BENECHMARKING - DEFINITION

1. BENECHMARKING -DEFINITION “The continuous process of measuring products, services, and practices against the company’s toughest competitors or those renowned as industry leaders

2. BENCHMARKING THOUGHTS “Benchmarking is the practice of being humble enough to admit that someone else is better at something and wise enough to try and learn how to match and even surpass them at it.”- APQC, 1998

3. BENCHMARKING • In sharp contrast to the conventional approach of setting the future goals extrapolated from the internal practices and past trends. • Since external environment and market conditions change rapidly; goal setting which is internally focused can’t be true reflection of customer’s expectations.

4. BENCHMARKING • Customers’ expectations are highly liquid and are driven by standards set by best performer. • Any product or service just below these standards may not catch the eyes of customer.

5. Whyuse Benchmarking • Survival lies in emulating best and not in lagging behind • Bench marking is time and cost efficient because it involves imitation and adaptation rather than pure invention. Prevents the “Re-inventing the wheel”. • Quantum-leaps in performance

6. Whyuse Benchmarking • An effective ‘wake-up call’ and helps to make a strong case for change • Practical ways in which step changes in performance can be achieved by learning from others who have already undertaken comparable changes • The impetus for seeking new ways of doing things and promotes a culture that is receptive to fresh approaches and ideas • Opportunities for staff to learn new skills and be involved in the transformation process from the outset.

7. POTENTIAL OF BENCHMARKING IN PAKISTAN • Local industry is not yet well developed and is sprouting its wings. • Cultural growth and professionalism is inchoate. • The leading enterprises are foreign based whether pharmaceuticals, automobiles or other FMCGs. • These transnational companies have nurtured a professional culture.

8. POTENTIAL OF BENCHMARKING IN PAKISTAN • The professional culture has paid TNCs in Pakistan through huge revenues. • MNCS have small market share volume wise and high share price wise. • National companies share is greater volume wise and fewer revenues wise.

9. POTENTIAL OF BENCHMARKING IN PAKISTAN • A list of top ten pharmaceutical companies in Pakistan is filled with the MNCs • Same situation exists in the beverages, automobile, electronics and FMCGs.

10. POTENTIAL OF BENCHMARKING IN PAKISTAN • Since TNCs are leading in the competition, they can be benchmarked by the striving national companies. • Every aspect of the business where TNCs outperform their local competitors can be benchmarked.

11. POTENTIAL OF BENCHMARKING IN PAKISTAN • These aspects include Organizational culture Marketing strategies Operational activities Financial aspects Human resource Or any other aspect

12. Types of Benchmarking • Internal benchmarking • External benchmarking • Functional benchmarking:

13. Internal benchmarking sharing opinions between departments within the same organisation ADVANTAGES: • Easier to implement • Easier to access data DISADVANTAGES: • External ideas blocked

14. External Benchmarking • Comparison with external organisations to discover new ideas, methods, products and services. • The gap between internal and external practices displays the way where to change and if there is any need to change. Advantages • Helps to measure one’s own performance • Helps to search for best practices Disadvantages • Takes time • Requires support • Legal/ethical isssues • Industrial espionage

15. Functional Benchmarking: Comparative research to seek world-class excellence by comparing business performance not only against competitors but also against the best businesses operating in different industry Advantages: • Discovering innovative practices Disadvantage: • Not suitable for every organisation

16. Other Types of Benchmarking • Product Benchmarking • Process Benchmarking • Strategic Benchmarking How companies compete, identify the winning strategies that have enable high-performing companies to be successful in their marketplaces. • Parameter Benchmarking

17. Gap Analysis (Spider chart)

18. METHODOLOGY OF BENCHMARKING AT&T Vs XEROX

20. BENCHMARKING ESSENTIALS • Clearly defined purpose • Continual analysis & reassessment • BM methodology must be appropriate • Significance of results must be clear • Conclusions must be justified by the data • Never compromise integrity for the sake of findings

21. BENCHMARKING ESSENTIALS • Investigation must be systematic • A high code of ethics is essential • Successful benchmarking requires a planned approach • Requires senior management commitment • Must establish & enforce milestones • Must report findings to senior mangment

22. BENCHMARKING ESSENTIALS • Internal training for company personnel • Access to a benchmarking database • Professional BM analysts to support studies • The process must be institutionalized!

23. BARRIERS TO BENCHMARKING • Fear of being seen as “copying” • Fear of losing competitive advantage by sharing information • Arrogance – “we are the best, why benchmark?” • Benchmarking trap – benchmark that which is convenient, but may not be important. Adapted from Watson 1992

24. BARRIERS TO BENCHMARKING • 5. Impatience – “A quintessential trait” • Excuses are too easy: • We are too small • We are too busy • We are too different • Nobody else does what we do • We do it better than anyone else Adapted from Watson 1992

25. BENCHMARKING OBSERVATIONS • Key is to “Adapt not adopt” – Deming • Benchmarking does not come as a natural process for many – competitiveness does, but not benchmarking, because benchmarking requires a team approach.

26. Legal & Ethical Guidelines • Keep it legal; • Be willing to give what you get; • Respect confidentiality; • Keep information internal; • Use benchmarking contacts;

27. EXAMPLRY SPIDER CHART FOR BENCHMARKING