BENECHMARKING -DEFINITION
“The continuous process of
measuring products, services, and
practices against the company’s
toughest competitors or those
renowned as industry leaders
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
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.
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.
Why use 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
Why use 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.
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.
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.
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.
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.
POTENTIAL OF BENCHMARKING IN
PAKISTAN
 These aspects include
Organizational culture
Marketing strategies
Operational activities
Financial aspects
Human resource
Or any other aspect
Types of Benchmarking
 Internal benchmarking
 External benchmarking
 Functional benchmarking:
Internal benchmarking
ADVANTAGES:
sharing opinions
between
departments
within the same
organisation
 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
 Helps to measure
one’s own
performance
 Helps to search for
best practices
Disadvantages
 Takes time
 Requires support
 Legal/ethical isssues
 Industrial espionage
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
 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
Gap Analysis (Spider chart)
Total customer
satisfaction
Current
performance of
the host for
variable ‘K’.
Best of the best
(current
performance of
the partner for
variable ‘A’.
Current performance of the host
Current performance of the partner
METHODOLOGY OF BENCHMARKING
AT&T
Vs
XEROX
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
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
BENCHMARKING ESSENTIALS
 Internal training for company personnel
 Access to a benchmarking database
 Professional BM analysts to support studies
 The process must be institutionalized!
BARRIERS TO BENCHMARKING
1.
2.
3.
4.
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
BARRIERS TO BENCHMARKING
5. Impatience – “A quintessential trait”
6. 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
BENCHMARKING OBSERVATIONS
1. Key is to “Adapt not adopt” – Deming
2. Benchmarking does not come as a natural process for many –
competitiveness does, but not benchmarking, because
benchmarking requires a team approach.
Legal & Ethical Guidelines
 Keep it legal;
 Be willing to give what you get;
 Respect confidentiality;
 Keep information internal;
 Use benchmarking contacts;
EXAMPLRY SPIDER CHART
FOR BENCHMARKING