Business Process Benchmarking


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Business Process Benchmarking

  1. 1. OBJECTIVES To know the definition of benchmarking To know the triggers for benchmarking To know the types of benchmarking To know what are the reasons for benchmarking To know the steps in identifying what to benchmark • To know benchmarking partner • To know the benchmarking process • To know what are the reasons why benchmarking efforts fail. • • • • •
  2. 2. OUTLINE I. Introduction II. Definition of Benchmarking III. Triggers for Benchmarking • Categories of Benchmarking IV. Types of Benchmarking • Internal • Competitive • Functional V. Reasons for Benchmarking VI. Steps in identifying what to benchmark VII. Benchmarking Partner VIII. Benchmarking Process • Benchmarking Process Model IX. Reasons for Failure of Benchmarking X. Summary
  3. 3. INTRODUCTION Benchmarking will help in identifying the current level of performance of the processes in the organization and bringing them up to the level of the best processes. It can be used to compare product features also. We will learn the following concepts pertaining to processes, namely Business Process Benchmarking (BPB), one of the tools of TQM.
  4. 4. BENCHMARKING • is a process of comparison of two or more products, services, processes or organizational practices. • standard or point of reference • “a basis for establishing rational performance goals through the search for industry best practices that will lead to superior performance” • Business Process Benchmarking is comparing a business process with the best process in that area.
  5. 5. TRIGGERS FOR BENCHMARKING Two Categories of Benchmarking Problem based benchmarking Process based benchmarking
  6. 6. Problem based benchmarking • Arises out of a problem in the organization • Some of the triggers that could motivate the organization to carry out benchmarking are: a. b. c. d. Adverse feedback from customer Increasing quality cost Alarming error rates Increase in cycle time
  7. 7. Process based benchmarking • It is initiated as a part of process improvement strategy of the organization. • Benchmarking arises out of the following: a. Defined mission b. Defined objectives c. Defined priorities
  8. 8. TYPES OF BENCHMARKING Internal Competitive Functional
  9. 9. Internal Benchmarking
  10. 10. Competitive Benchmarking
  11. 11. Functional Benchmarking
  12. 12. REASONS FOR BENCHMARKING • Benchmarking is carried out to bring out clearly and objectively the real status with regard to the performance of the organization as well as the processes. • Benchmarking is a way to improve the processes and reach the top. • Benchmarking has to be carried out periodically so as to maintain the leadership position • It is a powerful and effective tool when used for right reasons.
  13. 13. STEPS IN IDENTIFYING WHAT TO BENCHMARK Select processes Determine vital measures Prioritize processes and measures
  14. 14. Select Processes • It is important to select the right processes for benchmarking. • To identify all the processes, there is no better method than formulating a process flow chart of the organization.
  15. 15. Determine Vital Measures • The measures are to be documented. • One should select a few vital performance measures for each process for benchmarking.
  16. 16. Prioritize Processes • A duly constituted team for prioritization should carry out an objective study. • The team assign priority to the processes to be benchmarked in the organization.
  17. 17. BENCHMARKING PARTNER • Improves the processes in the organization to the level of the best. • Should be the role model who could be imitated or benchmarked with. • Customers and suppliers could be taken to know who is performing better in industry. • Consult the employees in the organization and particularly those working in the processes selected for improvement.
  18. 18. BENCHMARKING PROCESS Selection of a process improvement team Prepare a project description Carry out benchmarking Identification of benchmarking partners Adopt a suitable benchmarking process model
  19. 19. Benchmarking Process Model Plan Act PDCA Cycle Check Do
  20. 20. Planning Phase • The improvement team holds discussions and prepares a blueprint for the project including performance measurement of processes.
  21. 21. Do Phase • The team visits the partner and studies their process and notes down the performance.
  22. 22. • The new process is implemented on a pilot basis, the performance of the improved process is measured and a report is prepared.
  23. 23. Act Phase • Periodic measurements are carried out to confirm effectiveness of the process.
  24. 24. REASONS FOR FAILURE OF BENCHMARKING Lack of commitment Wrong selection of process Not being cost effective Wrong selection of team members Under estimating the time required • Not positioning the benchmarking within a larger strategy • Lack of involvement of management • • • • •
  25. 25. Summary Business Process Benchmarking is a basis for establishing rational performance goals through the search for industry best practices that will lead to superior performance. The triggers for carrying out benchmarking could arise due to a problem in the organization or process improvement initiative. There are three types of benchmarking; Internal, Competitive, and Functional. PDCA can be used for actual implementation of benchmarking projects. There are various reasons why benchmarking projects fail. However, as benchmarking has the potential to improve processes, the pitfalls should be avoided for. Benchmarking can be used as a part of a larger goal such as Total Quality Management (TQM) for it to be more effective.
  26. 26. Imagination is more important than knowledge… -Albert Einstein Thank You! 