Benchmarking is defined as a technique in which an organisation compares its performance to that of 'best in class' organisations, discovers how other organisations achieve the levels they do, and uses that information to improve its own performance.

1. Benchmarking
Presented By
Prof.(Dr.) Dinesh Kr. Mehta
MM College of Pharmacy,
MM(DU), Mullana

2. CONTENTS:
INTRODUCTION
REASONS OF BENCHMARKING
TYPES
BENCHMARKING PROCESS
ADVANTAGES
LIMITATIONS

3. Introduction
•Benchmarking is defined as a technique in which an organisation
compares its performance to that of 'best in class' organisations,
discovers how other organisations achieve the levels they do, and
uses that information to improve its own performance.
• Benchmarking is the process of continually improving
the business or the organization by evaluating the scope for
improvement, comparing the current position with that of the
previous one or with the business practices of the relevant
competitors, thereby establishing standards to be achieved.
Simple means: "Improve Ourselves by learning from
others:

4. Benchmarking is a technique for analysing a company's performance by
comparing it to that of a competitor or the entire industry. How does it
measure up? The comparison is of many performance criteria such as
product or service quality, prices involved, and so on.
How to carry out Benchmarking?
Measure Performance
The first step is to measure your internal performances. One can measure
your performance from various perspectives. We can measure how
effectively the finance is being deployed by the company with respect to
the returns that it is getting.

5. Compare with Best in Class
Once you measure your internal performances, the next step is
to compare these with the best-in-class organizations. What this does
is, you can now easily check which areas are you lacking at and which
areas are you right at par with best-in-class. Once you spot areas that
you are weak at, you can then take steps to improve in those areas.

6. Reasons for Benchmarking
Benchmarking is an important tool that companies can use to stay up-
to-date with trends within their industry related to sales, customer
service and more. Using the benchmarking process, organizations can
determine the best standard of performance based on other companies'
success.
1. Increase effectiveness and efficiency
Performing regular benchmarks contributes to a company's overall
effectiveness and efficiency by allowing an organization to identify any
potential areas of improvement internally.

7. 2. Set clear business goals
Performing regular benchmarks will allow you to set clearer business goals
for your organization.
3. Provide new opportunity for discovery
Another reason why benchmarking in business is important is because it
gives you a way to discover new opportunities for increased growth and
success. This is especially important if your organization is stuck or not
moving forward in the way you want it to.

8. 4. Increase business sales performance
Benchmarking provides an opportunity to assess your sales figures
and compare them to that of the most successful organizations in
your niche or industry. For example, you could examine how much
another company is selling, how many people they have on their
sales team, how many sales teams they have and where they are
located and whether your competitors are working with other major
organizations in the form of partnerships.

9. 5. Motivate employees
Regular benchmarking in business also provides a great opportunity
to rejuvenate employees and increase their overall motivation and
contribution to the organization. The best benchmarking to increase
employee motivation is benchmark tests
6. Better understand the competition
An obvious reason why benchmarking in business is important is
that it allows you to better understand your competition as a whole.

10. 7. Improve quality of product
We can also utilise benchmarking to evaluate and enhance your
present product quality. For example, you could buy a product from a
more successful company, examine what makes it different from
yours, and devise strategies to exceed that product.

11. Types of Benchmarking
Benchmarking is a strategic activity. It requires a lot of research and
analysis. To make it efficient, the company must be clear about the type
of related strategy it must adapt to treat a specific problem area. It is
bifurcated into the following two categories each of which holds some
strategies:
Internal Benchmarking
You compare the internal performances of various departments across
different locations within your organization.

12. Either with its previous performances or with that of its competitors, i.e.,
the companies belonging to the same industry. Here, the information is
usually gathered and circulated within the organization itself.
This is easy to implement as data is not an issue. But the scope is very
limited.
External Benchmarking
It is a process of comparing the organizational methods and
performance with the other peers of the same industry.

13. Competitive Benchmarking
The companies compare their performance with that of its competitors
in the industry or across the globe. Usually, by the data collected
through associations or third party. Data collection is difficult here but
at the same time, you get great insights as to why is your competitor
performing the way it is performing.
Industry Benchmarking
In this type of benchmarking, the comparison is made with the leaders in the
field. In this category, data collection can be considered tough and tedious but
you should know that you’re comparing with the leaders and pioneers in the

14. Process of Benchmarking
Benchmarking is not an immediate solution to a problem. Instead, it is
a step by step treatment of the problem area. These steps are explained
in detail below:

15. 1. Planning: The planning phase determines the need for benchmarking and
the area which requires it. The competitors and means to collect the
relevant data are also decided at this particular stage.
2. Analysis: The Company then analyses the data so gathered to find out the
strengths of the competitors, list out its weaknesses and ways of
improvement.
3. Integration: At this phase, the analysis is reported to the top management,
and after their approval, the desired action plan with a well-defined
Process of Benchmarking Cont.……..

16. 4. Action: Now, the management has a workable plan; at this stage, the
employees execute the benchmarking plan.
5. Maturity: The final stage is maturity; it is at this phase, where the result
of using benchmarking to improve the business operations can be
observed. A successful application of benchmarking will lead to the
attainment of market leadership.
Process of Benchmarking Cont.……..

17. Advantages of Benchmarking
Benchmarking has various features that contribute a lot overall to the
organization in terms of growth, development of new divisions, new
technology adaptations and many more.

18.  Improves Learning Methodology: Benchmarking works towards the
improvement in various learning methodologies adopted by the
organization. It helps the organization to learn new methods, adopt new
ideas, and new work model, etc.
 Helps in raising company standards: Benchmarking contributes to raising
the company standards by comparing it with various performers in the
market. For example, by the process of benchmarking the organization
might be able to raise the overall standard of the equipment used in
production, etc.

19.  Initiates Technological Upgradation: Through this strategy, the companies
get to know about the new technology and techniques which have been
adopted by the market leaders. The companies can accordingly plan for
up-gradation of its technology to sustain the competition.
 Improve Company’s Standards: The company analyzes and studies the
standards of the competitors. This facilitates the company to raise its
standard of production and products accordingly.
 Enhances Work Quality: It leads to organizational growth since it
improves the overall quality of the output and reduces the chances of
errors due to the standardization of business operations.

20.  Improves Efficiency: The overall efficiency of the employees increases
with this practice since standardization of work motivates them to
perform better without making many mistakes.
 Increases Customer Satisfaction: Feedback is always important for any
organization. By using various benchmarking methods, the organization
gains good customer feedback.
 Help Overcome Weaknesses: When something is not appropriate or up to
the mark, benchmarking helps the organization to recover from the
mistake that happened by throwing some light on the areas which have
to be altered, and new ideas to improve the losses occurred.

21. Limitations of Benchmarking
Even though, there are various advantages of benchmarking there are few
limitations also which have to be considered. They are,
1. It is just a mere suggestion: Benchmarking only suggests the organization
to improve on weak factors. It does not have any proving factor to adopt
the strategy it recommends.
2. Results shown are mere numbers: The result comparisons or profit rate of
the other organization are mere numbers. Benchmarking does not show or
concentrate on minute factors that have been adopted by the other
organizations.

22. 3. Benchmarking fails when it is not properly implemented:
It has to be properly adopted by following the various data
collected. When it is not followed periodically, there might be no
net result as it is not a one day process.
4. No clarity in data produced:
Benchmarking only produces rough data and it is only the team or
board members who have to concentrate on the whole process
using the data collected.

23. Thank You