Benchmarking GEOP 4316

Outline What is benchmarking? Types of benchmarking Methodology/ Process Code of Conduct

What is benchmarking? The process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost. In the process of benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compare the results and processes of those studied (the "targets") to one's own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful. http://en.wikipedia.org/wiki/Benchmarking

Types of Benchmarking Types of Benchmarking Functional benchmarking: a company will focus its benchmarking on a single function to improve the operation of that particular function. Process benchmarking: the initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms Product benchmarking: This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses. Competitive benchmarking: allows the initiator firm to assess their competitive position by comparing products and services with those of target firms.

Types of Benchmarking 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 Systems are unlikely to be directly comparable in cost and efficiency terms. Therefore the need to be disaggregated into processes to make valid comparisons.

Types of Benchmarking Process benchmarking - observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. A process that relates to multiple functional areas. For example new product design Engineering Quality Marketing Operations and SC ….

Types of Benchmarking Product benchmarking - the process of designing new products or upgrades to current ones. This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses. In services, visiting the competitor’s location and analyzing its front office operations. Universal studios visiting Disney’s parks

Methodology/ Process A process of investigation that provides valuable information. A process of learning from others; a pragmatic search for ideas. A time-consuming, labor-intensive process requiring discipline. A viable tool that provides useful information for improving virtually any business process.

Methodology/ Process 5 & 6 Identify your problem areas. This can relate to any of the types of benchmarks. Necessary to know the organization's function, processes; base lining performance provides a point against which improvement effort can be measured. Identify other industries that excel at problem to be benchmarked. Similar processes, similar market characteristics, similar products, similar functions. Setup the visit. Research the organization, develop a detailed questionnaire, setup logistics. Visit. Listen and ask questions 5 & 6

Methodology/ Process 5. Analyze notes and observations, develop an action plan. Match observations to improvement needs. Structure action plan and move into implementation 6. Revise and communicate. Examine long term effect of implemented changes; did the organization improve?

Code of Conduct Successful benchmarking includes personal interaction, openness, sharing and the transfer of information. Trust between benchmarking parties is fundamental. To respect the rights and prerogatives of others and reflect legal considerations and limitations, the following guidelines are suggested for any benchmarking interaction.

Code of Conduct Ethics: Principles, guidelines, or standards that determine a protocol of interaction between individuals and organizations. Provide for a clear understanding of the intended use of information. Consult your partner(s) should your intent change. Conduct benchmarking activities with integrity and in a professional manner. Establish specific ground rules in advance, particularly when benchmarking with a competitor.

Code of Conduct Legality Never misrepresent yourself or your organization’s interest in a benchmarking exchange. Treat information obtained from a benchmarking partner as privileged. Identify all parties who will have access and the extent of that access. Comply with antitrust laws; be aware of potentially sensitive issues and consult with legal counsel if gathering procedure is in doubt, particularly if dealing with current or potential competitors.