Материал: Management-and-Organization-Behavior

different dimensions, each with best practices for that particular measure. It involves comparison with several companies who are best for the chosen measure. (Some common performance measures are return on assets, cycle time, percentage of on-time delivery, proportion of defects, percentage of damaged goods and time spent on administrative functions).

-- Benchmarking focuses on performance measures and processes and not on products. Thus, it is not restricted to the industry to which the company belongs. It extends beyond these boundaries and identifies organizations in other industries that are superior with respect to chosen measures.

-- Benchmarking allows organizations to set realistic, rigorous new performance targets and this process helps convince people of the credibility of these targets.

-- Benchmarking allows organizations to define specific gaps in performance and to select the processes to improve. It enables the company to redesign its products and services to achieve outcomes that meet or exceed customer expectations.

-- Benchmarking provides a basis for training human resources.

Limitations of Benchmarking

-- The primary limitation or weakness of benchmarking is the fact that best-in-class performance is not a static but a moving target.

-- Benchmarking is not a panacea that can replace all other quality efforts or management processes that can improve the competitive advantage of a company.

-- Benchmarking is not an “instant pudding’.

Pitfalls of benchmarking

-- The potential pitfalls of benchmarking could be overcome by:

-- Involving the employees who will ultimately use the information and improve the process (participation can lead to enthusiasm).

-- Relating process improvement to strategy and competitive positioning.

-- Defining the firm’s own process before gathering data for the purpose of comparison.

-- Perceiving benchmarking as an ongoing process and not as a onetime project with a finite start and completion dates.

-- Expanding the scope of the companies studied instead of confining to one’s own areas, industry or to direct competitors, which is a narrow approach in identifying excellent performance that are appropriate to one’s own processes.

-- Perceiving benchmarking as a means to process improvement, rather than an end in itself.

-- Setting goals for closing the gap between the existing performance (what is) and the benchmark (what can be).

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-- Empowering employees to achieve improvements that they identify and for which they solve problems and develop action plans.

Approaches of Benchmarking

To compare one’s business practices with those of other organizations, four common approaches to benchmarking are adopted. They are:

-- Internal benchmarking ,

-- Competitive benchmarking,

-- Non-competitive benchmarking, and -- World-class benchmarking.

Internal benchmarking is done within one’s organization or perhaps in conjunction with another division or branch office. Internal benchmarking is the easiest to conduct since data and information should be readily available and confidentiality concerns are minimized.

Competitive benchmarking involves analyzing the performance and practices of best-in-class companies. Their performance becomes a benchmark to which a firm can compare its own performance and their practices are used to improve that firm’s practices. However benchmarking the competition could be difficult since it might be impossible to collect or learn a competitor’s secrets. This type of information can often be obtained through a confidential survey of all competitors, usually conducted by a third party, quite often by a consulting firm.

Non-competitive benchmarking is learning something about a process a company wants to improve by benchmarking:

-- a related process in the industry with another firm, the company does not directly compete with,

-- a related process in a different industry, and -- an unrelated process in a different industry.

An advantage of this type of benchmarking is that new processes which could easily be adapted to one’s organization might be discovered.

World-class benchmarking: This approach to benchmarking is the most ambitious. It involves looking towards the recognized leader for the process being benchmarked – an organization that does it better than any other.

Types of Benchmarking

Three major types of benchmarking that have emerged in business are:

i.Performance benchmarking or operational benchmarking,

ii.Process benchmarking or functional benchmarking, and

iii.Strategic benchmarking.

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Performance Benchmarkinginvolves pricing, technical quality, features and other quality or performance characteristics of products and services. Performance benchmarking is usually performed by direct comparisons

or “reverse engineering” in which competitor’s products are taken apart and analyzed. This process is also known as “operational benchmarking: or

“competitive benchmarking” and involves studying of products and processes of competitors in the same industry.

