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THE BENCHMARKING THE BENCHMARKING OVERVIEWOVERVIEW

19 September 200619 September 2006

Prepared by:Prepared by:Kiw Sook FuangKiw Sook Fuang

Lalitha VelayuthamLalitha VelayuthamYong Kim LanYong Kim Lan

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ContentContent

1.1. IntroductionIntroduction

2.2. DefinitionsDefinitions

3.3. Why use benchmarking?Why use benchmarking?

4.4. Functions of benchmarkingFunctions of benchmarking

5.5. Types of benchmarkingTypes of benchmarking

6.6. Approaches to benchmarkingApproaches to benchmarking

7.7. Benefits of benchmarkingBenefits of benchmarking

8.8. Seven steps to benchmarkingSeven steps to benchmarking

9.9. Critical success factorsCritical success factors

10.10. Benchmarking’s rulesBenchmarking’s rules

11.11. What benchmarking is not?What benchmarking is not?

12.12. NPC benchmarking modelNPC benchmarking model

13.13. Benchmarking through Community of Practices (CoP)Benchmarking through Community of Practices (CoP)

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If you If you know your enemyknow your enemy and and know yourselfknow yourself, , you need not fear the result of a hundred you need not fear the result of a hundred battles.battles.

-Sun Tzu (500 B.C.)-Sun Tzu (500 B.C.)

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1. What is benchmarking?1. What is benchmarking?

Benchmarking is a Benchmarking is a continuous processcontinuous process of of

ComparisonComparison ProjectionProjection ImplementationImplementation

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It involves:It involves:

1.1. Comparing:Comparing:

Organization and its partsOrganization and its parts with the best organizations, with the best organizations, regardless of the industry or countryregardless of the industry or country

Business processesBusiness processes with the best similar processes in with the best similar processes in any or all industries to define best valueany or all industries to define best value

Production processesProduction processes with the best similar processes with the best similar processes in any or all industries to define best valuein any or all industries to define best value

Organization's productsOrganization's products and services with those of the and services with those of the best competitorsbest competitors

Different types of equipmentDifferent types of equipment to select the best value to select the best value equipment for the specific applicationequipment for the specific application

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2.2. Implementing defined best practicesImplementing defined best practices

3.3. Projecting future trends in best practices and Projecting future trends in best practices and proactively leading to these trendsproactively leading to these trends

4.4. Meeting and exceeding customer/consumer Meeting and exceeding customer/consumer expectationsexpectations

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Here is what benchmarking will do:Here is what benchmarking will do:

Help the organization learn from the experiences of Help the organization learn from the experiences of others. others.

Show the organization how it is performing in Show the organization how it is performing in comparison to the best.comparison to the best.

Identify the organization's weaknesses and strengths.Identify the organization's weaknesses and strengths.

Help the organization prioritize its improvement activities.Help the organization prioritize its improvement activities.

Provide the organization with proven corrective action Provide the organization with proven corrective action plans.plans.

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2. Some definitions of benchmarking2. Some definitions of benchmarking

Robert C. Camp C. Camp, in his book , in his book Benchmarking - The Benchmarking - The Search for Industry Best Practice That Lead to SuperiorSearch for Industry Best Practice That Lead to Superior PerformancePerformance, , has defined benchmarking as has defined benchmarking as

The process of The process of continually researching for new researching for new ideas, methods, practices and processes, and ideas, methods, practices and processes, and either adopting the practices or adapting the either adopting the practices or adapting the good features, and implementing them to good features, and implementing them to obtain the “best of the best”.obtain the “best of the best”.

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David T, KearnsDavid T, Kearns, chief executive officer of , chief executive officer of Xerox Xerox CorporationCorporation, defines benchmarking as , defines benchmarking as

The continuous process of measuring products, The continuous process of measuring products, services, and practices against the toughest services, and practices against the toughest competition or those companies recognized as competition or those companies recognized as industrial leaders.industrial leaders.

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Webster's Ninth New Collegiate DictionaryWebster's Ninth New Collegiate Dictionary defines defines

benchmarking (benchmark) asbenchmarking (benchmark) as

"a point of reference from which "a point of reference from which measurements may be made." measurements may be made."

and and

"something that serves as a standard by which "something that serves as a standard by which others may be measured"others may be measured"

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For our purposes, benchmarking can he defined as For our purposes, benchmarking can he defined as

A systematic way to identify , understand, and A systematic way to identify , understand, and evolve superior products, services, designs, evolve superior products, services, designs, equipment, processes, and practices to improve equipment, processes, and practices to improve an organization's real performance.an organization's real performance.

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BENCHMARKINGBENCHMARKING

Benchmarking is a Benchmarking is a never-endingnever-ending discovery anddiscovery and learning experiencelearning experience that that identifies and evaluatesidentifies and evaluates best itemsbest items in order to integrate their best in order to integrate their best features into an organization's items.features into an organization's items.

Improvements in effectiveness, efficiency, and Improvements in effectiveness, efficiency, and adaptability will maximize their value -- an added adaptability will maximize their value -- an added contribution to the organization.contribution to the organization.

