Benchmarking (BM)

Faculty Guide - Prof. Arun Kumar Paul

Group 3 -
Akankshya Panda - US20003
Ojas Patil - US20012
Somesh Das - US20019
Table of Contents
❖ Meaning and Definition
❖ Features and Concept
❖ Why Benchmarking?
❖ Process
❖ Types of Benchmarking
❖ Cost
❖ Advantages of Benchmarking
❖ Disadvantages of Benchmarking
❖ Conclusion
❖ References
 Meaning and Definition

❖ Benchmarking is the competitive edge that allows organizations to adapt, grow,

and thrive through change.

❖ It is the process of measuring key business metrics and practices and comparing
them within business areas or against a competitor, industry peers, or other
companies around the world to understand how and where the organization needs
to change in order to improve performance.
 Features and Concept
❖ Benchmarking is a systematic and
continuous measurement process.
❖ It is a process of measuring and comparing
an organization’s business processes against
business process leaders anywhere in the
world, to gain information which will help
the organization to improve its performance.
❖ It is basically a quality practice.
 Why Benchmarking?
❖ Understand your performance relative to close competitors
❖ Compare performance between product lines/business units in your own company
❖ Hold people more accountable for their performance
❖ Drill down into performance gaps to identify areas for improvement
❖ Develop a standardized set of processes and metrics
❖ Enable a mindset and culture of continuous improvement
❖ Better understand what makes a company successful
 Process
❖ There is no single benchmarking process that has been universally adopted. The
wide appeal and acceptance of benchmarking has led to the emergence of
benchmarking methodologies.

❖ The first book on benchmarking, written and published by Kaiser Associates, is a

practical guide and offers a seven-step approach.

❖ Robert Camp (who wrote one of the earliest books on benchmarking in 1989)
developed a 12-stage approach to benchmarking.
 Process (Cont.)
The 12 stage methodology consists of:

1. Select subject 7. Establish process

2. Define the process differences
3. Identify potential partners 8. Target future performance
4. Identify data sources 9. Communicate
5. Collect data and select all 10. Adjust goal
partners 11. Implement
6. Determine the gap 12. Review and recalibrate
 Types of Benchmarking
Benchmarking can be internal or external .
Within these broader categories, there are three specific types of benchmarking: 1)
Process benchmarking, 2) Performance benchmarking and 3) Strategic benchmarking.
These can be further detailed as follows:

❖ Process benchmarking ❖ Product benchmarking

❖ Financial benchmarking
❖ Benchmarking from an investor
perspective
❖ Benchmarking in the public sector
❖ Performance benchmarking
❖ Strategic benchmarking
❖ Functional benchmarking
❖ Best-in-class benchmarking
❖ Operational benchmarking
❖ Energy benchmarking
 Cost
❖ The three main types of costs in benchmarking are:
➢ Visit Costs
➢ Time Costs
➢ Benchmarking Database Costs
❖ The cost of benchmarking can substantially be reduced through utilizing the many
internet resources that have sprung up over the last few years.
❖ These aim to capture benchmarks and best practices from organizations, business
sectors and countries to make the benchmarking process much quicker and
cheaper
 Advantages of Benchmarking

❖ Gain an independent perspective about how well you perform compared to

other companies
❖ Drill down into performance gaps to identify areas for improvement
❖ Develop a standardized set of processes and metrics
❖ Enable a mindset and culture of continuous improvement
❖ Set performance expectations
❖ Monitor company performance and manage change
 Disadvantages of Benchmarking
❖ Sometimes, the company is unable to gather adequate information for benchmarking.
This leads to an improper or inadequate comparison of the company’s performance
with that of its competitors.
❖ The companies tend to depend on other companies’ strategies to become successful. In
this process of following the market leaders, they sacrifice their individuality and
uniqueness and starts following the path shown by others.
❖ At times, companies adopt benchmarking for the sake of doing so, rather than finding
out the necessity of it. It fails to understand its weaknesses while keeping an eye on
the functioning of its competitors.
❖ Some organizations don’t understand the actual purpose of this strategy and start
copying their competitors in every aspect. This may even lead to a downfall of the
business.
 Conclusion
❖ Benchmarking has consequences which are beyond the process itself: it reforms all
the levels of the company.; modifies the process of manufacture of the product
leads(drives) ; also reforms the hierarchical organization of the company, the
product itself, and the state of mind of the employees.
❖ There is no doubt that benchmarking is here to stay. Any company should
benchmark if it wants to attain world-class competitive capability, prosper in a
global economy, and above all, if it wants to survive.
❖ These trends are not an option for companies anymore; they should be done by all
who want to remain competitive. All companies strive to be profitable, competitive,
and successful. Benchmarking can help any company succeed-as long as it is
applied correctly
 References

❖ https://en.wikipedia.org/wiki/Benchmarking
❖ https://www.apqc.org/blog/what-are-four-types-benchmarking
❖ https://theinvestorsbook.com/benchmarking.html
❖ https://commitagency.com/blog/pros-and-cons-of-industry-benchmarks/
❖ https://www.pharmaceuticalprocessingworld.com/7-reasons-you-should-b
enchmark-your-manufacturing-performance/
THANK
YOU…..