Bench Marking

BENCHMARKING ABSTRACT Benchmarking is a process by which you can find answers to questions regarding the performance of your business, such as how your business is doing compared to other businesses, whether you are gauging your performance based on the most appropriate measures, and whether you are using the best practices. By means of benchmarking, you can collect data that will help you answer these questions, and that will show you what you can achieve and how you can achieve it. Benchmarkin
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  BENCHMARKING ABSTRACT  Benchmarking is a process by which you can find answers to questions regarding the performance of  your business, such as how your business is doing compared to other businesses, whether you are gauging  your performance based on the most appropriatemeasures, and whether you are using the best  practices. By means of benchmarking, you can collect data that will help you answer these questions, and that will show you what you can achieve and how you canachieve it. Benchmarking is a systematic and ongoing  process of identifying and understanding the best  practices and processes of other businesses and organizations, in order to adapt and use them in your own business, to improve your performance. It is acontinuous learning process, starting with what ishappening around you and extending to the best  practices in all parts of the world. The idea behind benchmarking consists of defining specific performance standards in areas such as production costs, cycletimes, and the prices charged. In its beginnings,benchmarking was used as a means of systematizing information related to competitors in a certain sector of an industry, but it soon became obvious that benchmarking could be used only not only tounderstand and compare with competitors, but also tounderstand the behavior of any organization, including those in other industries, whether large or small, publicor private, local or global. KEYWORDS  Benchmark, improvement, measure, compare, adapt. 1. BENCHMARKING Benchmarking is a topic of general interest in qualitymanagement. Thus, our discussion here goes beyondthe use of benchmarking in project management alone.Benchmarking is a popular method for developingrequirements and setting goals. In more conventionalterms, benchmarking can be defined as measuring your  performance against that of best-in-class companies,determining how the best-in-class achieve those performance levels, and using the information as the basis for your own company’s targets, strategies, andimplementation. Benchmarking involves research intothe best practices at the industry, firm, or process level.Benchmarking goes beyond a determination of the industry standard. It breaks the firm’s activities downto process operations and looks for the best-in-class for a particular operation. For example, Xerox corporationstudied the retailer LL Bean to help them improve their  parts distribution process. Benchmarking goes beyondthe mere setting of goals. It focuses on practices that produce superior performance. Benchmarking involvessetting up partnerships that allow both parties to learn  from one another. Competitors can also engage in benchmarking, providing they avoid proprietary issues.Benchmarking projects are like any other major project.Benchmarking must have a structured methodology toensure successful completion of thorough and accurateinvestigations. However, it must be flexible toincorporate new and innovative ways of assemblingdifficult-to-obtain information. It is a discovery processand a learning experience. 2 1.1. Types of Benchmarking Process benchmarking - the initiating firm focuses itsobservation and investigation of business processeswith a goal of identifying and observing the best practices from one or more benchmark firms. Activityanalysis will be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office processes where outsourcing may be aconsideration. Financial benchmarking -  performing a financialanalysis and comparing the results in an effort to assessyour overall competitiveness and productivity. Benchmarking from an investor perspective –  extending the benchmarking universe to also compareto peer companies that can be considered alternativeinvestment opportunities from the perspective of aninvestor. Performance benchmarking - allows the initiator firmto assess their competitive position by comparing products and services with those of target firms. Product benchmarking - the process of designing new products or upgrades to current ones. This process cansometimes involve reverse engineering which is takingapart competitors products to find strengths andweaknesses. Strategic benchmarking - involves observing howothers compete. This type is usually not industryspecific meaning it is best to look at other industries. Functional benchmarking - a company will focus its benchmarking on a single function in order to improvethe operation of that particular function. Complexfunctions such as Human Resources, Finance andAccounting and Information and CommunicationTechnology are unlikely to be directly comparable incost and efficiency terms and may need to bedisaggregated into processes to make valid comparison. 