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Competitive benchmarking originally was viewed Competitive benchmarking originally was viewed as simply purchasing competitive products to as simply purchasing competitive products to compare them with the ones manufactured by compare them with the ones manufactured by the purchasing organization.the purchasing organization.

This process (competitive product test and This process (competitive product test and disassembly) is only a small part of the larger disassembly) is only a small part of the larger benchmarking activity.benchmarking activity.

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Benchmarking & detective workBenchmarking & detective work

The benchmarking process is a lot like a detective story, The benchmarking process is a lot like a detective story, and the person doing the benchmarking operates a lot and the person doing the benchmarking operates a lot like a detective.like a detective.

He or she must search through the many clues available He or she must search through the many clues available in the public domain to find leads, then dissect these in the public domain to find leads, then dissect these leads to define root causes.leads to define root causes.

Once the many clues are understood, they fall together Once the many clues are understood, they fall together to give the benchmarking team the best-value future-to give the benchmarking team the best-value future-state solution.state solution.

It can be an exciting and enlightening adventure.It can be an exciting and enlightening adventure.

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Benchmarking toolsBenchmarking tools

Competitive shopping Competitive shopping

Competitive analysisCompetitive analysis

Reverse engineeringReverse engineering

Disassembly analysisDisassembly analysis

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3. Why use benchmarking ?3. Why use benchmarking ?

To set challenging but realistic goalsTo set challenging but realistic goals

To define how goals can be accomplishedTo define how goals can be accomplished

To define gaps between the organization's To define gaps between the organization's performance and its competitors' performanceperformance and its competitors' performance

Because a breakthrough improvement is Because a breakthrough improvement is required to stay competitiverequired to stay competitive

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Other reasonsOther reasons

Because the organization is losing its market share Because the organization is losing its market share and needs to turn aroundand needs to turn around

Because overhead costs are running too highBecause overhead costs are running too high

Because the Malcolm Baldrige Award requires that Because the Malcolm Baldrige Award requires that benchmarking be donebenchmarking be done

Because the competition's quality is much betterBecause the competition's quality is much better

Because the competition is bringing product to market Because the competition is bringing product to market much fastermuch faster

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Because one function in the organization is trying to Because one function in the organization is trying to impress upper managementimpress upper management

To overcome management's complacency by To overcome management's complacency by exposing inaccurate perceptionsexposing inaccurate perceptions

To test the soundness of the organization's strategyTo test the soundness of the organization's strategy

To define competitors' future strategies and resource To define competitors' future strategies and resource investment plansinvestment plans

Because there is a need to supplement the Because there is a need to supplement the organization's ideas with fresh thoughtsorganization's ideas with fresh thoughts

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Primary reasonsPrimary reasons

The two primary reasons for using the The two primary reasons for using the benchmarking process are benchmarking process are

1.1. Setting goals Setting goals

2.2. Identifying how the goals can be Identifying how the goals can be accomplishedaccomplished

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In the past, goals were usually based on the In the past, goals were usually based on the organization's (or the item's) past performance .organization's (or the item's) past performance .

This very limited use of internal vision made or little This very limited use of internal vision made or little correlation between the organization's goals and the correlation between the organization's goals and the ultimate standard of excellence. ultimate standard of excellence.

Occasionally, the organization's goals exceeded what Occasionally, the organization's goals exceeded what was achievable, but more commonly they fell far below was achievable, but more commonly they fell far below what had been, at could be, achieved.what had been, at could be, achieved.

The unique value of the benchmarking process is that it The unique value of the benchmarking process is that it not only tells you how good you can be, it also tells you not only tells you how good you can be, it also tells you how to change the way you are doing business so that how to change the way you are doing business so that you can be that good.you can be that good.

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4. Functions of the benchmarking 4. Functions of the benchmarking processprocess

Two functions of the benchmarking process –Two functions of the benchmarking process –

1.1. Comparative analysis (the what)Comparative analysis (the what) What good is defining the gap between your What good is defining the gap between your organization and your competitors or world- class organization and your competitors or world- class organizations if you do not know how to improve organizations if you do not know how to improve your processes to narrow the gap?your processes to narrow the gap?

2.2. Product / system knowledge (the how)Product / system knowledge (the how)

Knowing that you are inferior, but not being able Knowing that you are inferior, but not being able to to improve, just discourages everyone.improve, just discourages everyone.

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4a. Providing the "WHAT"4a. Providing the "WHAT"

Without the ability to measure, you cannot control your Without the ability to measure, you cannot control your organization. organization.

Obtaining quantitative data is absolutely essential in the Obtaining quantitative data is absolutely essential in the pursuit of becoming, and then staying, world class.pursuit of becoming, and then staying, world class.

There is no real debate over the importance of There is no real debate over the importance of measurements. measurements.

We know that in order to operate effectively, we must be We know that in order to operate effectively, we must be able to measure.able to measure.

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What should be measured in the What should be measured in the

benchmarking process?benchmarking process?

How fastHow fastHow goodHow goodHow much vs WhereHow much vs WhereWhenWhenHow longHow longSize, shape, form, and fitSize, shape, form, and fit

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Use ratio measurementsUse ratio measurements

To encourage free exchange of information To encourage free exchange of information between organizations, it is often necessary to between organizations, it is often necessary to use ratio measurements whenever applicable.use ratio measurements whenever applicable.

