King Fahd University of Petroleum & MineralsKing Fahd University of Petroleum & MineralsConstruction Engineering & Management DeptConstruction Engineering & Management Dept..

Prepared ForPrepared For : :Dr. Abdulaziz A. BubshaitDr. Abdulaziz A. Bubshait

Prepared ByPrepared By : :Abdullah I. AbuzaidAbdullah I. Abuzaid

June, 2009June, 2009

Benchmarking

CEM 515CEM 515 Term PaperTerm Paper

Outline Introduction

• Definition • Origins• Important of Benchmarking

Benchmarking Process

Benchmarking Methodology

Types of Benchmarking

Criticisms of Benchmarking

Advantages & Disadvantages

Conclusion

Introduction

Introduction

• Benchmarking is a topic of general interest in quality management.

• Benchmarking has reached widespread diffusion and is now considered as one of the most powerful tools for promoting process improvements and re-engineering in many

prominent organizations.• Benchmarking is a popular method for developing

requirements and setting goals.

• Definition There are many definitions according to different perceptions and applications of the technique and philosophy.

• Benchmarking defined as a process for improving performance of any organization by continuously identifying, understanding & adopting outstanding practices and processes inside or outside the organization.

Benchmarking is basically learning from others.

Introduction

• Origins

The term 'benchmarking' was first adapted to business practices by Xerox in 1979.

Xerox’s aim was to evaluate itself, to identify its strengths and weaknesses and adapt to constantly changing market

conditions.

Introduction

• Important of Benchmarking Benchmarking allows you to discover the gaps in your performance

when compared with someone else.

The Benchmarking used for wield rang in organization for many aspects with deferent ranking as showing in the table below:

Introduction

Benchmarking Process

• Basic Steps 1. Planning

2. Analysis

3. Integration

4. Action and Monitoring

Benchmarking Process

Planning Data Gathering and

Analysis

Action and Monitoring

Integration

Benchmarking Process

1.Planning Establish benchmarking roles and responsibilities. Decide what you wish to benchmark. Identify the process to benchmark. Decide against whom you need to benchmark Document the current process. Identify outputs required. Determine data collection methodologies.

Benchmarking Process

2. Analysis Normalise the performance data. Construct a comparison matrix to compare your current

performance data with your partners’ data. Identify outstanding practices. Analys the gaps. Analys factors that create the gaps. Isolate process enablers .

Benchmarking Process

3. Integration Define Set stretching targets “Vision” an alternative process Consider the barriers to change Plan to implement the changes

4. Action and Monitoring Implementation planning Roll-out of new modus operandi (changes) Collecting data Evaluating progress Iterative change

Benchmarking Process

• Questionnaire to Apply Benchmarking

The questionnaire to determineif organisation is ready forbenchmarking or not.

Benchmarking Process

QuestionnaireAmerican Productivity and Quality Centre

( APQC)

Benchmarking Methodology

• Examples of Typical Methods:1. Identify your problem areas

2. Identify other organizations that have similar processes

3. Identify organizations that are leaders in these areas

4. Survey organizations for measures and practices

5. Selecting appropriate benchmarks

6. Finding the source for benchmarking

7. Visit the "best practice" organizations to identify leading edge practices

8. Implement new and improved business practices

Benchmarking Methodology

• Estimated Time and Effort for Benchmarking Process:

Benchmarking Methodology

Chart of the estimation of time and effort for the basicimprovement stages of Organization.

Types of Benchmarking

• There are several different types of benchmarking in which a organization can engage.

• They may come in different forms and names depending on individual perspectives.

• The type of benchmarking selected depends on the measures needed and the methods used to collect the data.

Types of Benchmarking

• The main types of benchmarking: 1. Internal good practice benchmarking. 2. Competitive benchmarking.3. Functional benchmarking.4. Generic benchmarking.5. Strategic benchmarking.6. Performance benchmarking.7. Process benchmarking.8. External benchmarking.9. International benchmarking.

Benchmarking Process

Criticisms of Benchmarking

As with any new concept there are those who are in favour of the idea and those who oppose or criticize it.

• Some of criticisms of benchmarking

1. benchmarking is that it can be considered as spying on the competition.This is not truth:

Benchmarking is not spying on the competition but keeping up with what they and the rest of the industry are doing.

Criticisms of Benchmarking

2. Benchmarking is copycatting . This is not truth:

• Copycatting and Benchmarking are not one and the same.

• Copycatting leads to lessened creativity and stale ideas.

• Benchmarking is not supposed to take the place of managers bringing insight and original strategies into the organization.

• Copycatting is an easy trap for managers to fall into, it is important for managers to realize that benchmarking will never be an excuse for managers to stop being

creative and innovative.

Criticisms of Benchmarking

3. Some organizations do not utilize benchmarking because they feel that if it’s not broke, don’t fix it.

4. Many organizations shy away from benchmarking because they do not understand what benchmarking is and they feel that

they do not have anything to gain.

Criticisms of Benchmarking

Advantages &

Disadvantages

• Advantages :

The advantage of benchmarking is not to compare key figures but to compare how tasks are performed.

There are many advantages of the benchmarking:

1. Learn from others experience & practices.

2. It allows examination of present processes

3. Aids change & improvement.

4. It gives a chance for study & measurement of a competitor for the

purposes of process or product quality improvement.

Advantages & Disadvantages

Advantages & Disadvantages

• Advantages :

5. Benchmarking often proves particularly successful when

comparing processes.

6. Helps the organizations to stay in the business with high

performance

7. Delight the customer of the organizations.

8. Continuous of Improvement and apply benchmarking increased

the opportunity to be world class leader

Advantages & Disadvantages

• Advantages :

9. Sharing the best practices between benchmarking partners.

10. It Iidentifies opportunities for improvement

11. Provides the momentum necessary for implementing change

12. Involves for looking in detail at how other organizations carry

out the same or similar processes.

13. The capability to use for everyone and can be applied to (almost)

any company, any private organization, any public organization.

• Disadvantages:

The advantage of benchmarking is limited and the organization can eliminate the number of disadvantages to gain the benefits of benchmarking.

There are some disadvantages of benchmarking:1. Poorly defined benchmarks may lead to wasted effort and meaningless

results.

2. Incorrect comparisons will effect the result of required improvement and what is best for someone else may not suit to other.

3. Some organizations have reluctance to share the information.

4. Benchmarking cannot change all required improvement at once.

Advantages & Disadvantages

Conclusion

The benchmarking is becoming more commonly used and it is a more

efficient way to make improvements.

Benchmarking speeds up organization’s ability to make improvements.

Benchmarking is not just making changes and improvements for the sake

of making changes, benchmarking is about adding value.

When an organization looks at benchmarking they must look at all aspects

of the business, its products, and its processes.

Benchmarking will not work unless you know yourself.

Conclusion

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