BENCHMARKING BENCHMARKING

What is Benchmarking ? It is a continuous process of comparing a company’s strategy, products, and processes with those of world leaders and best-in-class organisations in order to learn how they achieved excellence, and then setting out to match and even surpass The need for benchmarking was considered essential when most of the companies realised its importance in TQM and asked themselves that ‘’why reinvent the wheel if I can learn from someone who has already done it?’’

The Essence of Benchmarking It is a method of identifying new ideas and new ways of improving processes and hence meeting customers expectations Resultantly, besides reduction in cycle time and cost cutting it also helps in the improvement of process, which characterises customer’s expectation A properly implemented benchmarking program will take a total system approach by examining the company’s role in the supply chain Looking upstream at the suppliers and down stream at distribution channels Evaluating how suppliers are competitive in world market and how well they are integrated into company’s business processes

Benchmarking and the bottom line  Benchmarking is not the action plan, its techniques or measurement of existing financial measures i.e. return on assets and value added per employee  The most important payoff is quality processes that lead to a quality product  The full definition of benchmarking is finding and implementing best practices in our business. Practices that meet customers requirement

The Benefits Of Benchmarking 1. Cultural change – The embracement of benchmarking idea was difficult for certain cultures, but to get out of this myopia, its acceptance was important for progress in status quo environment 2. Performance improvement - Benchmarking allows the organisation to discover specific gaps in performance and to select the processes to improve 3. Human resources – Benchmarking provides basis for training. Employees begin to see the gap between themselves and best in class. Closing and bridging gaps through training and problem solving techniques, then organising all the activities in synergy with the functions of organisation helps in process improvement

Project conception Planning Preliminary data collection Best in class selection Best in class data Collection Assessment Implementation planning ImplementationRecalibration

 First focus on the company’s operational activities  Then identify ways to emulate or improve on the practices of best-in-class  Where strategic benchmarking is Macro analysis of environment, industry and competitors, operational benchmarking is thorough collection of data and its analysis  Now focus on cost and differentiation through customers purchasing decision i.e. differentiate through quality and improve price through cost reduction

It is a general opinion of most of the people that unless you have a proper infrastructure for TQM, the instant formula of benchmarking could have a detrimental affects. Because not having the requisite information and knowledge and yet imitating the best-in-class may disrupt the on-going operations Other potential pitfalls include the failure to:-  Involve the employees who will ultimately use the information and improve the process. Participation can lead to enthusiasm  Relate process improvement to strategy and competitive positioning. Design it to factors that affect the customer’s purchasing decision  Define your own process before gathering data or you will be astounded and will not have the data to compare your own process  Perceive benchmarking as an on-going process. It is not a one-time project with a finite start and complete date (cont)

 Expand the scope of the companies studied. Confining the benchmarking firms to your own area, industry, or to competitors is probably too narrow an approach in identifying excellent performers that are appropriate for your process  Perceive benchmarking as a means to process improvement, rather than an end in itself  Set goals for closing the gap between what is existing performance and what can be benchmark  Empower employees to achieve improvements that they identify and for which they solve problems and develop action plans  Maintain momentum by avoiding the temptations to put study results and action plan on the back burner. Credibility is achieved by quick and enthusiastic action