CHAPTER 15

Business Process Benchmarking

Team 7Aizell A. BernalReymund Rosaire A.

GonzalesBSBAMgnt 105-TQMMr. Abelito Quiwa

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.

OUTLINEI. IntroductionII. Definition of BenchmarkingIII. Triggers for Benchmarking• Categories of Benchmarking

IV. Types of Benchmarking• Internal• Competitive• Functional

V. Reasons for BenchmarkingVI. Steps in identifying what to benchmarkVII.Benchmarking PartnerVIII. Benchmarking Process• Benchmarking Process Model

IX. Reasons for Failure of BenchmarkingX. Summary

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.

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.

TRIGGERS FOR BENCHMARKING

Two Categories of Benchmarking

Problem based benchmarking

Process based benchmarking

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. Adverse feedback from customerb. Increasing quality costc. Alarming error ratesd. Increase in cycle time

Process based benchmarking• It is initiated as a part of process

improvement strategy of the organization.

• Benchmarking arises out of the following:a. Defined missionb. Defined objectivesc. Defined priorities

TYPES OF BENCHMARKING

Internal Competitive

Functional

Internal Benchmarking

Competitive Benchmarking

Functional Benchmarking

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.

STEPS IN IDENTIFYING WHAT TO BENCHMARK

Select processes

Determine vital measures

Prioritize processes and

measures

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.

Determine Vital Measures• The measures are to be

documented. • One should select a few vital

performance measures for each process for benchmarking.

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.

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.

BENCHMARKING PROCESS

Selection of a process

improvement team

Prepare a project

description

Identification of benchmarking

partners

Adopt a suitable

benchmarking process model

Carry out benchmarki

ng

Benchmarking Process Model

PDCA

Cycle

Planning Phase

• The improvement team holds discussions and prepares a blueprint for the project including performance measurement of processes.

Do Phase

• The team visits the partner and studies their process and notes down the performance.

Check Phase

• The new process is implemented on a pilot basis, the performance of the improved process is measured and a report is prepared.

Act Phase

• Periodic measurements are carried out to confirm effectiveness of the process.

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

SummaryBusiness 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.

Imagination is more important than knowledge…

-Albert Einstein

Thank You!