Process Benchmarking centres on work processes such as billing, order entry or employee training. This type of benchmarking identifies the most effective practices in companies that perform similar functions, no matter in what industry. For example, the warehousing and distribution practices of L.L.Bean were adapted by Xerox for its spare parts distribution system. Texas Instruments studied the kitting (order preparation) practices of six companies, including Mary Kay Cosmetics and designed a process that captured best practices of each of them and thereby cutting the cycle time by 50 percent. Companies should not aim benchmarking solely at direct competitors and it would be mistake if they do so. If a company simply benchmarks within its own industry, it may be competitive and have an edge in those areas in which it is the industry leader. However, if benchmarks are adopted from outside the industry, a company may learn ideas and processes as well as new applications that allow it to surpass the best within its own industry and to achieve distinct superiority.

Strategic benchmarking examines how companies compete and seeks the winning strategies that have led to competitive advantage and market success. One way to determine how well a company is prepared to compete in a segment and to help define a best-in-class competitor is to construct a Key Success Factor (KSF) matrix similar to the one shown in figure

Success Factor Matrix

Competitive Analysis – Computer Industry… Segment

Cost structure

Figure 29.1: Success Factor Matrix

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Areas to Benchmark: Specific areas to benchmark at the operating level might include the following:

-- Customer service levels -- Inventory management

-- Inventory control (extent of automation) -- Purchasing

-- Billing and collection -- Purchasing practices -- Quality process

-- Warehousing and distribution, and -- Transportation.

Guidelines to Benchmarking: Companies approach benchmarking in different ways. IBM has a four step approach. AT & T has a nine step approach and Xerox a ten step approach. All these approaches have the general guidelines given below:

-- Do not go on a fishing expedition: When preparing a benchmarking study, pickup a specific area in the organization that needs improvement. This may be quality, customer satisfaction, accounts payable or delivery time. Then do your homework, including thoroughly reviewing your own processes and procedures before picking a company that excels in the particular area chosen.

-- Use Company people: The people who are going to implement changes need to see and understand for themselves, so it is they who should make the visits to other firms which are benchmarked and have the discussions with the concerned people. Further, the visits should be short and the working teams small.

-- Exchange information: You should be ready to exchange information and provide answers in turn to any questions you might ask another company.

-- Legal concerns: Avoid legal problems which might arise as a result of discussions that might imply price fixing, market allocation or other illegal activities. This could lead to problems. Do not expect to learn much about new products of competitors by the benchmarking process. Most benchmarking missions focus on existing products, business practices, human resources and customer satisfaction.

-- Confidentiality: Respect the confidentiality of data obtained. Companies that agree to share information may strongly object if that information leaks out to a competitor.

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Phases of Benchmarking

There are four phases of Benchmarking:

-- Planning: Identify the product, service or process to be benchmarked and the firm(s) to be used for comparison determines the measure of performance for analysis and collects the relevant data.

-- Analysis: Determine the gap between the firm’s current performance and that of the firm(s) benchmarked and identify the causes of significant gaps.

-- Integration: Establish goals and obtain the support of managers who must provide the resources for accomplishing the goals.

-- Action: Develop cross-functional teams of those most affected by the changes, develop action plans and team assignments, implement the plans, monitor progress and recalibrate benchmark as improvements are made.

Benchmarking Process: Specific steps in benchmarking vary from company to company but the fundamental or basic approach is the same. One company’s benchmarking may not work at another organization because of differences in their operating concerns. Successful benchmarking reflects the culture of the organization, works within the existing infrastructure and is harmonious with the leadership philosophy.

The Seven Step Benchmarking Model

Benchmarking is an ongoing process that requires data gathering, goal setting and analysis. These are accomplished by a seven step model. The seven steps are:

Step 1: Identify what to benchmark Step 2: Determine what to measure Step 3: Identify who to benchmark Step 4: Collect the data

Step 5: Analyze data and determine the gap Step 6: Set goals and develop action plan and Step 7: Monitor the process.

Factors to be kept in mind to ensure success with benchmarking:

-- Benchmarking must have the full support of senior management. Management should also be actively involved.

-- Training is critical for the benchmarking team and process.

-- Benchmarking should be a team activity. The team should include management, experts, consultants and especially those people directly involved in the process.

-- Benchmarking is an ongoing process. It must be part of an organization’s strategy and development. If well monitored, it serves as an important segment of a total quality management system.

-- Benchmarking efforts must be organized, planned and carefully

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