By using ratios instead of real values, you can By using ratios instead of real values, you can exchange information with other organizations exchange information with other organizations without having to disclose production or absolute without having to disclose production or absolute values.values.

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Getting cooperationGetting cooperation

In competitive benchmarking, your organization probably In competitive benchmarking, your organization probably will not get the cooperation that is needed from its will not get the cooperation that is needed from its competitors. competitors.

In these cases, you need to collect the data yourself using In these cases, you need to collect the data yourself using techniques like reverse engineering, competitive shopping, techniques like reverse engineering, competitive shopping, and competitive performance analysis.and competitive performance analysis.

This information is extremely valuable because it is directly This information is extremely valuable because it is directly compatible with and comparable to your item's data. compatible with and comparable to your item's data.

Often in competitive benchmarking the organization can Often in competitive benchmarking the organization can make use of third party test laboratories (such as make use of third party test laboratories (such as Consumer reports) to obtain performance comparisons Consumer reports) to obtain performance comparisons between the item under study and the competitor's item.between the item under study and the competitor's item.

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4b. Providing the "HOW"4b. Providing the "HOW"

Another real advantage of the benchmarking Another real advantage of the benchmarking process is that it process is that it provides insights into how provides insights into how others have become the best.others have become the best.

This aspect focuses on discovering This aspect focuses on discovering how world-how world-class organizations developed their processes class organizations developed their processes and products to ensure superior performance.and products to ensure superior performance.

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The specifics you might analyze are:The specifics you might analyze are: KnowledgeKnowledge WaysWays ProcessesProcesses MethodsMethods

Can apply this knowledge to your benchmark Can apply this knowledge to your benchmark item, adapting and/or improving it to meet the item, adapting and/or improving it to meet the unique requirements of the customers, unique requirements of the customers, employees, and products that make up your employees, and products that make up your organization's personality.organization's personality.

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5. Camp has defined four distinct 5. Camp has defined four distinct types of benchmarking:types of benchmarking:

InternalInternal CompetitiveCompetitive FunctionalFunctional GenericGeneric

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Internal benchmarkingInternal benchmarking

One of the easiest benchmarking investigations One of the easiest benchmarking investigations is to is to compare operations among functions compare operations among functions within your own organization.within your own organization.

This type of investigation is applicable to This type of investigation is applicable to multidivisional or international firms.multidivisional or international firms.

Data should be readily available and reportable Data should be readily available and reportable on a consistent basis.on a consistent basis.

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Competitive benchmarkingCompetitive benchmarking

Direct product or service competitors are the Direct product or service competitors are the most obvious to benchmarkmost obvious to benchmark..

Although this information may be difficult to Although this information may be difficult to obtain, its value is highobtain, its value is high

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Functional benchmarkingFunctional benchmarking

Functional benchmarking Functional benchmarking investigates leaders in investigates leaders in dissimilar industries.dissimilar industries.

The relevance of comparison is maintained by The relevance of comparison is maintained by defining the performance characteristics that must defining the performance characteristics that must be similar to your own functions.be similar to your own functions.

It is not necessary to limit comparison to direct It is not necessary to limit comparison to direct competitors. competitors.

In fact, a narrow focus may risk missing potential In fact, a narrow focus may risk missing potential breakthroughs.breakthroughs.

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Generic benchmarkingGeneric benchmarking

Generic benchmarking is the Generic benchmarking is the purest form of purest form of benchmarking, in that it may uncover methods that are benchmarking, in that it may uncover methods that are not implemented in the investigator’s own industry.not implemented in the investigator’s own industry.

It extends functional benchmarking by removing the It extends functional benchmarking by removing the constraints imposed by limiting the investigation to constraints imposed by limiting the investigation to practices with similar characteristics.practices with similar characteristics.

It holds the potential for revealing the “best of the best”.It holds the potential for revealing the “best of the best”.

It requires broad conceptualization.It requires broad conceptualization.

Although it is the most difficult type of benchmarking to Although it is the most difficult type of benchmarking to use, it probably provides the highest potential payoff.use, it probably provides the highest potential payoff.

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Other types of benchmarkingOther types of benchmarking

NoncompetitiveNoncompetitive To benchmark the process that we want to improve includingTo benchmark the process that we want to improve including

a related process with a firm you do not directly compete witha related process with a firm you do not directly compete with a related process in a different industrya related process in a different industry an unrelated process in a different industryan unrelated process in a different industry

World classWorld class The most ambitious.The most ambitious. It involves looking toward the recognized leader for the process It involves looking toward the recognized leader for the process

being benchmarked.being benchmarked. An organization that does it better than any one.An organization that does it better than any one.

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6. Approaches to benchmarking6. Approaches to benchmarking

Strategic Approaches BenchmarkingStrategic Approaches BenchmarkingBenchmark to Benchmark to identify weaknesses and strengthsidentify weaknesses and strengths within within a specific area or functional unita specific area or functional unit

Organizational Approaches BenchmarkingOrganizational Approaches BenchmarkingBenchmark Benchmark to support and direct the business plan.to support and direct the business plan.

