3. What is Benchmarking?
Benchmarking is the process of improving
performance by continuously identifying,
understanding, and adapting outstanding practices
found inside and outside the organization.
Dr. Zargari
4. What is Benchmarking?
Benchmarking is the process of comparing one's
business processes and performance metrics to
industry bests and/or best practices from other
industries.
Why are others better ?
How are others better ?
What can we learn ?
How can we catch up ?
How can we become the best in our sector ?
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5. What is Benchmarking?
Benchmarking is
Making Best Practices Your Daily
Practice.
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6. What is Benchmarking? (J. McEvilly-2008)
Benchmarking has three main features:
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7. Benchmark
There are many benchmarks in the world including:
Processes
Design
Training
Service
Rapid product development
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9. Continuous and Breakthrough Improvement
ly
igh itive
H t
e
mp tion
Co tua
Si Continuous
Improvement
Improvement
Breakthrough
Improvement
ing
hmark
Benc rates
Continuous Accele ion
at
Improvement Innov nge
ha
an d C
Time
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10. Background of Benchmarking
Benchmarking was originally defined by D.T.
Kearns, the CEO of Xerox Corporation, in 1981 as
the continuous process of measuring products,
services, and practices against the toughest
competitors or non-competitors who is the leader
in their industry (Kolarik, 1995).
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12. Why Benchmarking?
Benchmarking gives us the chance of gaining:
Better Awareness of Ourselves (Us)
What we are doing
How we are doing it
How well we are doing it
Better Awareness of the Best (Them)
What they are doing
How they are doing it
How well they are doing it
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13. Why Benchmarking
Performance
Improvement
Meeting
Quality Creative
Standards Thinking
Benchmarking
Innovation Keep Pace with
In Science and
Management Technology
Methods Changes
Cope with Meeting
Competitive Customers
Markets Expectations
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16. Types of Benchmarking
On the basis of “What” is being compared with
other organizations and “Who” is being compared
with our organization, we can classify
benchmarking.
“What” is being
Who” is being
compared with
other vs. compared with
our organization
organizations
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17. Types of Benchmarking
On the basis of “What” is being compared with
other organizations we have four main types.
These four major types of benchmarking are
evolutionary beginning with product, through to
functional (performance), process and strategic
benchmarking.
Strategic
Process
Performance
Product
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18. Types of Benchmarking
On the basis of “Who” is being compared with our
organization, we have these categories:
Best of the Best
Best in Class
International
Generic
Internal vs. External
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20. Many firms perform product benchmarking when
designing new products or upgrades to current
products. Providing an external perspective on
opportunities to improve products, technology,
manufacturing and support processes, the product
development process, and engineering practices
are core activities of product benchmarking.
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21. Performance benchmarking focuses on assessing
competitive positions through comparing the
products and services of other competitors. When
dealing with performance benchmarking,
organizations want to look at where their product
or services are in relation to competitors on the
basis of things such as reliability, quality, speed,
and other product or service characteristics.
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22. Process benchmarking focuses on the day-to-day
operations of the organization. It is the task of
improving the way processes performed every day.
Some examples of work processes that could
utilize process benchmarking are the customer
complaint process, the billing process, the order
fulfillment process, and the recruitment process
(Bogan, 1994).
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23. Wisdom from “Texas Instruments”:
“Unless you change the process,
why would you expect the
results to change”
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24. Strategic benchmarking deals with top
management. It deals with long term results.
Strategic benchmarking focuses on how
companies compete. This form of benchmarking
looks at what strategies the organizations are
using to make them successful. This is the type of
benchmarking technique that most Japanese firms
use (Bogan, 1994). This is due to the fact that the
Japanese focus on long term results.
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25. This is concerned with comparing different
companies' strategies and assessing the success of
those strategies in the marketplace. Analyzes the
strategies with particular reference to:
strategic intent
core competencies
process capability
product line
strategic alliances
technology portfolio
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27. This refers to the analysis and comparison of one
or more units within the same organization. It is
often the case when organizations have an in-
house best practice area.
Sharing opinions Advantage:
between Easier to implement
departments within Easier to access data
the same
Disadvantage:
organization.
External ideas blocked
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28. Where examples of good practices can be found in
other organizations and there is a lack of good
practices within internal business units.
Comparison with external organizations leads to
discovery of new ideas, methods, products and
services. Advantage:
The gap between Helps to measure one’s own
internal and external performance
Helps to search for best practices
practices displays the
way where to change Disadvantage:
and if there is any need Takes time
Requires support
to change. Legal/ethical issues
Industrial espionage
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29. Comparisons of business process or functions that
are very similar, regardless of industry.
