Presented By:
Ayesha Ishaq
Sharrel Palous
Saman Zahid
What is Benchmarking?
“Improving ourselves
by learning from
others.”
What is benchmarking?
.

Benchmarking is a continuous, systematic process for
evaluating products, services and work processes or
organizations that are recognized as representing the
best practices, for the purpose of organizational
improvement (Spendolini 1992, 10-11)

Benchmarking is the search for industry best practices
that lead to superior performance (Camp, 1989).
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Benchmarking is the continuous process of measuring
products, services, and practices against the toughest
competitors or those companies recognized as industry
leader (Xerox Corporation, 1986).

A predefined position, used as a reference point for
taking measures against (Andersen & Pettersen, 1996).
Source: Spendolini, M. (1992). The Benchmarking Book. New York: American Management Association.
Camp, R.C. (1989). Benchmarking. The Search for Industry Best Practices That Lead to Superior Performance. Milwaukee,
Wisconsin: ASQC Quality Press
Andersen, P. & Pettersen P.-G. (1996). The Benchmarking Handbook: Step-by-Step Instructions. London: Chapman & Hall
In simple terms..
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Benchmarking is an on-going search for
the best practices that produce
superior performance when adapted
and implemented in one’s organization.
Emphasis should be placed on the
continuous elements of benchmarking.
In most cases benchmarking activities
are related to quality improvement.
Source: http://www15.uta.fi/yksikot/entrenet/hankerekisteri/hanke5_benchmarking.htm pril 24, 2015]
Brief history:
The word 'benchmarking' is borrowed
from land surveying, where it indicates a
fixed reference point for comparison.
 In a quality context, Benchmarking has a
different meaning – it refers to a quality
improvement methodology. While external
comparisons
(e.g.
reconnaissance,
competitive analysis, industry analysis,
etc.) have been used for centuries, this
approach was significantly extended by
Xerox during the 1980's.
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Source: http://www.dhutton.com/samples/sampbench.html [accessed April 24, 2015]
History:
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G.H. Watson outlines the development of benchmarking
in five phases:
Phase 1 1950-1975
Reverse Engineering
Phase 2 1976-1986
Competitive Benchmarking
Phase 3 1982-1988
Process Benchmarking
Phase 4 1988+
Strategic Benchmarking
Phase 5 1993+
Global Benchmarking
Reverse engineering was tearing things apart, examining
them, improving them, and putting them back together.
Benchmarking really began in its modern form with the
introduction of competitive benchmarking began with
Rank Xerox, and its implementation of benchmarking in
beginning around 1976.
This was followed by process benchmarking which
included looking for ideas outside of the direct
competition. Strategic benchmarking involves
fundamentally changing the business, not just the
process
Global Benchmarking is the newest and involves
comparing your organization on a global scale.
The xerox case: evolution
of benchmarking
The company that invented photocopier in 1959 and
maintained a virtual monopoly for many years
thereafter, like “Coke” or “Kleenex,” “Xerox” became
a generic name for all photocopiers.
 By 1981, however, the company’s market shrank to
35% as IBM, Kodak developed high-end machines and
Canon, Richo, and Savin dominated the low-end
segment of the market.
 The company was suffering from the “not invented
here” syndrome, as Xerox managers did not want to
admit that they were not the best.
 The company instituted the benchmarking process,
but it met with resistance at first. People did not
believe that someone else could do it better. When
faced with the facts, reaction went from denial to
dismay to frustration and finally to action.
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Source: https://totalqualitymanagement.wordpress.com/2009/09/16/the-evolution-of-benchmarking-xeroxcase/ [accessed April 24, 2015]
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Once
the
process
began,
the
company
benchmarked virtually every function and task for
productivity, cost, and quality. Comparisons were
made for companies both in and outside the
industry. For example, the distribution function
was compered to L.L. Bean, tje Freeport, Main
Catalog seller outdoor equipment and clothing and
everyone’s model of distribution effectiveness.
Results included:
◦ Quality problems cut by two-thirds
◦ Manufacturing costs cut in half
◦ Development time cut by two-thirds
◦ Direct labor cut by 50 percent and corporate
staff cut by 35 percent while increasing volume
The term ‘benchmarking’ was used to describe this
process.