If improved, that will impact the organization’s If improved, that will impact the organization’s competitive position.competitive position.

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What benchmarking can do:What benchmarking can do:

Here are some of the Here are some of the benefitsbenefits of benchmarking: of benchmarking:

Increases the desire to change.Increases the desire to change. Focuses on meeting end-user expectations.Focuses on meeting end-user expectations. Improves the benchmark item and key financial Improves the benchmark item and key financial

indicators.indicators. Focuses on the use of best worldwide practices.Focuses on the use of best worldwide practices.

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7. The benefits of benchmarking:7. The benefits of benchmarking: Provides-a way to improve customer satisfaction.Provides-a way to improve customer satisfaction.

Helps eliminate the not-invented-here syndrome.Helps eliminate the not-invented-here syndrome.

Includes the use or proven approaches, methods, Includes the use or proven approaches, methods, processes and technologies.processes and technologies.

Improves employee morale and pride.Improves employee morale and pride.

Improve relationships and understanding between Improve relationships and understanding between benchmarking partners.benchmarking partners.

Identifies your competitive position, strengths and Identifies your competitive position, strengths and weaknesses.weaknesses.

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Increases the effectiveness, efficiency and adaptability Increases the effectiveness, efficiency and adaptability of your processes.of your processes.

Transforms complacency into an urgent desire to Transforms complacency into an urgent desire to improve.improve.

Defines and incorporates best applicable processes and Defines and incorporates best applicable processes and management practices.management practices.

Helps set attainable but aggressive targets.Helps set attainable but aggressive targets.

Provides breakthrough types of improvement and Provides breakthrough types of improvement and prioritizes improvement activities. prioritizes improvement activities.

Concentrates on the major contributors to the success of Concentrates on the major contributors to the success of the organization.the organization.

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Allows you to project future trends in your industry.Allows you to project future trends in your industry.

Sets new standards of performance.Sets new standards of performance.

Provides a faster, lower-risk approach to meeting Provides a faster, lower-risk approach to meeting aggressiveaggressive targets.targets.

Provides your organization with a competitive Provides your organization with a competitive advantage.advantage.

Creates culture of continuous improvement.Creates culture of continuous improvement.

Reduces the cost of the improvement process.Reduces the cost of the improvement process.

Develops a professional interface with other Develops a professional interface with other organizations.organizations.

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8. The seven steps to benchmarking8. The seven steps to benchmarking

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9. Bench marking's critical success 9. Bench marking's critical success factorsfactors

The following is a list of critical success factors The following is a list of critical success factors that must be addressed if an organization is to that must be addressed if an organization is to have a productive benchmarking process:have a productive benchmarking process:

1.1. Top management must actively lead and support the Top management must actively lead and support the benchmarking process. benchmarking process.

2.2. Benchmarking must be defined correctly. It is not Benchmarking must be defined correctly. It is not just comparative analysis. just comparative analysis.

3.3. Resources must be set aside for benchmarking.Resources must be set aside for benchmarking.

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4.4. Projects need to be prioritized and competitive areas Projects need to be prioritized and competitive areas addressed first.addressed first.

5.5. The organization must have a comprehensive The organization must have a comprehensive understanding of how its item functions and performs understanding of how its item functions and performs before it approaches benchmarking partners.before it approaches benchmarking partners.

6.6. The process must be focused on implementing the The process must be focused on implementing the future-state solution.future-state solution.

7.7. There must be a commitment to a continuous, There must be a commitment to a continuous, ongoing benchmarking effort.ongoing benchmarking effort.

8.8. All managers and key support personnel need to All managers and key support personnel need to understand the benchmarking process.understand the benchmarking process.

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9.9. Results must be measured in away that evaluates the Results must be measured in away that evaluates the benchmarking effort's impact on the bottom line.benchmarking effort's impact on the bottom line.

10.10. Benchmarking projects must apply Organizational Benchmarking projects must apply Organizational Change Management concepts to the target areas Change Management concepts to the target areas from the beginning of a project and continually apply from the beginning of a project and continually apply them after the future-state solution is implemented.them after the future-state solution is implemented.

11.11. Benchmarking item teams must develop a specific Benchmarking item teams must develop a specific and realistic action planand realistic action plan

12.12. Management must select Benchmarking Item Team Management must select Benchmarking Item Team (BIT) members who can implement the results of the (BIT) members who can implement the results of the benchmarking study.benchmarking study.

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13.13. Management and BIT members should be measured Management and BIT members should be measured on how they will use the benchmarking process.on how they will use the benchmarking process.

14.14. Critical business processes must be identified and Critical business processes must be identified and improved.improved.

15.15. Creativity, innovativeness and new ideas must be Creativity, innovativeness and new ideas must be required of all employees. All efforts must be required of all employees. All efforts must be encouraged. Even noble failures should be encouraged. Even noble failures should be rewarded.rewarded.

16.16. The organization must be willing to share information The organization must be willing to share information with internal and external with internal and external benchmarking partners.benchmarking partners.

