?

Measuring yourself against

the “best in class”

Diagram of Benchmarking Concept

What is our

performance level? How do we do it?

What are others’ performance levels?

How did they get there?

Creative Adaptatio

n

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 © 1995.

Key Elements

Measuring using metrics- Expressed numerically, with target

in mind

Key Elements

Recognizing differences in processes

- Need to thoroughly understand their own processes as well as those of the

best in class’s company

Key Elements

Comparing self to external competition

- Reduces chance of being caught off guard

- Encourages competition- Personnel more motivated to attain

goals

Key Elements

Imitation/Adaptation vs. Invention- Provides a working model

on an improved process

Key Elements

Continuous Improvement- Technologies and ideas become

obsolete; businesses need to keep abreast

of what is current- Some benchmarking may need to be

done continually

Handout #1

What Can We Learn from Benchmarking?

Who in your field performs best?

What ideas can your organization adapt?

Who would be best for you to benchmark with?

Reasons to BenchmarkAssists businesses cultivate strong points and diminish problem areas

Lets ambitions be set impartially, taken from outside information

Includes emulation and revision instead of new innovation

Probable, valuable knowledge can be established and implemented early on

Requirements

Buy-in

Training

Timeliness

6 Steps of the Benchmarking Process

Decide what to benchmarkUnderstand current performancePlanStudy othersLearn from the dataUse the findings

Decide What to BenchmarkWhich process are causing the most trouble?

Which processes contribute most to customer satisfaction and which are not performing up to expectations?

What are the competitive pressures impacting the organization the most?

What processes or functions have the most potential for differentiating our organization from the competition?

Critical Success Factors

Strategy that defines how a company positions itself and competes

Expressed in mission and vision statements

Includes list of critical activities that must be accomplished to realize company’s vision

Help get the most “bang for the buck”

Understand Current Performance

Thoroughly understand the and document the current process

Flow charts and cause-and-effect diagrams are helpful

Pay attention to inputs and outputs

Plan

The benchmarking team decides:

- what type of benchmarking to perform- what type of data to collect- the method of collection

Types of Benchmarking

Internal

Competitive

Generic/Process/Functional

Internal BenchmarkingEvaluates progressions or procedures inside the business or company over time with recognized objectives in mind

Benefits - the simplicity of data gathering and the designation of parts for upcoming outside inspections

Disadvantage - a decreased likelihood that it will generate important process advancement innovations

Competitive Benchmarking

Evaluates the organization's procedures to those of close rivals.

An expert or another outside party, rather than the company itself, gathers and evaluates the data because of its proprietary quality.

Generic/Process/Functional Benchmarking

Investigates actions that are or can be used in the majority of businesses

One inconvenience is in realizing how processes transform across industries

Can frequently bring about an organization's radically changing its thoughts about its working competence and in the reengineering of industry processes

Innovations from other kinds of organizations can be applied across industries

Generic/Process/Functional Benchmarking

(continued)Examines comparable practices and procedures in businesses or companies in additional industries

Presents a chance for innovative advances by investigating high-performance methods across an array of trades and businesses

Study Others

How are best-in-class processes practiced?

What are the measurable results?

Learn From the DataIs there a gap between the organization’s performance and the performance of the best-in-class organizations?

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?

Three Types of Gaps

Negative

Parity

Positive

Identifiable Benchmark Gaps

Must be described and quantified

Processes must have inputs, activities, and outputs

Level of detail must allow for eventual quantification

Additional Gap Analysis

Necessary to determine root causes

Gaps come from process practices, general business practices, and the organizational and operational structure

Changeable

<<<< BREAK >>>>

Handout #2

Use the FindingsBenchmarking must generate outcomes.

Individuals who can formulate the modifications must be notified.

Process Owners and Upper Management must concur on the modifications.

There are seven stages for progression and implementation of action plans.

Goals and Objectives

After acceptance, the new goals and objectives set are based on benchmark findings

Depends on the organization’s planning process

Development and Executionof Action Plans

Specify tasksSequence tasksDetermine resource needsEstablish task scheduleAssign responsibility for each taskDescribe expected resultsSpecify methods for monitoring results

Adapting to Change

Process practices are easier to change

Business practices are harder to change

Disadvantages

Best in class is a moving target

Not the only answer

Not helpful for processes that do not offer

much opportunity to improve

Not helpful if process owners and managers

feel threatened by findings or do not act upon

them

Potential Problems with Benchmarking

Benchmarking is restricted to your individual trade

It may confine the focal point to what is currently being done

Useless if used for procedures that do not present a great deal of opportunity for progress

Process owners and managers may feel intimidated or may not admit/act on results

Exercise #4 in Textbook (p. 221)

What difficulties are typically encountered when benchmarking direct competitors?

Describe several ways to work around these problems.

Quiz

Please clear your desks ……

Works CitedThe Benchmarking Exchange. (2008) What is

benchmarking? Retrieved February 11, 2008 from http://www.benchnet.com/wib.htm

Answers.com – Business & Finance. Business encyclopedia: benchmarking. Retrieved February 11, 2008 from http://www.answers.com/topic/benchmarking?cat=biz-fin

Besterfield, D. H., Besterfield, G. H., Besterfield-Michna, C., & Besterfield-Sacre, M. (2003). Total quality management (3rd ed.) New Jersey: Pearson Education International

Other ResourcesAmerican Productivity & Quality Center (APQC)

http://www.asq.org/index.htmlBenchmarking and Best Practices Presentation

http://www.asq.org/articles/aqc-proceedings/public_proceedings/54_2000/14094.pdf

The Benchmarking Exchange and Best Practices Homepage

http://www.benchnet.com/Benchmarking: The search fo rIndustry Best Practices That Lead to Superior Performance by Robert C. Camp

The Benchmarking Book by Michael J. Spendolini