Benchmarking Features
Continuous method of measuring and
comparing a firm’s business processes
against those of another firm.
Discover performance gaps between
one’s own processes and those of
leading firms.
Incorporate leading firm’s processes
into one’s own strategy to fill the
gaps and improve performance.
Benchmarking Concept
What is our
performance
level?
What are others'
performance levels?
How did they get
there?
How do we do it?
Creative
Adaptation
Breakthrough
Performance
Benchmarking Process
Plan
Measure
Improving
Practices
Collect
Collecting
Data
Implement
Analysis Analyze
Source: National Institute of Standards and Technology Quality Program http://www.quality.nist.gov
6 General Steps to
Benchmarking
1) Decide what to
benchmark
2) Understand current
performance
3) Plan
4) Study others
5) Learn from the data
6) Use the findings
Source: American Productivity and Quality Center http://www.apqc.org
1. Planning
 Determine
the purpose and scope of
the project
 Select the process to be benchmarked
 Choose the team
 Define the scope
 Develop a flow chart for the process
 Establish process measures
 Identify benchmarking partners
2. Collecting Data
 Conduct
background research to gain
thorough understanding on the process
and partnering organizations
 Use
questionnaires to gather
information necessary for
benchmarking
 Conduct
site visits if additional
information is needed
 Conduct
interviews if more detail
information is needed
3. Analysis
 Analyze
quantitative data of
partnering organizations and your
organization
 Analyze
qualitative data of partnering
organizations and your organization
 Determine
the performance gap
4. Improving Practices
 Report
findings and brief management
 Develop
an improvement
implementation plan
 Implement
process improvements
 Monitor
performance measurements
and track progress
 Recalibrate
the process as needed
Types of Benchmarking
 Internal
benchmarking
 External
benchmarking
 Functional
 Other
benchmarking
types
Internal benchmarking
Sharing opinions between
departments within the
same organization
ADVANTAGES:
Easier to
implement
Easier to access
data
DISADVANTAGES:
External ideas
blocked
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
Disadvantages
•Helps to
measure one’s
own
performance
•Takes time
•Helps to
search for
best practices
•Legal/ethical
issues
•Requires
support
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
Other Types of Benchmarking
Strategic
benchmarking
• When organizations seek to improve their overall
performance by focusing on certain strategies
• Example: benchmarking against companies that have
won awards/distinctions
Performance
benchmarking
• When organizations compare themselves with similar
organizations based on performance
• It focuses on elements of cost, technical quality,
service features, speed, reliability, profits and other
performance comparisons (FMCG companies)
Process
benchmarking
• Focuses on specific processes or operations
• Example: in logistics – delivery, safety
• In hotels – housekeeping, customer care
Three Major Advantages
of Benchmarking
Product &
Process
Improvement
• By implementing benchmarking
activity, organizations can improve
their operation process
Time & Cost
Reduction
• It is time and cost efficient because
it involves imitation and adaptation
rather than pure invention.
Competitive
Strategy
• Provides ability to compare and learn
from the best practices and gain
competitive advantage
Advantages:
Team Building
 Benchmarking cannot be successful without the full
involvement of everyone in contact with a
project. It creates a united front for an
organization and gives those who work within it a
common goal to accomplish. It also includes the
ideas and concerns of those affected.
Comprehensibility
 Unlike some methods, benchmarking is easy to
understand. This is due largely to the fact that
benchmarking produces a direct comparison to
another organization. After determining whom to
follow, you study what they do, and emulate
it. There is no misunderstanding of the overall goal
of being the best.
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Flexibility
 Benchmarking is flexible and can be interdisciplinary. Benchmarking
can be used on almost any organization, public, private, or, nonprofit. It can be fitted to a large multinational corporation or a local
shop, from a federal agency to the government of a small village.
 Identifying the best does not necessarily mean that a competitor has
the best solution. It may be a company who just does something
well. When Rank Xerox needed to make its shipping better, it relied on
L.L. Bean. This sort of out-of-the-box thinking can create new
standards rather than emulating someone else's practices
Creativity
 Sometimes an organization might know where their goals are, but the
path to meet them is not clear. Furthermore, even if another
organization is perceived to be doing something the best, it does not
mean it couldn't be done better. After clearly defining goals, however,
it can be easier to come up with new, innovative ways of getting
there. It could also create news ways of obtaining information or
making partnerships, such as Remington, a shotgun shell manufacturer,
getting information on how to make shinier shells from Maybelline lip
stick containers.