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10. Bench marking’s rules of the road10. Bench marking’s rules of the road Designing the organization's benchmarking process and Designing the organization's benchmarking process and

implementation strategy to ensure that it will adhere to implementation strategy to ensure that it will adhere to these rules will save the organization a great deal of these rules will save the organization a great deal of time and trouble. time and trouble.

1.1. First, get top management's commitment to the First, get top management's commitment to the benchmarking process.benchmarking process.

2.2. Design your benchmarking process before you start to Design your benchmarking process before you start to benchmark.benchmark.

3.3. Start with a few critical items.Start with a few critical items.

4.4. Define a very specific code of ethics and be sure that Define a very specific code of ethics and be sure that everyone engaged in the benchmarking process is trained everyone engaged in the benchmarking process is trained on its content & intent.on its content & intent.

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5.5. Train all the employees who will be actively engaged in Train all the employees who will be actively engaged in the benchmarking process about the benchmarking the benchmarking process about the benchmarking methodology and the appropriate supporting tools.methodology and the appropriate supporting tools.

6.6. Characterize your benchmark item first.Characterize your benchmark item first.

7.7. Never ask a benchmarking partner for information that Never ask a benchmarking partner for information that you would not share with. Be very careful not to obtain you would not share with. Be very careful not to obtain confidential information from your benchmarking partner, confidential information from your benchmarking partner, even if you would be willing to share that information even if you would be willing to share that information with the partner.with the partner.

8.8. Tell your benchmarking partner up front how the data Tell your benchmarking partner up front how the data will be used.will be used.

9.9. Combine inputs from all your benchmarking partners to Combine inputs from all your benchmarking partners to define a number of potential future-state solutions. Then define a number of potential future-state solutions. Then select the best-value solution for implementation. select the best-value solution for implementation.

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10.10. Be satisfied not to be the best. Stop when additional cost Be satisfied not to be the best. Stop when additional cost does not improve your competitive position.does not improve your competitive position.

11.11. Start managing the benchmark item's change process Start managing the benchmark item's change process the first week that the benchmarking item team is the first week that the benchmarking item team is formed.formed.

12.12. Do not try to collect all the data that is out there. If you Do not try to collect all the data that is out there. If you do try, you will never get beyond the data collection do try, you will never get beyond the data collection stage.stage.

13.13. Don't copy; create. Analyze what the benchmarking item Don't copy; create. Analyze what the benchmarking item team has collected so that the data can be transformed team has collected so that the data can be transformed into information. Then be creative with the use of this into information. Then be creative with the use of this information to design the future-state solution.information to design the future-state solution.

14.14. No organization is the best at everything it does. Find No organization is the best at everything it does. Find the right benchmarking partner for each item that is the right benchmarking partner for each item that is benchmarked.benchmarked.

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15.15. Keep focused on implementation of the future-state Keep focused on implementation of the future-state solution. Remember, the very best plan is useless if it solution. Remember, the very best plan is useless if it does not get implemented. Don't analyze the bench- does not get implemented. Don't analyze the bench- marking process to death.marking process to death.

16.16. Make line managers responsible for benchmarking, Make line managers responsible for benchmarking, and measure their performance.and measure their performance.

17.17. Establish a reward-and-recognition system that Establish a reward-and-recognition system that supports the desired benchmarking behaviours.supports the desired benchmarking behaviours.

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11. What benchmarking is not?11. What benchmarking is not?

Benchmarking is an important tool in the Benchmarking is an important tool in the improvement arsenal, but it is just one of more improvement arsenal, but it is just one of more than 400 different tools that should be part of than 400 different tools that should be part of every organization's improvement toolbox. every organization's improvement toolbox.

It should not be used:It should not be used: To cure all the organization's ills-many ills cannot be To cure all the organization's ills-many ills cannot be

cured by benchmarkingcured by benchmarking As a short-term process that will be dropped in 1 or 2 As a short-term process that will be dropped in 1 or 2

yearsyears

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UntruthsUntruths Just a Competitor Analysis. Actually looking in detail at

specific processes which may or may not be at competitors. Copying. Usually a case of looking and improving, rarely are

the circumstances such that you want to copy anyway. Just numbers. The way things are done is often the key.

Understanding the process is a discipline, as is having the right measures.

Only manufacturing. Applies to all sectors and equally to administration, sales, finance etc.

Competitors won't share. Don't expect them to share everything. That still leaves lots that could be reviewed and help the industry as a whole to grow.

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TruthsTruths Senior Management SupportSenior Management Support.. Based on commitment, Based on commitment,

understanding and participation. understanding and participation.

Understand own ProcessUnderstand own Process.. A prerequisite to finding A prerequisite to finding out more from others. out more from others.

Team processTeam process. Involve the people concerned, who . Involve the people concerned, who really know the current work and gain their enthusiasm really know the current work and gain their enthusiasm in making improvements. in making improvements.

PlanningPlanning.. The approach needs organising, The approach needs organising, championing and monitoring with goals etc. championing and monitoring with goals etc.

Part of strategyPart of strategy. Requires thinking about critical . Requires thinking about critical success factors and could have a major impact on success factors and could have a major impact on achieving business strategy. achieving business strategy.

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Benchmarking is..Benchmarking is..

