What is Benchmarking?

Benchmarking is the process of

measuring an organizations 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
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 classs 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 companys 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 highperformance 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 organizations
performance and the performance of the best-inclass 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 organizations
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
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-fi
n
Besterfield, D. H., Besterfield, G. H., Besterfield-Michna, C.,
& Besterfield-Sacre, M. (2003). Total quality
management (3rd 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/aqc-proceedings/public_proceed
ings/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