What is benchmarking?
• Benchmarking is the process of comparing one's
business processes and performance metrics to
industry bests or best practices from other
• Benchmarking is a systematic method by
which an organization can continuously
measure themselves against the best
industry practices or world class and
The Evolution of Benchmarking
• The method may have evolved in the early 1950s, when W. Edward
Deming taught the Japanese the idea of quality control.
• The best example is Toyota Motor
Corporation’s following the footsteps of Ford
Motor Corporation albeit with the adaptation
of the Ford’s Just-in-case system into
Toyota’s Just-in-time system.However the
word “BENCHMARKING” was not coined at
TYPES OF BENCHMARKING
• Internal benchmarking : Benchmarking against its own unit or branches.
• External Benchmarking : Comparison of the same product or service
produced by direct market competitors.
• International Benchmarking : Involves benchmarking against companies
outside the country.
Benefits of Benchmarking
• Promotes a thorough understanding of company’s own process
• Saves time and money
• Identify non value added activities
• Focuses on performance measures and processes and not on products
• It provides a basis for training human resource
The Xerox Case
• The company invented the photocopier in 1959 and maintained a virtual
monopoly for many years thereafter.
• By 1981, however ,the companies market shrunk to 35% as IBM and Kodak
developed high-end machines and Canon, Richo and Savin dominated the
low-end segment of market.
• Xerox’s products had over 30,000 defective parts per million—about 30
times more than its competitors.
Benchmarking Model at Xerox
• Planning: Determining the subject to be benchmarked, identify the relevant best practice and
develop most appropriate data collection technique.
• Analysis: Assess the strengths of competitors and compare Xerox’s performance with
• Integration: Establish necessary goals and integrate these goals into the companys formal
• Action: Implement action plans established and assess them periodically to determine whether
the company is achieving its objective.
• Maturity: Determine whether the company has attained a superior performance level.
Supplier management system
• It has 1000 suppliers
• They trained Vendor’s Employee in Quality Control , manufacturing automation.
• Just-in-time i.e. Delivery in small quantities, as per customer’s production
• Reduced the vendors from 5000 to 400.
• Created a Vendor Certification Process in which suppliers were offered training & told their areas of improvement.
• Vendors were consulted for better Designs & Improved Customer service.
Inventory holding Time reduction
• Xerox asked Branch managers to match the Stocking Policy with
Customer’s installation Orders .
• Minimize Inventory Carrying Cost was to delay the assembly of product
into the final Configuration.
• Company sent 55,000 questionnaires to monthly to customers to measure
customer Satisfaction & record Competitor’s performance.
• Those Competitors who have scored higher, Xerox benchmark itself
• As a part of “Leadership Through Quality” program, Xerox started providing its
customers( External & Internal) innovative products & services.
Total Quality Management
• Team consists of Senior managers & Consultants from McKinsey help to make
• Under which New three SBUs were introduced:
Enterprise Service Business
• All these have autonomy in Engineering, marketing & pricing.
Reaping The Benefits
• Number of defects reduced by 78 per 100 machines.
• Service response time reduced by 27%.
• Defects in incoming parts reduced to 150ppm.
• Inventory costs reduced by two-thirds.
• Distribution productivity increased by 8-10%.
• Increased product reliability on account of 40% reduction in unscheduled
•Increased product reliability on account of 40% reduction in unscheduled
• Became the leader in the high-volume copier-duplicator market segment.
•Xerox went to be only company to win three prestigious quality awards-
Malcolm Baldridge National award, Deming award ,and European quality
•During 1990s, Xerox, along with companies like Ford, AT&T, IBM,
Motorola created the International Benchmarking Clearinghouse (IBC) to
promote Benchmarking and guide companies across the world in