To know your position / operationTo know your position / operation To know the industry leaders / competitorsTo know the industry leaders / competitors To incorporate the best To incorporate the best To gain superiority.To gain superiority.

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12. NPC BENCHMARKING MODEL12. NPC BENCHMARKING MODEL There are different models of the benchmarking process, which vary in complexity from four steps to thirty steps.There are different models of the benchmarking process, which vary in complexity from four steps to thirty steps. No matter what terms they use, close scrutiny reveals that they all revolve around four basic stages or phases: No matter what terms they use, close scrutiny reveals that they all revolve around four basic stages or phases: Planning, Data Collection, Data Planning, Data Collection, Data

AnalysisAnalysis and and ActionAction.. A vigorous process ‘model’ which supports successful benchmarking study is one which based on the Deming cycle of Plan-Do-Check-Action.A vigorous process ‘model’ which supports successful benchmarking study is one which based on the Deming cycle of Plan-Do-Check-Action.

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This model was developed by National Productivity This model was developed by National Productivity Corporation (NPC), Malaysia in 1998. Corporation (NPC), Malaysia in 1998.

The NPC Benchmarking Model is a synthesis of various The NPC Benchmarking Model is a synthesis of various models and consistent with various definitions on models and consistent with various definitions on benchmarking. benchmarking.

It incorporates many steps, that have been found to It incorporates many steps, that have been found to characterize successful benchmarking programs in leading characterize successful benchmarking programs in leading organizations. organizations.

As such, the model follows the PDCA cycle.As such, the model follows the PDCA cycle.

The desired end result of benchmarking is higher The desired end result of benchmarking is higher productivity and better service quality level.productivity and better service quality level.

Benchmarking is a Benchmarking is a systematic and continuoussystematic and continuous process of searching, learning, adapting and process of searching, learning, adapting and

implementing the implementing the best practicesbest practices from within your from within your organisation or from other organisations organisation or from other organisations towards attaining superior performance.towards attaining superior performance.

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The NPC Benchmarking ModelThe NPC Benchmarking Model

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The model comprises 14 stepsThe model comprises 14 steps

The model comprises 14 steps arranged in three phases. The model comprises 14 steps arranged in three phases. Phase 1 emphasizes on the selection of performance Phase 1 emphasizes on the selection of performance

indicators, data processing, benchmark comparison and indicators, data processing, benchmark comparison and sharing of strengths.sharing of strengths.

Phase 2 focuses on the performance analyses, identifying best Phase 2 focuses on the performance analyses, identifying best practices and sharing of knowledge and experiences.practices and sharing of knowledge and experiences.

Phase 3 is the adaptation, implementation and standardization Phase 3 is the adaptation, implementation and standardization of best practices into one's organization for continuous of best practices into one's organization for continuous improvement. improvement.

The first 2 phases are for The first 2 phases are for planning, data collection & analysisplanning, data collection & analysis The 3The 3rdrd phase is for phase is for actionaction or implementing the best practices or implementing the best practices

identified. identified. In the model, constant monitoring and feedback take place In the model, constant monitoring and feedback take place

throughout the benchmarking process. The final phase also throughout the benchmarking process. The final phase also embraced reviewing the benchmarking project. embraced reviewing the benchmarking project.

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Basis for Using NPC ModelBasis for Using NPC Model

This model provides an adequate framework for successful This model provides an adequate framework for successful planning and execution for any benchmarking exercise. planning and execution for any benchmarking exercise.

It enables companies to see where they are going and how It enables companies to see where they are going and how they are going to get there. they are going to get there.

It also provides a common process in a language It also provides a common process in a language understandable to all. understandable to all.

Since the model provides the Since the model provides the basic framework of actionbasic framework of action, , all types of variations in approaches are possible within the all types of variations in approaches are possible within the model framework, enabling benchmarking process to be model framework, enabling benchmarking process to be tailored to fit specific requirements of the industries.tailored to fit specific requirements of the industries.

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Example of NPC Benchmarking ProcessExample of NPC Benchmarking Process

Benchmarking process

1st Meeting Agree on Benchmarking Topic

2nd Meeting Agree on Scope; Measures and Definitions

3rd Meeting Data Collection: Survey

4th Meeting Share Strengths

5th Meeting Site Visit Preparation

6th Meeting Data Collection: Site Visit 1

7th Meeting Recommend Improvement

5th Meeting® Site Visit Preparation

6th Meeting® Data Collection: Site Visit 2

7th Meeting® Recommend Improvement

8th Meeting Share Findings

® = Repeat

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About NPCAbout NPC The National Productivity Corporation (NPC) formerly known The National Productivity Corporation (NPC) formerly known

as the National Productivity Centre, was established in 1962 as the National Productivity Centre, was established in 1962 as a joint project between the United Nations Special Fund as a joint project between the United Nations Special Fund and the Federal Government, with the International Labour and the Federal Government, with the International Labour Organisation acting as its executing agency. Organisation acting as its executing agency.

