Benchmarking
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Benchmarking

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Benchmarking Benchmarking Presentation Transcript

  • www.a2zmba.com
    • 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.
    www.a2zmba.com
    • Benchmarking - is the process of determining who is the very best, who sets the standard, and what that standard is.
    • organizations evaluate various aspects of their processes in relation to best practice
    www.a2zmba.com
    • Benchmarking is a powerful management tool because it overcomes paradigm blindness
    • Benchmarking gets people out of their comfort zones and generates closed loop change processes
    www.a2zmba.com
  • Benchmarking the Japanese way
    • I. People
    • Employee selection based on potential
    • Importance of the individual
    • Lifetime employment
    • Company loyalty
    • II. Work style
    • Top management involved in quality
    • Job rotation
    • Very important to have an inquiring mind
    • Attitude to Excel under challenge
    • III. Product Quality
    • Zero defect policy
    • Quality supersedes production
    • Just in Time inventory
    • Company takes interest in development of suppliers
    • IV. Customers
    • Global reach
    • Attention to detail
    • Market research
    www.a2zmba.com
  • The Xerox story
    • Invented as a formal process by Rank Xerox
    • Benchmarking initiative taken as a part of its ‘Leadership Through Quality’ program.
    • The program encouraged Xerox to find ways to reduce their manufacturing costs.
    www.a2zmba.com
  • The key findings by Xerox
    • Twice as long as its japanese competitors to bring a product to market
    • Five times the number of engineers,
    • Four times the number of design changes
    • Three times the design costs...
    www.a2zmba.com
    • all the Japanese copier companies put together had only 1,000 suppliers, while Xerox alone had 5,000.
    • Cooperation between the company and the vendor extended to just-in-time production scheduling,
    www.a2zmba.com
  • Outcome
    • Highly satisfied customers for its copier/duplicator and printing systems increased by 38% and 39% respectively
    • Customer satisfaction with Xerox's sales processes improved by 40%, service processes by 18% and administrative processes by 21%...
    www.a2zmba.com
  • Steps for benchmarking
    • Identify your problem areas
    • Identify organizations that are leaders in these areas
    • Scope definition
    • Determine measurement methods, units, indicators and data collection method
    • Data collection
    • Analysis of the discrepancies
    • Present the results and discuss implications / improvement areas and goals
    • Make improvement plans or new procedures
    • Monitor progress and plan ongoing benchmark
    www.a2zmba.com
  • www.a2zmba.com Benchmarking :- Stages of improvement World Class Recognized as the best. Benchmarked by others even in other sectors Best in Class Exceeds customer expectations,outperforms all competitors and has clear competitive edge Efficient Meets all internal requirements for cost margins, asset utilization,cycle-time and measures of excellence Incapable Is ineffective , inefficient and at the risk of failing. Needs major redesign Effective Satisfies all customer requirements
  • 24/7
    • Staff are benchmarked in five key areas: productivity, cost and structure, compensation and benefits, hiring, and retention.
    • It is the first Indian BPO company to get an ISO 9002 certification and in December 2001 was awarded with COPC-2000 certification by COPC (Customer Outsourcing Performance Centre), an authority in contact centre operations.
    www.a2zmba.com
  • LEVELS OF BENCHMARKING
    • Strategic Benchmarking - using best practices to develop corporate, program, product strategies and results.
    • Operational Benchmarking - assessing and implementing the best practices of industry or public service leaders to improve processes to the extent possible to meet organizational goals.
    www.a2zmba.com
  • Types of Benchmarking
    • 1. Internal benchmarking -benchmark within a corporation, for example between business units
    • 2. Competitive benchmarking - benchmark performance or processes with competitors
    www.a2zmba.com
    • 3. Functional benchmarking -benchmark similar processes within an industry
    • 4. Generic benchmarking - comparing operations between unrelated industries
    www.a2zmba.com
    • 5. Collaborative benchmarking - carried out collaboratively by groups of companies (e.g. subsidiaries of a multinational in different countries or an industry organization).
    www.a2zmba.com
  • VERIZON
    • Energy Star benchmarking - dramatically reduce energy costs while reducing pollution - top Energy Star company in the telecommunications industry
    • Compensation
    • Process benchmarking of software engineering models and the processes followed for CMMI certification
    www.a2zmba.com
  • Energy use benchmarking
    • Energy-use benchmarking process for the company's central office buildings
    • Identify efficient energy-use administrative buildings
    • Buildings audited for energy use - receive a score between 0 and 100, based on how efficiently the building uses electricity
    • Score of 75 or higher - eligible to apply for the energy star label
    • Saved millions of dollars in energy costs annually
    www.a2zmba.com
  • COMPENSATION
    • Benchmarks compensation programs against two peer groups - companies that Verizon competes with for executive talent
    • Market peer group - similarly sized, multinational companies regardless of industry. eg., 3M, AT&T, Cisco Systems, Coca Cola, Ford
    • Industry peer group - companies that provide wireline, wireless and broadband communication services. eg., AT&T , BellSouth, Time Warner
    www.a2zmba.com
  • COMPENSATION
    • Annually benchmarks and reviews verizon’s total compensation and component pay levels (base salary, short- and long-term incentive opportunities)
    • Overall compensation – market and industry peers
    • Short & long-term incentive programs and individual compensation – industry peers
    www.a2zmba.com
  • Cost of benchmarking
    • There are costs to benchmarking, although many companies find that it pays for itself. The three main types of costs are:
    • Visit costs .
    • Time costs
    • Benchmarking database costs
    www.a2zmba.com
  • Limitations of benchmarking
    • Tough process
    • Time-consuming and expensive.
    • 'they are different from us' syndrome
    • Comparing with 'best in class' -ideally be done on a continuous basis
    www.a2zmba.com
  • COMMON MISTAKES
    • Confusing benchmarking with participating in a survey
    • Thinking there are pre-existing "benchmarks" to be found
    • Forgetting about service delivery and customer satisfaction
    • The process is too large and complex to be manageable
    • Confusing benchmarking with research
    www.a2zmba.com
  • Contd…
    • Misalignment
    • Picking a topic that is too intangible and difficult to measure
    • Not establishing the baseline
    • Not researching benchmarking partners thoroughly
    • Not having a code of ethics and contract agreed with partners
    www.a2zmba.com
  • How to improve??
    • You can keep costs down by doing benchmarking in degrees and by defining very narrow areas to explore
    • With careful planning, the benchmarking costs can be kept to a minimum.
    • To benchmark effectively, one must team up with companies in ones own industry whose processes are analogous
    www.a2zmba.com
  • INFOSYS – Financial policy
    • Return of capital should be two times the cost of capital and three times the invested capital, excluding cash – earned 3.2 times and 4.8 times respectively
    • Benchmark of 30% operating cash flows - earned 31.5%
    • Days of the sales outstanding benchmark was 60 - achieved 47
    www.a2zmba.com
  • INFOSYS – PERFORMANCE
    • Measure response times and throughput for different workload intensities to use as a standard for comparison and to understand scalability of system components
    • Benchmark consists of a workload model and associated performance measures - used as a standard to compare the performance of other systems or workloads in a specific domain
    www.a2zmba.com
  • CONCLUSION
    • Opens organisation to new ideas, tools ans methods to improve effectiveness
    • “ The knowledge you gain is well
    • worth the investment you make.”
    www.a2zmba.com