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Bench Marking Final
Bench Marking Final
BENCHMARKING
By
Sanjeev Rathod.
What is Benchmarking? Benchmarking can somewhat philosophically be defined as follows. 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 them and even surpass them at it. This definition captures the essence of benchmarking, namely learning from others. The core of the current interpretation of benchmarking is: Measurement, of own and the benchmarking partners performance level, both for comparison and for registering improvements. Comparison, of performance levels, processes, practices, etc. Learning, from the benchmarking partners to introduce improvements in your own organization. Improvement, which is the ultimate objective of any benchmarking study.
WHAT IS BENCHMARKING? The continuous process of measuring our products, services and practices against our toughest competitors of those renowned as leaders. WHY BENCHMARK? To effect radical improvements and not just incremental ones. Exposing managers to practices that they would never have developed on their own. Accelerating change and enhancing an awareness of world standards. Benchmarking offers a goal. After all your benchmark partner has achieved it.
The gap between internal and external practices creates the need for change.
Understanding industry best practices identifies what must change Externally benchmarked practices provide a picture of the potential results from change.
WHAT TO BENCHMARK?
Key business priorities Performance improvement areas Process outputs Topics successfully benchmarked
STEP - 9 IMPLEMENTATION OF ACTION PLANS AND MONITORING PROGRESS STEP - 10 RECALIBRATION OF BENCHMARKS
What products or services are you providing to your customer? What factors are responsible for customer satisfaction? What problems have been identified in your operation? In what areas are you feeling competitive pressure? What process measurements are you tracking? What areas are your major cost of quality expenditures? What subjects have been Benchmarked by departments similar
GUIDELINE C : DETERMINE THE MEASUREMENTS It is important to select measurements that are true indicators of performance. Developing good measurements is key to successful Benchmarking. Many of them' are expressed in terms of a ratio : Defects per machine Percentage on time delivery. Percentage yield Order lead time Return on assets
Prepare a brief statement of the Purpose of the project Subject of the study Measurements involved Indicate how the output will help you run your-business What possible Decisions will be made. Action taken Strategies developed.
GUIDELINE E : Review the subject of study with your internal customer and management
Obtain agreement with the customer at the early stage of the process. A benchmarking study must have clear accurate objectives based on customer requirements. Another advantage of involving customers is that when it's time to implement the teams recommendations they are based on clear, accurate customer requirements. Important to obtain management involvement and commitment to the study.
STEP 2 : IDENTIFY BENCHMARKING PARTNERS WHO ARE THE BEST COMPANIES? BEST COMPANY: A company with which you are directly competing with or a company which is' considered an industry leader in a specific area. GUIDELINE A : Prepare a list of companies whom you consider competitors or industry leaders. For this you may ask Customers People in your department Other members in your company with similar functions Members of your Trade association Trade journals from companies who have received recognition or Industry awards. Consultant Companies with excellent financial Reports Companies with many patent awards Business Directories Trade Shows & Seminars Newspapers magazine articles Reports from Securities analysis. Top rated firms in industrial surveys.
STEP 2 : IDENTIFY BENCHMARKING PARTNERS WHO ARE THE BEST COMPANIES? (contd..)
GUIDELINE B: Shortlist and Cross check based on following criteria How reliable is the information about the competitor?
STEP 3
The way by which one will collect the Data for the subject of study. GUIDELINE A : Preparation of a list of questions that will be used to gather the data required. The questions should be clear with the units of measurement clearly defined. GUIDELINE B : Prepare the answers for your own operation. Answering the questions for ones own organization, will provide a validation of the questions and a base for initial analysis.
STEP 3
Public Domain
Newspapers. Magazines Trade publications Trade shows Professional Organizations User Groups University Research Papers Government Documents Annual Reports Patent records Internet
STEP 3
Considering the relevance of the project, a balance sheet of each of the different methods is to be prepared as addressed below: Time availability for the project Complexity of information to be gathered Availability of specialized skills
STEP 3
GUIDELINE F : Determine the team to conduct research Cross functional Team Consultant GUIDELINE G : Check the legal requirements of collecting Data There are certain ethical and legal codes of conduct Do not misrepresent yourself Do not obtain competitive products illegally Do not provide proprietary data Do not entice suppliers to divulge information by promising business Do not discuss pricing Do not ask or check proprietary data Note: Many BM efforts fail because teams dont understand the company process first.
GUIDELINE B : Analysis of the Data Identity those statistics that are related to the original purpose of study Do not over analyze or be over precise. . Cross check in case of significant differences unusual business conditions change in accounting methodology Estimate the relative value of impact of these unique factors. GUIDELINE C : Determine the benchmark The benchmark should represent a level of performance which is clearly the hest in the industry GUIDELINE D : Determine the Gap Compare your own internal data against the benchmark.
STEP 4: DETERMINE THE CURRENT COMPETITIVE GAP (Contd..) GUIDELINE E: Determine the reasons for the gap This should be evident provided the study has been properly done. In case our performance is superior to that of the benchmark the cost of exceeding the benchmark is to be evaluated. This may need a cost benefit analysis. GUIDELINE F : Develop a list of benchmark drivers. From the information gathered develop a list of factors that appear to be driving the benchmark performance. This list is helpful for establishment of functional goals.
GUIDELINE C : ORGANISING THE ANALYSIS The report should be structured as Summary Key Results; Conclusion; Recommendation Study Process Respondent Selection; Methods employed to gather data Analysis Techniques
For the report Provide Key Results & Conclusion at the beginning Maintain an objective point of view throughout the communication. Analysis should be based on data and not on opinion.
Develop a Force Field: which defines the areas that influence the achievement of the goals
Determine the Key Drivers Use brainstorming to develop a list of possible actions
Preparation of action plan for each event Timeframe ( When the action will be completed) Responsibility (Who will act) Resources (What is required to complete the action) Impact on gap closure GUIDELINE B : ORGANISE THE ACTION PLAN Use GNATT, PERT charts etc as required.
Note
Benchmarking by itself does not improve performance It provides information, one can use to improve It is a discovery process aimed at exceeding customer requirements. Considered a powerful tool for quality, Benchmarking is an indispensable tool for the Learning Organisation. Without it one will never know where he stands relative to competitors and world class performers are. One will have no way of gauging the effectiveness of his process or imaging how good they are. One may miss out on new ways of thinking needed to achieve breakthrough improvements