King Fahd University of Petroleum & Minerals Construction Engineering & Management Dept. Prepared For: Dr. Abdulaziz A. Bubshait Prepared By: Abdullah I. Abuzaid June, 2009 Benchmarking CEM 515 Term Paper

Outline  Introduction Definition Origins Important of Benchmarking  Benchmarking Process  Benchmarking Methodology  Types of Benchmarking  Criticisms of Benchmarking  Advantages & Disadvantages  Conclusion

Introduction

Benchmarking is a topic of general interest in quality management. Benchmarking has reached widespread diffusion and is now considered as one of the most powerful tools for promoting process improvements and re-engineering in many prominent organizations. Benchmarking is a popular method for developing requirements and setting goals.

Definition There are many definitions according to different perceptions and applications of the technique and philosophy. Benchmarking defined as a process for improving performance of any organization by continuously identifying, understanding & adopting outstanding practices and processes inside or outside the organization. Benchmarking is basically learning from others. Introduction

Origins The term 'benchmarking' was first adapted to business practices by Xerox in Xerox’s aim was to evaluate itself, to identify its strengths and weaknesses and adapt to constantly changing market conditions. Introduction

Important of Benchmarking  Benchmarking allows you to discover the gaps in your performance when compared with someone else.  The Benchmarking used for wield rang in organization for many aspects with deferent ranking as showing in the table below: Introduction

Benchmarking Process

Basic Steps 1.Planning 2. Analysis 3. Integration 4. Action and Monitoring Benchmarking Process Planning Data Gathering and Analysis Action and Monitoring Integration Benchmarking Process

1.Planning  Establish benchmarking roles and responsibilities.  Decide what you wish to benchmark.  Identify the process to benchmark.  Decide against whom you need to benchmark  Document the current process.  Identify outputs required.  Determine data collection methodologies. Benchmarking Process

2. Analysis  Normalise the performance data.  Construct a comparison matrix to compare your current performance data with your partners’ data.  Identify outstanding practices.  Analys the gaps.  Analys factors that create the gaps.  Isolate process enablers. Benchmarking Process

3. Integration  Define Set stretching targets  “Vision” an alternative process  Consider the barriers to change  Plan to implement the changes 4. Action and Monitoring  Implementation planning  Roll-out of new modus operandi (changes)  Collecting data  Evaluating progress  Iterative change Benchmarking Process

Questionnaire to Apply Benchmarking The questionnaire to determine if organisation is ready for benchmarking or not. Benchmarking Process Questionnaire American Productivity and Quality Centre (APQC)

Benchmarking Methodology

Examples of Typical Methods: 1. Identify your problem areas 2. Identify other organizations that have similar processes 3. Identify organizations that are leaders in these areas 4. Survey organizations for measures and practices 5. Selecting appropriate benchmarks 6. Finding the source for benchmarking 7. Visit the "best practice" organizations to identify leading edge practices 8. Implement new and improved business practices Benchmarking Methodology

Estimated Time and Effort for Benchmarking Process: Benchmarking Methodology Chart of the estimation of time and effort for the basic improvement stages of Organization.

Types of Benchmarking

There are several different types of benchmarking in which a organization can engage. They may come in different forms and names depending on individual perspectives. The type of benchmarking selected depends on the measures needed and the methods used to collect the data. Types of Benchmarking

The main types of benchmarking: 1.Internal good practice benchmarking. 2. Competitive benchmarking. 3. Functional benchmarking. 4. Generic benchmarking. 5. Strategic benchmarking. 6. Performance benchmarking. 7. Process benchmarking. 8. External benchmarking. 9. International benchmarking. Benchmarking Process

Criticisms of Benchmarking

 As with any new concept there are those who are in favour of the idea and those who oppose or criticize it. Some of criticisms of benchmarking 1.benchmarking is that it can be considered as spying on the competition. This is not truth: Benchmarking is not spying on the competition but keeping up with what they and the rest of the industry are doing. Criticisms of Benchmarking

2. Benchmarking is copycatting. This is not truth: Copycatting and Benchmarking are not one and the same. Copycatting leads to lessened creativity and stale ideas. Benchmarking is not supposed to take the place of managers bringing insight and original strategies into the organization. Copycatting is an easy trap for managers to fall into, it is important for managers to realize that benchmarking will never be an excuse for managers to stop being creative and innovative. Criticisms of Benchmarking

3. Some organizations do not utilize benchmarking because they feel that if it’s not broke, don’t fix it. 4. Many organizations shy away from benchmarking because they do not understand what benchmarking is and they feel that they do not have anything to gain. Criticisms of Benchmarking

Advantages & Disadvantages

Advantages :  The advantage of benchmarking is not to compare key figures but to compare how tasks are performed.  There are many advantages of the benchmarking: 1.Learn from others experience & practices. 2. It allows examination of present processes 3. Aids change & improvement. 4.It gives a chance for study & measurement of a competitor for the purposes of process or product quality improvement. Advantages & Disadvantages

Advantages : 5.Benchmarking often proves particularly successful when comparing processes. 6.Helps the organizations to stay in the business with high performance 7.Delight the customer of the organizations. 8.Continuous of Improvement and apply benchmarking increased the opportunity to be world class leader

Advantages & Disadvantages Advantages : 9.Sharing the best practices between benchmarking partners. 10. It Iidentifies opportunities for improvement 11.Provides the momentum necessary for implementing change 12.Involves for looking in detail at how other organizations carry out the same or similar processes. 13.The capability to use for everyone and can be applied to (almost) any company, any private organization, any public organization.

Disadvantages:  The advantage of benchmarking is limited and the organization can eliminate the number of disadvantages to gain the benefits of benchmarking.  There are some disadvantages of benchmarking: 1.Poorly defined benchmarks may lead to wasted effort and meaningless results. 2.Incorrect comparisons will effect the result of required improvement and what is best for someone else may not suit to other. 3.Some organizations have reluctance to share the information. 4.Benchmarking cannot change all required improvement at once. Advantages & Disadvantages

Conclusion

 The benchmarking is becoming more commonly used and it is a more efficient way to make improvements.  Benchmarking speeds up organization’s ability to make improvements.  Benchmarking is not just making changes and improvements for the sake of making changes, benchmarking is about adding value.  When an organization looks at benchmarking they must look at all aspects of the business, its products, and its processes.  Benchmarking will not work unless you know yourself. Conclusion

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