Benchmarking and Best Practices in Benchmarking and Best Practices in The Retail IndustryThe Retail Industry

MeasureMeasure Sharing Spirit Sharing Spirit

BenchmarkingBenchmarking Best PracticesBest Practices factors that can impact profitability

the need to collaborate more and make more fact-based decisions though benchmarking

Key to success is “customer-supplier collaboration” and “real-time information”

Majority of successful companies are already sharing some information with their customers

need to understand on how the collaboration and info sharing can contribute to profitability, cost competitiveness, efficiency and customer satisfaction

Benchmarking and Best Practices in Benchmarking and Best Practices in Retail Industry (cont’d)Retail Industry (cont’d)

Retail Industry

Indicator Groups

Key Performance Indicators

(KPIs)

Definition

Sales Performance

Retail Sales Performance

Percentage change in sales-turnover of retail business in Malaysia

Inventory Turnover

Total inventory divided by last month’s sales

Employee Performance

Sales per Employee

Total sales divided by number of employees

Square Footage per Employee

Gross area inclusive of store room, toilet, office, aisles, etc., divided by number of employees

Labour Cost vs. Sales

Gross salary (basic payroll, EPF, overtime and allowances) for full time, part-time staff vs. gross sales

Staff Turnover Percentage of resignation on monthly basis

Absenteeism Rates

Number of staff times 26 days divided by number absent (AWOL), medical leave, absent without approval, unplanned leave, etc

BenchmarkBenchmark

Retail Industry

Best PracticesBest Practices

Benchmarking and Best Practices in Benchmarking and Best Practices in Retail Industry (cont’d)Retail Industry (cont’d)Emphasis on Membership Card Privileges & benefits to enhance relationship with loyal customers

Frequently review, innovate and improve own retail concept

Respond promptly towards changing consumer spending & behaviour

Most products new – fast moving products

Good relationship with suppliers

Aggressive promotional activities

Customers’ payment capabilities

Outlets to be more functional in relation to its customers’

logistical requirements

Outlets to be more aesthetically pleasing and attractive as shopping destination

Retail Industry

Best PracticesBest Practices

Benchmarking and Best Practices in Benchmarking and Best Practices in The Malaysian Retail Industry (cont’d)The Malaysian Retail Industry (cont’d)

Creating a culture to make your staff happy

Good employee benefits package

Motivate staff, ensure employees’ emotional, intellectual & physical well-being

Contractual bonus

Productivity Incentive program

Work/life balance (provides sports & recreational facilities)

Service award program

Group health plan cover

Punctuality incentive, full attendance allowance

Structured skills career and development programs

Retail ResurgenceRetail Resurgence

““The retail industry is bouncing back after being hit by the The retail industry is bouncing back after being hit by the Iraq War Iraq War

Initial retail growth 5% but due to Iraq War, drop in April-May to 2-3%

Increased customer spending due to: Mega sales promotion help boost sales Bonuses to government servants Improved income and employment MIER projected private consumption to grow from 4.4

to 5-7% next year

How can industry integrate and share their How can industry integrate and share their experiences and best practices? experiences and best practices?

BenchmarkingBenchmarking

Benchmarking for Best PracticesBenchmarking for Best Practices

Benchmarking is the practice of being humble enough to admit that someone else is better at something, and being wise enough to learn how to match and even surpass them

at it.

Benchmarking is a systematic and continuous process of searching, learning, adapting and implementing the best

practices from within own organization or from other organizations towards attaining superior performance

- National Productivity Corporation, Malaysia

Types of BenchmarkingTypes of Benchmarking

Benchmarking

Market related(Competition analysis)

Internal Benchmarking External Benchmarking

Generic Processes(Best Practice)

Branch related(Trend research)

Plant related

e.g., safety performance measures

3 Basic Issues in Benchmarking3 Basic Issues in Benchmarking

Where?

Basic issues:

Where are you now?

Why is your organization atthis position vs the other?

What can be improved?

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Why?

What?

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Benchmarking : An Overview Benchmarking : An Overview

Comp2

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Comp1

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CompanySpread Sheet

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Jan

Feb

Mar

CompetitiveBenchmark

What Is Benchmark?What Is Benchmark?

