Benchmarking

1. Xerox Corporation defines benchmarking as the continuous process of measuring products, services and practices against the toughest competitors or those companies renowned as leaders. 2. American Productivity & Quality Centre defines benchmarking as "the process which companies target key improvement areas within their firms, identify and study best practices by others in these areas, and implement new processes and systems to enhance their own productivity and quality.

3. Spendoline defines benchmarking as "a continuous systematic process for evaluating the products, services and work processes of organizations that are recognized as representing best practices for the purpose of organizational improvement.

Benchmarking is
(1) Ongoing Process (2) Systematic Process (3) To improve performance (4) Involves right people (5) Choosing right thing (6) Top management support (7) Gaining thorough understanding of the organization process (8) Choosing suitable partners (9) Managing improvement process

Benchmarking is not (1) Industrial tourism (2) Database consultation or number fixation (3) Just a labour cost cutting exercise (4) Just playing catch up to international performance (5) Just competitive analysis

(6) Industrial espionage or spying

Types of Benchmarking
a) Internal b) External c) Functional d) Competitive e) Cooperative f) collaborative g) Process h) Performance & strategic

Process of Benchmarking
Planning

1.
2. 3.

Identify what is to bebenchmarked

Identify comparative companies Determine data collection method and collect data Determine current performance gap Project future performance level

Analysis

4. 5.

Integration

6.
7. 8.

Communicate benchmark findings and gain acceptance

Establish functional goals Develop action plan Implement specific actions & monitor progress Recalibrate benchmarking

Maturity Action

9. 10.

Leadership position attained Practices fully integrated into processes

Xerox's Five Phase Process

Phase 1 - Planning 1. Decide what to benchmark 2. Identify whom to benchmark 3. Plan investigate & conduct it - Gather necessary information & draft - Observe the best practices.

Phase 2 - Analysis
1. Determine the current performance gaps 2. Project the future performance levels

Phase 3 -Integration 1. Communicate bench marking findings & gain acceptance 2. Revise performance goals
.

Phase 4 - Action 1. Develop action plans 2. Implement actions and monitor progress 3.Recalibrate the benchmarks Phase5- Maturity 1. Determine when leadership position is attained 2. Assess benchmarking as on going process.

Alcoo's Six Step Process

1. Decide what to benchmark 2. Planning the benchmarking project 3. Understand own performance 4. Study others 5. Learn from data 6. Use findings
.

NCR's Six Step Process

1. 2. 3. 4. Identify key performance measures Identify best-in class companies Measure performance of best in class companies Measures own performance and identify opportunity gaps 5. Specify programmes and actions to meet/surpass the best in class. 6. Implement and monitor results
.

Historical performance Improvement

Step improvement due to benchmarking Projected improvement rate for this process

Widening gap

Projected Improvements for benchmarking partners

Gap Projection

Time

Benchmarking Positioned

Strategic Benchmarking

Operational Benchmarking

Hybrid Assessment Benchmarking

Product Benchmarking

Process Benchmarking

Sphere of Benchmarking

Market Research

A Genetic Benchmarking Methodology Planning Plan the project Assemble team Decide what to benchmark Decode Partners Prepare to gather data Collect data Analyse results Determine gaps Project future Performance

Communicate findings Developaction Plan Implement Improvements Recalibrate

Action

Data

Analysis

Benchmarking by various Cos

1. Xerox studied order process system of LL Bean in detail because it was considered to be best in the class.

2. Alcoa has studied Dow Chemical, Du Pont, and Hercules Inc. for safety process.
3. General electric studied for management process Dow Chemical, Du Pont & Hercules Inc. 4. Motorola in order to improve delivery process of cellular telephones benchmarked Dominos Pizza and Federal Express.

5. MBNA a credit card company benchmarked XEROX, IBM, L.L. Bean, U.S. Sprint to study customer practices.