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30. Best-In-Class
Generally, initiator firms will choose to benchmark the
best-in-class.
Best-in-class refers to those firms or organizations that
have been recognized as the best in an industry based
on some criterion.
Objective
The objective of best-in-class is to provide a basis for
continual improvement.
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31. Best-of-the-Best
After becoming a best-in-class firm, it may be difficult
to gain new insight and information from direct
competitors.
Therefore, the next level of improvement is called best-
of-the best or best-in-the-world.
Don’t limit your effort to players
inside the industry only!
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33. Types of Benchmarking
There are several other classifications for
benchmarking, based on partner type, adoption
level and target process, etc. Following are the
most used types:
Internal
External
Competitive
Functional
Generic
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34. Competitive benchmarking is the most difficult
type of benchmarking to practice. For obvious
reasons, organizations are not interested in
helping a competitor by sharing information. This
form of benchmarking is measuring the
performance, products, and services of an
organization against its direct or indirect
competitors in its own industry. Competitive
benchmarking starts as basic reverse engineering
and then expands into benchmarking.
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35. Competitive Benchmarking is the continuous
measurement of the company’s products,
services, processes and practices against the
standards of best competitors and other
companies who are recognized as leaders. It is also
important to remember when using competitive
benchmarking that the goal is to focus on your
direct competitors and not the industry as a
whole.
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36. Functional benchmarking - a company will focus its
benchmarking on a single function to improve the
operation of that particular function. Complex
functions such as Human Resources, Finance and
Accounting and Information and Communication
Technology are unlikely to be directly comparable
in cost and efficiency terms and may need to be
disaggregated into processes to make valid
comparison.
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37. Benchmarking, originally described as a formal
process by Rank Xerox, is usually carried out by
individual companies. Sometimes it may be carried
out collaboratively by groups of companies (e.g.
subsidiaries of a multinational in different
countries). One example is that of the Dutch
municipally-owned water supply companies, which
have carried out a voluntary collaborative
benchmarking process since 1997 through their
industry association.
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38. Performing a financial analysis and comparing the
results in an effort to assess your overall
competitiveness and productivity.
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40. TOP-10 Benchmarking Organizations
Organization Ranking
Xerox 1
U.S. Army 2
Corning 3
Abu Dhabi Food Control Authority 4
Internal Revenue Service 5
United Technologies 6
DynMcDermott 7
Dubai Municipality 8
Dubai Chamber of Commerce and Industry 9
Allergan 10
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42. General Benchmarking Process
Plan Analyze
•Select Process •Collect Data
•Understand Process •Establish the gap
•Select Partners •Identify process changes
•Target future goals
Act
•Communicate actions
•Develop improvement
plan
•Implement
•Review Progress
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43. 1. IDENTIFY WHAT IS TO BE BENCHMARKED
A Benchmarking Process
PLANNING 2. IDENTIFY COMPARATIVE COMPANIES
3. DETERMINE DATA COLLECTION METHOD
AND COLLECT DATA
4. DETERMINE CURRENT PERFORMANCE "GAP"
ANALYSIS
5. PROJECT FUTURE PERFORMANCE LEVELS
6. COMMUNICATE BENCHMARK FINDINGS
AND GAIN ACCEPTANCE
INTEGRATION
7. ESTABLISH FUNCTIONAL GOALS
8. DEVELOP ACTION PLANS
9. IMPLEMENT SPECIFIC ACTIONS AND
ACTION MONITOR PROGRESS
10. RECALIBRATE BENCHMARKS
MATURITY • LEADERSHIP POSITION ATTAINED
• PRACTICES FULLY INTEGRATED INTO
PROCESS
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44. Xerox Experience-1 (Brogan, 1994)
The Xerox of today is not the Xerox of the sixties and
seventies. During that time period the organization
experienced market erosion from competitors,
primarily Japanese. These competitors were marketing
higher quality products in the United States at the
same price or lower as Xerox. Xerox found that the
Japanese were able to assemble quality products at a
low price. This was hard for Xerox to grasp because
they were the first to develop the photocopy and their
name had come to be synonymous with photocopies.
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45. Xerox Experience-2 (Brogan, 1994)
How could the Japanese be beating them at their own
game? Xerox found that they had to regroup. In doing
this they made competitive benchmarking a
fundamental part of their operations. Xerox began to
study other organizations within and out of their
industry. By 1983, Xerox had bench marked more than
230 process performance areas in their operation.
Identifying the best processes used by others, Xerox
adapted them for their own use. This is how they
regained their core competency and strategic
advantage in the photocopying industry.
Dr. Zargari