NPC worked closely with other institutions and the Trade and NPC worked closely with other institutions and the Trade and Service Associations such as Federation of Malaysian Service Associations such as Federation of Malaysian Manufacturers (FMM), Malaysian Retailers Association Manufacturers (FMM), Malaysian Retailers Association (MRA), Pusat Tenaga Malaysia (PTM), Malaysian Employers (MRA), Pusat Tenaga Malaysia (PTM), Malaysian Employers Federation (MEF), Asian Productivity Organization (APO), Federation (MEF), Asian Productivity Organization (APO), and other relevant agencies as the intermediaries to promote and other relevant agencies as the intermediaries to promote benchmarking to the potential companies. benchmarking to the potential companies.

NPC set up a NPC set up a Benchmarking On-line Networking Database Benchmarking On-line Networking Database (BOND)(BOND) to assist organizations in implementing to assist organizations in implementing benchmarking and facilitate companies to search for benchmarking and facilitate companies to search for benchmarks and best practices locally and world-wide.benchmarks and best practices locally and world-wide.

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BOND is a database of best practices and performance BOND is a database of best practices and performance measurements, which will guide you through the measurements, which will guide you through the benchmarking techniques, step-by-step processes, benchmarking techniques, step-by-step processes, defining the terms and providing examples and case defining the terms and providing examples and case studies whenever necessary.studies whenever necessary.

NPC's best practices online systems comprises the NPC's best practices online systems comprises the interactive e-Benchmark system, BP Net and HR Suite.interactive e-Benchmark system, BP Net and HR Suite. Your company can register as a member of the Your company can register as a member of the community community

of practices (CoP)of practices (CoP) and gain access to the and gain access to the e-Benchmark e-Benchmark systemsystem for data collection to obtain the real-time for data collection to obtain the real-time competitive scores and ranking.competitive scores and ranking.

You can interact actively with other members in your CoP You can interact actively with other members in your CoP using the Best Practices Net (using the Best Practices Net (BP NetBP Net). ).

You can participate in NPC benchmarking projects, best You can participate in NPC benchmarking projects, best practices forums, seminars and workshopspractices forums, seminars and workshops ..

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13. Benchmarking through13. Benchmarking throughCommunity of practices (CoP)Community of practices (CoP)

Creating a Community of Practice (CoP) is an essential step Creating a Community of Practice (CoP) is an essential step before initiating on any benchmarking project. before initiating on any benchmarking project.

CoP is a network of individuals / organizations (public or private CoP is a network of individuals / organizations (public or private sector) within similar or dissimilar industries who share some sector) within similar or dissimilar industries who share some common areas of interest, voluntarily group together to initiate common areas of interest, voluntarily group together to initiate some form of benchmarking activities, where NPC serves as the some form of benchmarking activities, where NPC serves as the facilitator. facilitator.

The main purpose of setting up CoP is that members would be The main purpose of setting up CoP is that members would be able able to share benchmarks and best practicesto share benchmarks and best practices in common areas of in common areas of interest using the e-Benchmark system. interest using the e-Benchmark system.

Common Interest Group acts as a platform in sharing information Common Interest Group acts as a platform in sharing information on performance of business results (financial or non-financial) on performance of business results (financial or non-financial) among its members.among its members.

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List of NPC CoPList of NPC CoP1.1. Private SectorPrivate Sector

Electronic Manufacturing Benchmarking Council (EMSBC) Electronic Manufacturing Benchmarking Council (EMSBC) Best Practices in Human Resource (BPHR) Best Practices in Human Resource (BPHR) Human Resource Scorecard (HRS) Human Resource Scorecard (HRS) Hotel Industry Hotel Industry Malaysian Oleo-chemical Manufacturers Group (MOMG) Malaysian Oleo-chemical Manufacturers Group (MOMG) Energy-use Efficiency Energy-use Efficiency Small and Medium Enterprise (SMEs) APO BPN - Local Small and Medium Enterprise (SMEs) APO BPN - Local

Companies Companies World Association For Industrial and Technological Research World Association For Industrial and Technological Research

Organisation (WAITRO) Organisation (WAITRO) Private Hospital Private Hospital Power ProducerPower Producer

2.2. Public SectorPublic Sector Counter Service Counter Service Selangor Local Authority Selangor Local Authority Educational Excellence Educational Excellence Service DeliveryService Delivery

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The e-benchmark systemThe e-benchmark system

The e-Benchmark system provided by NPC is to The e-Benchmark system provided by NPC is to speed up the data collection and computation of speed up the data collection and computation of benchmarks. benchmarks.

The interactive e-benchmark system involves 6 The interactive e-benchmark system involves 6 simple steps which allows industries to key-in simple steps which allows industries to key-in data, compute indicators, rank performance and data, compute indicators, rank performance and benchmark comparisons, all within a submission. benchmark comparisons, all within a submission.

Confidentiality of data is assured using a Confidentiality of data is assured using a password and coding of companies.password and coding of companies.

A web-based tool which facilitates benchmarking A web-based tool which facilitates benchmarking communities to be more effective and efficient in handling communities to be more effective and efficient in handling data and information.data and information.