A measured “best-in-class” achievement, recognized A measured “best-in-class” achievement, recognized as the standard of excellence for a particular processas the standard of excellence for a particular process

Examples:Examples:

• Rate of customer complaint Rate of customer complaint 5%5%• Employee satisfaction rate Employee satisfaction rate 95%95%• Customer retention rate Customer retention rate 90%90%• Information retrieval time Information retrieval time 5 seconds5 seconds• Customer response time Customer response time 15 min.15 min.• Medical Cost per EmployeeMedical Cost per Employee RM16.89RM16.89• MC RateMC Rate 0.5%0.5%

What Are Best Practices ? What Are Best Practices ?

Examples :Examples :

• Development of in-house trainers and training academyDevelopment of in-house trainers and training academy• Visual management to inculcate culture of excellenceVisual management to inculcate culture of excellence• QCC in building knowledge-based workforceQCC in building knowledge-based workforce

Best practices are a relative term indicating Best practices are a relative term indicating

outstanding business practicesoutstanding business practices which have been which have been

identifiedidentified as as contributing to significant improved contributing to significant improved

performancesperformances in leading companies in leading companies

Importance of Benchmarking Importance of Benchmarking

Objective Without Benchmarking With Benchmarking

To become more adaptive Evolutionary Change Understanding of competition ideas from proven practices

Implement Industry best practices

Few solutions, Frantic catch up activity

Many options, Superior performance

Defining customer requirements

Based on history, Gut feeling or Perception

Market reality, objective evaluation

Establishing effective goals & objectives

Lacking external focus, Reactive

Credible unarguable, Proactive

Developing true measures of productivity

Pursuing projects, strength/weaknesses not understood, Route of least resistance

Solving real problems, Understanding output based on industry best practices

Benefits of Benchmarking Benefits of Benchmarking Improves organizational quality

Leads to lower cost

Creates buy-in for change

Exposes employees to new ideas

Broadens organization’s perspective

A catalyst for learning

Increase employee satisfaction

Test the internal operating target

Raise the level of potential performance

Sharing of best practices

Understanding world-class performance in-depth

Encourage and stimulate innovation

“If you know neither yourself nor your enemy, you will succumb in every battle.

If you know yourself but not the enemy, for every victory gained you will suffer a defeat.

If you know yourself and your enemy, you need not fear of a hundred battles.” - Sun Tzu

NPC Benchmarking Model NPC Benchmarking Model Phase 1

BENCHMARK

Start

1. Agree On Benchmarking Topic

2. Finalise On Scope; Measures & Definitions

3. Data Collection : Survey

4. Share Strengths

Phase 3IMPROVEMENT

New Area

9. Plan to Adapt Best Practices

10. Implement Best Practices

11. Monitoring Result

12. Standardization

13. Daily Control

Continue Existing Project?Yes

No

Phase 2BEST PRACTICES

5. Plan for Site Visit

6. Data Collection

7. Recommend Improvement

8. Share FindingsYes

2nd Site Visit

(Focus Visit)

Community of Practice (CoP)Community of Practice (CoP)

CoP is a smallCoP is a small group of group of peoplepeople who comes together who comes together to explore opportunities forto explore opportunities for

benchmarksbenchmarks andand best best practices sharingpractices sharing onon

common interest areascommon interest areas

Benchmarking Community of Practices (CoP)Benchmarking Community of Practices (CoP)

Clusters e.g., Hypermarket, Supermarket,

Specialty Store,Pharmacy

Industries e.g., Retail

Sector e.g., Distributive Trade

Processes e.g., Delivery, Handling Customer

Complaints

Functionale.g., Marketing, HRM

Communities of Practices (CoP)Communities of Practices (CoP)SMIs

Enterprise50Headstart500

Productivity& Quality Improvement

ASEAN SMIs

Process

HRMCycle time

Counter ServiceCall Centre

TQMProductivity

Utility

Power ProducersEnergy Users

Public Sector

Local AuthoritiesProject Development Management

Counter Service Excellence Organization

Construction

Klang ValleyJohor Baharu

Manufacturing

TextileApparel

Plastic InjectionPlastic Packaging

Palm Oil RefineriesElectrical Mfg Services

Automotive Vendors

Services

HotelsHospitals

PortsBanksRetail