1.2. PROCEDURE There is no single benchmarking process that has beenuniversally adopted. The wide appeal and acceptance of  benchmarking has led to various benchmarkingmethodologies emerging. The most prominentmethodology is the 12 stage methodology by RobertCamp (who wrote the first book on benchmarking in1989) .The 12 stage methodology consisted of 1. Selectsubject ahead 2. Define the process 3. Identify potential   partners 4. Identify data sources 5. Collect data andselect partners 6. Determine the gap 7. Establish process differences 8. Target future performance 9.Communicate 10. Adjust goal 11. Implement 12.Review/recalibrate. The following is an example of atypical shorter version of the methodology: 1.Identify your problem areas - Because benchmarking can be applied to any business processor function, a range of research techniques may berequired. They include: informal conversations withcustomers, employees, or suppliers; exploratoryresearch techniques such as focus groups; or in-depthmarketing research, quantitative research, surveys,questionnaires, re-engineering analysis, processmapping, quality control variance reports, or financialratio analysis. Before embarking on comparison withother organizations it is essential that you know your own organization's function, processes; base lining performance provides a point against whichimprovement effort can be measured. 2.Identify other industries that have similarprocesses - For instance if one were interested inimproving hand offs in addiction treatment he/shewould try to identify other fields that also have hand off challenges. These could include air traffic control, cell phone switching between towers, transfer of patientsfrom surgery to recovery rooms. 3.Identify organizations that are leaders in theseareas - Look for the very best in any industry and inany country. Consult customers, suppliers, financialanalysts, trade associations, and magazines todetermine which companies are worthy of study. 4.Survey companies for measures and practices - Companies target specific business processes usingdetailed surveys of measures and practices used toidentify business process alternatives and leadingcompanies. Surveys are typically masked to protectconfidential data by neutral associations andconsultants. 3 5.Visit the best practice companies to identifyleading edge practices - Companies typically agree tomutually exchange information beneficial to all partiesin a benchmarking group and share the results withinthe group. 6.Implement new and improved business practices - Take the leading edge practices and developimplementation plans which include identification of specific opportunities, funding the project and sellingthe ideas to the organization for the purpose of gainingdemonstrated value from the process. 2. ASPECTS OF BENCHMARKING2.1. Why Benchmark? Benchmarking is practiced:- As an enabler for achieving and maintaining  high levels of competitiveness.- As a measurement of business performanceagainst the best of the best through acontinuous effort of constantly reviewing processes and methods.- As a process which can characterized by astandard and variables.- As a continuous process of measuring products , services and business practices against thetoughest competitors and those organizationsrecognized as industry leaders.- To emulate the by continuously implementingchange and measuring performance. 2.2. The Benefits Of Benchmarking The benefits of competitive benchmarking include:- Creating a culture that values continuousimprovement to achieve excellence.- Enhancing creativity by devaluing the notinvented-here syndrome.- Increasing sensitivity to changes in the externalenvironment.- Shifting the corporate mind-set from relativecomplacency to a strong sense of urgency for ongoing improvement.- Focusing resources through performancetargets set with employee input.- Prioritizing the areas that need improvement.- Sharing the best practices between benchmarking partners. 2.3. Some Dangers Of Benchmarking Benchmarking is based on learning from others, rather than developing new and improved approaches. Sincethe process being studied is there for all to see, a firmwill find that benchmarking cannot give them asustained competitive advantage. Although helpful, benchmarking should never be the primary strategy for improvement. Competitive analysis is an approach togoal setting used by many firms. This approach isessentially benchmarking confined to one’s ownindustry. Although common, competitive analysisvirtually guarantees second-rate quality because thefirm will always be following their competition. If theentire industry employs the approach it will lead tostagnation for the entire industry, setting them up for eventual replacement by outside innovators. 2.4. Criticism Of Benchmarking As with any new concept there are those who are infavor of the idea and those who opposeor criticize it. Benchmarking should not be used as is away to set goals. Those who are responsible for meeting specific goals must understand all of the processes that are required to make the goal a reality.One of the criticisms of benchmarking is that it can beconsidered as spying on the competition (Boxwell,1994). This is not truth. Benchmarking is not spying on

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