Evolution
 Benchmarking evolves with the consumer and doesn't require a large
up-front cost. As things change in the world, so does who is the
best. Because benchmarking involves constant reiteration, evaluating
and changing, it changes as the market or consumer does.
Benchmarking can also have a beneficial
effect on aspects needed to support
continuous improvement, such as:
Raised awareness about performance and greater
openness about relative strengths and weaknesses;
 Learning from others and greater confidence in
developing and applying new approaches;
 Greater involvement and motivation of staff in change
programmes
 Increase in willingness to share solutions to common
problems and build consensus about what is needed to
accommodate changes;
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Better understanding of the ‘big picture’ and gaining a
broader perspective of the interplay of the factors
(or enablers) that facilitate the implementation of
good practice; and
Increasing collaboration and understanding of the
interactions within and between organizations.
What to benchmark:
Work
processes
•
•
•
•
Support
functions
• HR management
• Financial management
• Marketing
Organizational
performance
Manufacturing
Supplying
Ordering
Maintenance
• Sales, Profitability,
• Cost, quality and manpower
Benchmarking does not..
Copy... Instead, you must adapt the
information to fit your needs, your culture,
and your system. And, if you copy, you can
only be as good as your competitor, not
better.
 Steal... To the contrary, it is an open, honest,
legal study of another organization’s
business practices
 Stop... Rather, it is a continuous process that
requires recalibration.
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Disadvantages
It does not measure the overall effectiveness of
the process
 Benchmarking reveals the standards attained by
competitors but does not consider the
circumstances under which the competitors
attained such standards.
 Many organizations tend to relax after excelling
beyond competitors' standards, allowing
arrogance to develop.
 Finally, many organizations make the mistake of
undertaking benchmarking as a stand-alone
activity. Benchmarking is only a means to an end,
and it is worthless if not accompanied by a plan
to change
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Source: http://www.brighthub.com/office/entrepreneurs/articles/82292.aspx
Performance attributes for
Food Quality
Product Quality
• Sensory
properties and
Self life
• Food Safety
• Food nutrition
• Packaging
Process Quality
• Production
system
• Product handling
and
transportation
• Environmental
aspects
Source: http://www.worldbusinesscapabilitycongress.com/wp-content/uploads/2013/01/Muhammad-Moazzam_MasseyUniversity_Paper_Benchmarking-Agri-food-Supply-Chain-Networks-A-Conceptual-Framework.pdf
Benchmarking gives us the
chance of gaining
Better
Awareness of Ourselves(Us)
 What we are doing?
 How we are doing it?
 How well we are doing it?
Better Awareness of the Best
(Them)
 What they are doing?
 How they are doing it?
 How well they are doing it?
POTENTIAL OF BENCHMARKING IN
PAKISTAN
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Local industry is not yet well developed
and is sprouting its wings.
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Cultural growth and professionalism is
immature.
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The leading enterprises are foreign
based whether pharmaceuticals,
automobiles or other FMCGs.
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These transnational companies have
nurtured a professional culture.
POTENTIAL OF BENCHMARKING IN
PAKISTAN
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The professional culture has paid TNCs
in Pakistan through huge revenues.
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MNCS have small market share volume
wise and high share price wise.
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National companies share is greater
volume wise and fewer revenues wise.
POTENTIAL OF BENCHMARKING IN
PAKISTAN
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A list of top ten pharmaceutical
companies in Pakistan is filled
with the MNCs
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Same situation exists in the
beverages, automobile,
electronics and FMCGs.
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 like Nestle
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POTENTIAL OF BENCHMARKING IN
PAKISTAN
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These aspects that can be
benchmarked include:
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Organizational culture
Marketing strategies
Operational activities
Financial aspects
Human resource
Or any other aspect
Legal & Ethical Guidelines
Keep it legal;
 Be willing to give what you get;
 Respect confidentiality;
 Keep information internal;
 Use benchmarking contracts;
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