BENECHMARKING -DEFINITION

The continuous process of

measuring products, services, and
practices against the companys
toughest competitors or those
renowned as industry leaders
 BENCHMARKING THOUGHTS

Benchmarking is the practice 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
In sharp contrast to the
conventional approach of setting
the future goals extrapolated from
the internal practices and past
trends.
Since external environment and
market conditions change rapidly;
goal setting which is internally
focused cant be true reflection of
customers expectations.
BENCHMARKING

Customers expectations are highly

liquid and are driven by standards
set by best performer.
Any product or service just below
these standards may not catch the
eyes of customer.
Why use Benchmarking
Survival lies in emulating 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.
Quantum-leaps in performance
 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.
POTENTIAL OF BENCHMARKING IN
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.
POTENTIAL OF BENCHMARKING IN
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.
POTENTIAL OF BENCHMARKING IN
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.
POTENTIAL OF BENCHMARKING IN
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.
POTENTIAL OF BENCHMARKING IN
PAKISTAN

These aspects include

Organizational culture
Marketing strategies
Operational activities
Financial aspects
Human resource
Or any other aspect
Types of Benchmarking

Internal benchmarking

External benchmarking

Functional benchmarking:
Internal benchmarking
ADVANTAGES:

sharing opinions Easier to implement

between Easier to access data
departments
within the same
organisation DISADVANTAGES:

External ideas blocked

External Benchmarking
Advantages
Comparison with Helps to measure
external organisations ones own
to discover new ideas, performance
methods, products and
services. Helps to search for
The gap between best practices
internal and external Disadvantages
practices displays the Takes time
way where to change
and if there is any Requires support
need to change. Legal/ethical isssues
Industrial espionage
Functional Benchmarking:

Comparative Advantages:
research to seek
world-class Discovering innovative
excellence by practices
comparing business
performance not Disadvantage:
only against
competitors but also Not suitable for every
against the best organisation
businesses operating
in different industry
Other Types of Benchmarking

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
Gap Analysis (Spider chart)
Total customer
satisfaction

Current
performance of
the host for
variable K.

Best of the best

(current
performance of
the partner for
variable A.

Current performance of the host

Current performance of the partner

METHODOLOGY OF BENCHMARKING

AT&T
Vs

XEROX
 BENCHMARKING ESSENTIALS

Clearly defined purpose

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

Investigation must 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
mangment
 BENCHMARKING ESSENTIALS

Internal training for company

personnel
Access to a benchmarking database

Professional BM analysts to support

studies
The process must be institutionalized!
 BARRIERS TO BENCHMARKING

1. Fear of being 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

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

 BENCHMARKING OBSERVATIONS

1. Key is to 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.
Legal & Ethical Guidelines

Keep it legal;
Be willing to give what you get;
Respect confidentiality;
Keep information internal;
Use benchmarking contacts;
EXAMPLRY SPIDER CHART

FOR BENCHMARKING