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IMPROVE BUSINESS PRACTICE

LEVEL III

Major General Mulugeta Buli Technical College

Holeta Genet
 LEARNING OUTCOMES
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At the end of this module the trainees should be able

to:
 Diagnose the Business

 Benchmark the Business

 Develop Plans to Improve Business Performance

 Develop Marketing and Promotional Plans

 Develop Business Growth Plans

 Implement and Monitor Plans

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LEARNING OUTCOME II
Benchmark the Business
 What is Benchmarking?
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 Benchmarking is where one process is compared

to a better process with the aim of improving the
first process.
 Benchmarking is the process of continuously
comparing and measuring an organization against
business leaders anywhere in the world to gain
information that will help the organization take
action to improve its performance.
 Why Do Benchmark
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 The key benefits of benchmarking to organizations are:

 Benchmarking focuses improvement efforts on issues critical
to business success
 It ensures that improvement targets are based on what has
been achieved in practice, which removes the temptation to
say ‘it cannot be done’.
 Benchmarking provides confidence that your organization's
performance compares favorably with best practice.
 For organizations in the public sector, benchmarking provides
an assurance that ‘Best Value’ is being achieved.
 What Does Successful Benchmarking
Require?
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 The main ingredients for success are:

 A clear understanding of what needs to be improved, and why. This
analysis is usually senior managers’ responsibility.
 Benchmarking must align with the organisation’s objectives if it is to be
successful.
 Careful selection of who to benchmark against.
 Clear understanding of the reasons for any difference in performance.
 Establishment of goals and targets that are both challenging and
achievable with effort.
 A willingness to change and adapt based on the benchmarking findings.
 Persistence! Results will not necessarily come quickly and easily.
 Types of Benchmarking
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 There are several different types of

benchmarking in which a organization can
engage.
 They may come in different forms and names

depending on individual perspectives.

 The type of benchmarking selected depends

on the measures needed and the methods used

to collect the data.
 Conti…
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 The four basic types of bench-marking are:

1. Internal-The process of comparing one
particular operation within your organization with
another.
 Success in this area is a matter of "the left hand
knowing what the right hand is doing."
 Internal benchmarking is by far the easiest, both to
research and to implement.
 Types of benchmarking cont...
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Internal benchmarking– a comparison of internal

operations such as one site (or project team) against
another within the same company.
Comparing internally:
 Data are easy to obtain
 Dialog generates immediate improvement ideas
 Defines common problems that help to focus external
inquiries
 Types of benchmarking cont...
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2. Competitive benchmarking – a comparison against a

specific competitor for the product, service or function of
interest.
 Competitive- The process of comparing an operation with that
of your direct competitors.
 For obvious reasons, this is the most difficult type of
benchmarking to carry out successfully, and legal considerations
must always be kept in mind.
 Conti…
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Product competitors are an obvious choice to

benchmark.
 Products and processes are directly comparable
 Good sources are information in the public
domain and third parties.
 Conti…
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3. Functional-The process of comparing an operation

with that of similar ones within the broad range of
your industry (e.g., copper mining techniques
compared with coal mining techniques).
Functional benchmarking is relatively easy to

research and implement.

Productivity improvement achieved in this type may

be 35 percent or better.
 Conti…
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 4. Generic-The process of comparing operations

from unrelated industries (i.e., ones often used by a
wide variety of industries).
 An example would be a film library using the
warehousing techniques of another industry to store
more efficiently its catalogue of old movies.
 The advantage of this type is that the problems of
competition do not apply, increasing the access to
information and reducing the possibility of legal
problems.
 Types of benchmarking cont...
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Process benchmarking – a comparison of business

functions or processes that are the same, regardless of
industry or country.
Process benchmarking is sometimes known as
functional or generic benchmarking.
 Innovations from other types of organizations can be
applied across industries.
 Easier to get organizations to share information.
 It is relatively to find organizations with world-class
operations
 The Benefits of Benchmarking
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Benefits include:
· Better performance in meeting customer needs &
requirements.
· Establishing effective business goals and objectives.
· Measuring true productivity.
· Becoming competitive
· Identifying & implementing best practice in business
processes
 5 steps to successful benchmarking
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The five key steps in the benchmarking process are:

Plan: Clearly establish what needs to be improved – make sure it is
important to you and your customers – and determine the data collection
methodology to be used (including any KPIs).
Analysis: Gather the data and determine the current performance gap -
against a competitor, the industry or internally – and identify the reasons
for the difference.
Action: Develop and implement improvement plans & performance targets.
Review: Monitor performance against the performance targets.
Repeat: Repeat the whole process – benchmarking needs to become a habit
if you are serious about improving your performance.
 Sources of Relevant Benchmarking Data
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 Benchmarking may be a one-off event or a continuous

process. It is usually carried out by individual companies
(internal benchmarking). It may also be carried out by groups
of organisations (collaborative benchmarking).
 Internal
Internal benchmarking involves collecting data across the
business rather than looking outside the organization.
 External

Collaborative benchmarking involves collecting data from

outside the business.
 Key Performance Indicators
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 Benchmarks are goals to aim for. Other names for

benchmarks include best practices and exemplary practices.
 Businesses choose benchmarks based on standards within
their industry.
 Key performance indicators are specific measurements used
to gauge performance.
 They're a way to precisely measure performance. For
example, in manufacturing, a key performance indicator
might be the production of a specific amount of product
within a particular time.
 Using Benchmarks and Key Performance
Indicators
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 Benchmarks and key performance indicators can

motivate employees, giving them measurable goals to
achieve.
 They can help you see how your company measures
up to others in the industry.
 Benchmarks are one way to readily identify areas
where you need to improve.
 Key performance indicators can help you in planning,
and they're useful for evaluating employees.
 Identify Potential Areas for Improvement
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 Identify potential areas for improvement that could contribute to

meeting business objectives.
 Potential areas for improvement are identified through a proactive

analysis to determine areas that could address process

performance shortfalls.
 The output from activity is used to evaluate and prioritize

potential improvements, and can result in either incremental or

innovative improvement suggestions as described in specific goal.
Example Work Products
 Conti…
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 1. Identify potential improvement areas based on the

analysis of process performance shortfalls.
 Performance shortfalls include not meeting
productivity, cycle time, or customer satisfaction
objectives.
 Examples of areas to consider for improvement
include product technology, process technology,
staffing and staff development, team structures,
supplier selection and management, and other
organizational infrastructures.
 Conti…
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 2. Document the rationale for the potential

improvement areas, including references to
applicable business objectives and process
performance data.
 3. Document anticipated costs and benefits
associated with addressing potential improvement
areas.
 4. Communicate the set of potential improvement
areas for further evaluation, prioritization, and use.
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Thank you for your time.