Benchmarking and Best Practices in

The Retail Industry

Measure Sharing Spirit

Benchmarking Best Practices

 factors that can impact profitability  need to understand on how
the collaboration and info
 the need to collaborate more and
sharing can contribute to
make more fact-based decisions
profitability, cost
though benchmarking
competitiveness, efficiency
 Key to success is “customer-supplier and customer satisfaction
collaboration” and “real-time
information”
 Majority of successful companies are
already sharing some information
with their customers
 Benchmarking and Best Practices in
Retail Industry (cont’d)

Indicator Key Definition

Benchmark Groups Performance
Indicators
(KPIs)
Sales Retail Sales Percentage change in sales-turnover of retail
Performance Performance business in Malaysia
Inventory Total inventory divided by last month’s sales
Retail Turnover
Industry Employee Sales per Total sales divided by number of employees
Performance Employee
Square Footage Gross area inclusive of store room, toilet, office,
per Employee aisles, etc., divided by number of employees
Labour Cost vs. Gross salary (basic payroll, EPF, overtime and
Sales allowances) for full time, part-time staff vs. gross
sales
Staff Turnover Percentage of resignation on monthly basis
Absenteeism Number of staff times 26 days divided by number
Rates absent (AWOL), medical leave, absent without
approval, unplanned leave, etc
 Benchmarking and Best Practices in
Retail Industry (cont’d)
 Emphasis on Membership Card Privileges & benefits to
enhance relationship with loyal customers
Best Practices
 Frequently review, innovate and improve own retail concept
 Respond promptly towards changing consumer spending &
behaviour

Retail  Most products new – fast moving products

Industry  Good relationship with suppliers
 Aggressive promotional activities
 Customers’ payment capabilities
 Outlets to be more functional in relation to its customers’
logistical requirements
 Outlets to be more aesthetically pleasing and attractive as
shopping destination
 Benchmarking and Best Practices in
The Malaysian Retail Industry (cont’d)

 Creating a culture to make your staff happy

Best Practices
 Good employee benefits package
 Motivate staff, ensure employees’ emotional,
intellectual & physical well-being
Retail  Contractual bonus
Industry
 Productivity Incentive program
 Work/life balance (provides sports & recreational
facilities)
 Service award program
 Group health plan cover
 Punctuality incentive, full attendance allowance
 Structured skills career and development programs
 Retail Resurgence

“The retail industry is bouncing back after being hit by the

Iraq War

 Initial retail growth 5% but due to Iraq War, drop in April-May

to 2-3%
 Increased customer spending due to:
 Mega sales promotion help boost sales
 Bonuses to government servants
 Improved income and employment
 MIER projected private consumption to grow from 4.4 to 5-
7% next year
How can industry integrate and share their
experiences and best practices?

Benchmarking
Benchmarking for Best Practices

Benchmarking is the practice of being humble enough to

admit that someone else is better at something, and being
wise enough to learn how to match and even surpass them
at it.

Benchmarking is a systematic and continuous process of

searching, learning, adapting and implementing the best
practices from within own organization or from other
organizations towards attaining superior performance

- National Productivity Corporation, Malaysia

 Types of Benchmarking

Benchmarking

Internal Benchmarking External Benchmarking

Market related
Plant related (Competition analysis)

Branch related Generic Processes

(Trend research) (Best Practice)

e.g., safety performance measures

 3 Basic Issues in Benchmarking

Basic issues:
Waiting Time for Admission

Where are you now?

Where?
[minutes]

112
90
Why? Why is your organization at
30 this position vs the other?

10

min mean Company max What? What can be improved?

 Benchmarking : An Overview
Company Internal
Spread Sheet Benchmarking
Mon Energy Product 1999

SEC
Jan

Feb 2000
Mar

month

Comp1
Competitive
Comp2 Benchmark

Comp3
 What Is Benchmark?

A measured “best-in-class” achievement, recognized

as the standard of excellence for a particular process

Examples:
• Rate of customer complaint 5%
• Employee satisfaction rate 95%
• Customer retention rate 90%
• Information retrieval time 5 seconds
• Customer response time 15 min.
• Medical Cost per Employee RM16.89
• MC Rate 0.5%
 What Are Best Practices ?

Best practices are a relative term indicating

outstanding business practices which have been
identified as contributing to significant improved
performances in leading companies

Examples :

• Development of in-house trainers and training academy

• Visual management to inculcate culture of excellence
• QCC in building knowledge-based workforce
 Importance of Benchmarking

Objective Without Benchmarking With Benchmarking

To become more adaptive Evolutionary Change Understanding of
competition ideas from
proven practices
Implement Industry best Few solutions, Frantic Many options, Superior
practices catch up activity performance
Defining customer Based on history, Gut Market reality, objective
requirements feeling or Perception evaluation

Establishing effective Lacking external focus, Credible unarguable,

goals & objectives Reactive Proactive

Developing true Pursuing projects, Solving real problems,

measures of productivity strength/weaknesses not Understanding output
understood, Route of based on industry best
least resistance practices
 Benefits of Benchmarking
 Improves organizational quality
 Leads to lower cost
“If you know neither
 Creates buy-in for change
yourself nor your enemy,
 Exposes employees to new ideas you will succumb in
every battle.
 Broadens organization’s perspective
If you know yourself but
 A catalyst for learning not the enemy, for every
victory gained you will
 Increase employee satisfaction suffer a defeat.
 Test the internal operating target If you know yourself and
your enemy, you need
 Raise the level of potential performance not fear of a hundred
 Sharing of best practices battles.” -
Sun Tzu
 Understanding world-class performance in-depth
 Encourage and stimulate innovation
 NPC Benchmarking Model
Phase 1 Phase 2 Phase 3
BENCHMARK BEST PRACTICES IMPROVEMENT

Start
5. Plan for Site Visit 9. Plan to Adapt Best
Practices
1. Agree On
Benchmarking Topic 6. Data Collection 10. Implement Best
Practices
2. Finalise On Scope;
Measures & Definitions 7. Recommend 11. Monitoring Result
Improvement
3. Data Collection : 2nd
Site Visit 12. Standardization
Survey (Focus Visit)
Yes
8. Share Findings 13. Daily Control
4. Share Strengths

Continue Existing
Yes Project?
No

New Area
Community of Practice (CoP)

CoP is a small group of

people who comes together
to explore opportunities for
benchmarks and best
practices sharing on
common interest areas
 Benchmarking Community of Practices (CoP)

Sector e.g., Distributive Trade

Industries e.g., Retail

Clusters
e.g., Hypermarket, Supermarket,
Specialty Store,Pharmacy

Processes e.g.,
Delivery, Handling Customer
Complaints

Functional
e.g., Marketing, HRM
 Communities of Practices (CoP)
Manufacturing SMIs
Textile Process Enterprise50
Apparel Headstart500
Plastic Injection HRM Productivity& Quality
Plastic Packaging Cycle time Improvement
Palm Oil Refineries Counter Service ASEAN SMIs
Electrical Mfg Services Call Centre
Automotive Vendors TQM Construction
Productivity
Utility Klang Valley
Public Sector Johor Baharu
Power Producers Services
Energy Users
Local Authorities Hotels
Project Development Management Hospitals
Counter Service Ports
Excellence Organization Banks
Retail