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Lecture 6 - Benchmarking
Lecture 6 - Benchmarking
Lecture 6: Benchmarking
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Brainstorming
• What is benchmarking?
• Its application?
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Introduction
• Benchmarking is the process of identifying the highest standards of excellence for:
products,
services, or processes, and
then making the improvements necessary to reach those standards,
commonly called “best practices”.
• The justification lies partly in the question: “Why re-invent the wheel if I can
learn from someone who has already done it?” (Jackson Grayson Jr, chairman of the
Houston-based American Productivity and Quality Center).
• Benchmarking was begun in the late 1970s by Xerox Corporation. During this time,
Xerox was losing market share and feeling a lot of pressure from its competitors.
In an attempt to try and “get back into the game”, Xerox decided to compare
its operations to those of its competitors.
After finding quality standards with which to compare itself, Xerox began one
of the greatest trends in the business world today.
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Reasons and perceived benefits of benchmarking
processes,
approaches, &
Concerns.
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Reasons for Benchmarking
1. Increasing productivity and individual design 3. Enhance learning
learning.
2. Strategic tool
For e.g., selling or hearing
Leapfrogging competition is another reason to
about another company’s
use benchmarking as a strategic tool.
processes & how they are
A company’s competitors may be stuck in the working will help
same channel as the company deciding to employees to believe that
budgeting, strategic planning & capital example, other ways of achieving and
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Five stages in the process of BM ……..
2. Form the benchmarking team 3. Collect the data
• the first step is to select overall team • this step involves gathering
members. information on best practice
• These members should be chosen from companies & their performances.
various areas of the organization. • Before a company identifies best
• All members should cooperate and practice companies, they should
communicate with one another in order to first identify their own processes,
get the best results out of the products, & services.
benchmarking process. • This step will allow a company to
• There are three main teams comprising the fully realize the extent of
overall group. improvements available.
• The lead team is responsible for • Site visits are also an important
maintaining commitment to the process factor in collecting data because
throughout the organization. they allow for a more in-depth
• The preparation team is responsible for understanding of the processes.
carrying out detailed analysis, and the visit
team must carry out the benchmarking
visit.
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Five stages in the process of BM ……
Warning !
Consider all the Ethical & Legal aspects while Bench Marking
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BM – Requirements & Ethical/Legal issues
According to Bateman (1994), for the BM The BM process must also follow some
process to be successful, there are ethical/legal “guidelines.”
This will ensure that the company’s practices
some general requirements that must are considered morally & ethically correct:
Avoid talking about topics/areas that
be present in any organization:
involve pricing or competitively
senior management interest and sensitive costs.
Do not ask competitors for sensitive
support;
data.
solid understanding of your own Do not share proprietary information
without clearance.
organization’s operations &
Have impartial third party assemble &
requirements for improvement; present competitive data without
company names attached.
openness to change and new ideas;
Do not criticize competitor’s
willingness to share information with business or operations to
outsider based on data obtained
BM partners; &
from benchmarking.
dedication to ongoing BM efforts.
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Conclusion
BM becomes a popular adopted procedure to gain competitive advantage
Over time the procedures used to benchmark have been improved & modified.
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Conclusion
Benchmarking makes it easy to identify the gap between where the organization would like
to be and where it actually is.
This gap provides a measure of the improvement an organization would like to make.
In the short run, avoiding this gap and refusing to change will decrease the opportunities for
survival in the long run.
BM is an excellent tool as it involves everyone, including the management and the workers.
Any type of BM that management chooses will be extremely beneficial to the company if it
is applied correctly.
It is the seed of organizational & cultural changes that must occur if survival and
competitive excellence are to be achieved.
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7/20/2023
Thank you so much for your attention