Benchmarking

Benchmarking is the practice of comparing actual

performance results with a standardize performance goal or
number–a benchmark.

Example
 A cost accountant or managerial accountant might
analysis the level of fixed and variable costs in a
production process for the last three years.
 Managers can then use the average costs over the past
three years as a benchmark. It can then judge the
current performance against the benchmark and find
new way to improve.

What Does Benchmarking Mean?

Benchmarking is a great way for managers to gauge how
well their department or company is performing internally
and in the industry as a whole.
A Step-by-Step Approach to
Benchmarking/Benchmarking process
Following are the steps involved in benchmarking process:
 Planning: It is imperative that the organization identifies the
activities that need to be benchmarked prior to engaging in
benchmarking. Since benchmarking can be applied to any business
process or function, a range of research techniques may be
required. These include informal conversations with customers,
employees or suppliers. These also include exploratory
research techniques, re-engineering analysis, process mapping,
quality control variance reports, financial ratio analysis, or simply
reviewing cycle times or other performance indicators. The next
step in the planning process would be for the organization to
choose an appropriate benchmark against which their performance
can be measured.
 Collection of information: Information need to be
collected can be the primary data and secondary data. Primary data
refers to collection of data directly from the benchmarked
organization/organizations itself, while secondary data refers to
information generated from the media, publications or internet.
 Analysis of data: Once sufficient data is collected, the
proper analysis of such information is of foremost importance.
Data analysis, data presentation, results projection, classifying the
performance gaps in processes and identifying the root cause that
leads to the creation of such gaps are then require to be then
carried out.
 Implementation: This is the stage in the benchmarking
process, where it becomes mandatory to walk the talk for success.
This usually means that far reaching changes need to be made so
that the performance gap between the target and the actual is
narrowed and eliminated.
 Monitoring: Benchmarking process need to be properly
monitored in order to reap the maximum benefit out of the
benchmarking process.
WHAT IS SIX SIGMA?
Six Sigma is a method that provides organizations tools to improve the
capability of their business processes. This increase in performance and
decrease in process variation lead to defect reduction and improvement in
profits, employee morale, and quality of products or services.
It involves:
 Use of teams that are assigned well-defined projects that have direct
impact on the organization's bottom line.
 Training in "statistical thinking" at all levels.
 Emphasis on the DMAIC approach to problem solving: Define,
measure, analyze, improve, and control.
 A management environment that supports these initiatives as a
business strategy.

THE END!!!