BENCHMARKING.

Ben

Benchmarkichmarkingng isis tthhe pe pracractticicee of of  b beeiingng humblhumble ene enouougghh ttoo admi

admit tt thahatt somsomeeoone ene elslsee isis b betteetter r aatt somsometethihingng aanndd wiswisee en

enouougghh ttoo ttryry aanndd lleear ar nn howhow ttoo mamattchch aanndd eveneven sur sur  p passass tthheemm aatt iitt..

Benchmarking - is the process of determining who is the

very best, who sets the standard, and what that standard is. or ganizations evaluate various as pects of their   processes in r elation to best practice

y Benchmarking is a powerful management tool because it

overcomes paradigm blindness

y Benchmarking gets peo ple out of their comfor t zones and

Benchmarking the Ja panese way

I. Peo ple

Employee selection based on potential Importance of the individual

Lifetime employment Company loyalty

II. Work style

Top management involved in quality Job rotation

Very important to have an inquiring mind Attitude to Excel under challenge

III. Product Quality

Zero defect policy

Quality supersedes production Just in Time inventory

Company takes interest in development of suppliers

IV. Customers

Global reach

Attention to detail Market research

T

_{he Xerox story}

y Invented as a formal process by R ank Xerox

y Benchmarking initiative tak en as a par t of its µLeadershi p

T_{hrough Quality¶ program.}

y The program encouraged Xerox to find ways to

T

_{he k ey findings  by Xerox}

y Twice as long as its ja panese com petitors to  bring a

 product to mark et

y Five times the number of engineers,

y Four times the number of design changes y Thr ee times the design costs...

y all the Ja panese co pier com panies put together had only

1,000 su ppliers, while Xerox alone had 5,000.

y Coo peration between the com pany and the vendor 

Outcome

y Highly satisfied customers for its co pier/du plicator and

 printing systems incr eased by 38% and 39% r es pectively

y Customer satisfaction with Xerox's sales processes

im proved by 40%, ser vice processes by 18% and administrative processes by 21%...

S

_{teps for  benchmarking}

y Identify your  problem ar eas

y Identify or ganizations that ar e leaders in these ar eas y Sco pe definition

y Determine measur ement methods, units, indicators and data

collection method

y Data collection

y Analysis of the discr epancies

y Pr esent the r esults and discuss im plications / im provement

ar eas and goals

y Mak e im provement plans or new procedur es y Monitor progr ess and plan ongoing benchmark 

Benchmarking : Benchmarking :--Stages of improvement Stages of improvement W_{orld Class} Recognized as the best.

Benchmark ed by others even in other sectors B_{est in Class}

Exceeds customer ex pectations,outperforms all com petitors and has clear com petitive edge

Efficient

Meets all inter nal r equir ements for cost mar gins,

asset utilization,cycle-time and measur es of excellence

Incapable

Is ineff ective , inefficient and at the risk of failing.  Needs ma jor r edesign

Effective

24/7

y Staff ar e benchmark ed in five k ey ar eas: productivity, cost

and structur e, com pensation and benefits, hiring, and r etention.

y It is the first Indian BPO com pany to get an ISO 9002

cer tification and in December 2001 was awarded with COPC-2000 cer tification by COPC (Customer 

Outsourcing Performance Centr e), an authority in contact centr e o perations.

LEVELS OF

B

_ENCHMARKING

y Strategic Benchmarking - using best practices to develo p

cor  porate, program, product strategies and r esults.

y Operational Benchmarking - assessing and

im plementing the best practices of industry or public

ser vice leaders to im prove processes to the extent possible to meet or ganizational goals.

Types of 

B

_enchmarking

1. Internal benchmarking - benchmark within a cor  poration, for exam ple between business units

2. Competitive benchmarking - benchmark performance or   processes with com petitors

3_{. Functional benchmarking - benchmark similar processes}

within an industry

4. Generic benchmarking - com paring o perations between unr elated industries

5

_{. Collaborative}

benchmarking

- carried

out collaboratively by

grou ps of com panies

(e.g. subsidiaries of a

multinational in diff er ent

countries or an industry

or 

ganization).

VER IZON

y Ener gy Star  benchmarking - dramatically r educe ener gy

costs while r educing pollution - to p Ener gy S_{tar com pany}

in the telecommunications industry

y Com pensation

y Process benchmarking of sof twar e engineering models

Ener gy use benchmarking

y

Ener gy-use benchmarking process for the com pany's

central office buildings

y

Identify efficient ener gy-use administrative buildings

Buildings audited for ener gy use - r eceive a scor e

 between 0 and 100, based on how efficiently the

 building uses electricity

y S

cor e of 75 or higher - eligible to a pply for the ener gy

star label

COMPEN

S

_A

T

_ION

y

Benchmarks com pensation programs against two peer 

grou ps - com panies that Verizon com petes with for 

executive talent

y

Mark et peer grou p - similarly sized, multinational

com panies r egardless of industry. eg., 3M, A

_,

Cisco

_{ystems, Coca Cola, Ford}

y

Industry peer grou p - com panies that provide wir eline,

wir eless and broadband communication ser vices. eg.,

A

_{, Bell}

_outh,

_{ime War ner} 

COMPEN

S

_A

T

_ION

y

Annually benchmarks and r eviews verizon¶s total

com pensation and com ponent pay levels ( base

salary, shor t- and long-term incentive

o ppor tunities)

y

Overall com pensation ± mark et and industry peers

hor t

long-term incentive programs and

Cost of benchmarking

y Ther e ar e costs to benchmarking, although many

com panies find that it pays for itself. T_{he thr ee main ty pes}

of costs ar e:

y Visit costs. y Time costs

Limitations of benchmarking

y Tough process

y Time-consuming and ex pensive.

y 'they ar e diff er ent from us' syndrome

y Com paring with 'best in class' -ideally be done on a

COMMON MI

ST

_AK E

S

y

Confusing benchmarking with par tici pating in a

sur vey

y T

hinking ther e ar e pr e-existing " benchmarks" to be

found

y

For getting about ser vice delivery and customer 

satisfaction

y T

he process is too lar ge and com plex to be

manageable

C

ontd

y

Misalignment

y

Picking a to pic that is too intangible and difficult to

measur e

y

Not establishing the baseline

y

Not r esearching benchmarking par tners thoroughly

Not having a code of ethics and contract agr eed with

H

_{ow to im prove??}

y

You can k eep costs down by doing benchmarking in

degr ees and by defining very narrow ar eas to ex plor e

y

With car eful planning, the benchmarking costs can be

k 

ept to a minimum.

y T

o benchmark eff ectively, one must team u p with

com panies in ones own industry whose processes ar e

analogous

INFO

S

_Y

S

_{± Financial policy}

y

Retur n of ca pital should be two times the cost of 

ca pital and thr ee times the invested ca pital, excluding

cash ± ear ned 3.2 times and 4.8 times r es pectively

y

Benchmark of 30% o perating cash flows - ear ned

31.5%

y

Days of the sales outstanding benchmark was 60

INFO

S

_Y

S

_{± PERFORMA NCE}

y

Measur e r es ponse times and through put for diff er ent

workload intensities to use as a standard for 

com parison and to understand scalability of system

com ponents

y

Benchmark consists of a workload model and

associated performance measur es - used as a standard

to com par e the performance of other systems or 

CONCLUSION



O pens or ganisation to new ideas, tools ans methods to

im prove eff ectiveness

³The knowledge you gain is well worth the investment you make.´