What is Benchmarking Benchmarking is the process of

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 are others’ performance levels? How did they get there? What is our performance level? How do we do it? 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 © 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 Benchmark Assists 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 benchmark Understand current performance Plan Study others Learn from the data Use the findings

Decide What to Benchmark Which 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 Benchmarking Evaluates 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 Data Is 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 Findings Benchmarking 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 Execution of Action Plans Specify tasks Sequence tasks Determine resource needs Establish task schedule Assign responsibility for each task Describe expected results Specify 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 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 Cited The 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 (3 rd ed. ) New Jersey: Pearson Education International

Other Resources American Productivity & Quality Center (APQC) http: //www. asq. org/index. html Benchmarking and Best Practices Presentation http: //www. asq. org/articles/aqcproceedings/public_proceedings/54_2000/14094. pdf The Benchmarking Exchange and Best Practices Homepage http: //www. benchnet. com/ Benchmarking: The search fo r. Industry Best Practices That Lead to Superior Performance by Robert C. Camp The Benchmarking Book by Michael J. Spendolini