An on-line interactive database that offers members An on-line interactive database that offers members greater convenience and speed - available at all hours; greater convenience and speed - available at all hours; members can just participate through internet access members can just participate through internet access

Members able to enter data, obtain real-time feedback Members able to enter data, obtain real-time feedback report which enables them to view comparative data of report which enables them to view comparative data of where they stand/rank where they stand/rank

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The e-benchmark SystemThe e-benchmark System

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The e-Benchmark system generates two type of reports: The e-Benchmark system generates two type of reports: Competitive Scores and Ranking Report (graph/table) Competitive Scores and Ranking Report (graph/table)

The competitive scores report presents in terms of The competitive scores report presents in terms of minimum, medium and maximum of the community's minimum, medium and maximum of the community's performance against the organization's own performance, performance against the organization's own performance, while the ranking report highlighted the organization's while the ranking report highlighted the organization's position against CoP members.position against CoP members.

NPC won the 2004 United Nations’ Public Service Award NPC won the 2004 United Nations’ Public Service Award for “Innovation in the Public Service,” in developing the e-for “Innovation in the Public Service,” in developing the e-Benchmark System that had contributed significantly to Benchmark System that had contributed significantly to Benchmarking and other Productivity and Quality Benchmarking and other Productivity and Quality enhancement.enhancement.

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The CoP ProcessThe CoP Process A seminar to share the e-Benchmark findings will be organized for more A seminar to share the e-Benchmark findings will be organized for more

in-depth discussion.in-depth discussion.

The exemplary performers or best practice organizations will share their The exemplary performers or best practice organizations will share their strengths on how they have achieved the benchmark performance. strengths on how they have achieved the benchmark performance.

All participating members could exchange experiences and share their All participating members could exchange experiences and share their strengths and opportunities in this seminar.strengths and opportunities in this seminar.

To learn more about the best practices, the CoP would visit the To learn more about the best practices, the CoP would visit the benchmark organizations. benchmark organizations.

The face-to-face interview provides members the chance to get The face-to-face interview provides members the chance to get acquainted with the atmosphere, environment and culture in which the acquainted with the atmosphere, environment and culture in which the organization is operating.organization is operating.

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The BP NetThe BP Net The next stage of benchmarking for best practices project is to share The next stage of benchmarking for best practices project is to share

the best practices implemented by the "best-in-class" organization. the best practices implemented by the "best-in-class" organization.

NPC also issued password to each of the member for them to NPC also issued password to each of the member for them to access into BP Net that allows the capture, dissemination, sharing of access into BP Net that allows the capture, dissemination, sharing of knowledge and best practices information that provides a culture of knowledge and best practices information that provides a culture of continuous learning, innovation and improvement.continuous learning, innovation and improvement.

Best Practices Net (BP Net) is a platform that enables CoP Best Practices Net (BP Net) is a platform that enables CoP members to communicate through "discussion forum". members to communicate through "discussion forum".

The members also could use other e-facilities in BP Net such as The members also could use other e-facilities in BP Net such as news publishing mechanism, event calendar, notification news publishing mechanism, event calendar, notification mechanisms such as online calendar, web messaging system, mechanisms such as online calendar, web messaging system, online qualitative survey & questionnaire.online qualitative survey & questionnaire.

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The HR SuiteThe HR Suite HR Suite is an NPC's window that addresses the Best HR Suite is an NPC's window that addresses the Best

Practices of Human Resource Management and Practices of Human Resource Management and Development as well as NPC's Productivity Thrust on Development as well as NPC's Productivity Thrust on Quality Workforce. Quality Workforce.

It comprises 8 web channels: HRCP, BP-HR Taskforce, It comprises 8 web channels: HRCP, BP-HR Taskforce, BEST, HR Exchange, HR Dashboard, HRPQ (Human BEST, HR Exchange, HR Dashboard, HRPQ (Human Resource - Productivity and Quality), HR Benchmarking and Resource - Productivity and Quality), HR Benchmarking and Productivity-Linked Wage System (PLWS).Productivity-Linked Wage System (PLWS).

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The CoP ProcessThe CoP Process

Benchmarking process is only complete when members Benchmarking process is only complete when members take learning back to their organization. take learning back to their organization.

They need to plan to adapt Best Practices from They need to plan to adapt Best Practices from observations learnt during the site visits and experiences observations learnt during the site visits and experiences shared during the sharing of best practices findings. shared during the sharing of best practices findings.

The proposed improvements recommended should be The proposed improvements recommended should be implemented, for continuous improvement the very implemented, for continuous improvement the very essence of benchmarking. essence of benchmarking.

It is important to establish detailed action plans and It is important to establish detailed action plans and accountability for identified improvements.accountability for identified improvements.

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ReferencesReferences

Robert C. Camp (1989). Robert C. Camp (1989). Benchmarking- The Search for Benchmarking- The Search for industry Best Practice That Lead to Superior industry Best Practice That Lead to Superior Performance. Performance. Milwaukee: Quality Press.Milwaukee: Quality Press.

Harrington H. J. & Harrington J. S. (1995). High Harrington H. J. & Harrington J. S. (1995). High Performance Benchmarking: 20 Steps to Success. New Performance Benchmarking: 20 Steps to Success. New York: McGraw-Hill.York: McGraw-Hill.

NPC Homepage NPC Homepage ((http://www.npc.org.my)http://www.npc.org.my)

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The EndThe End

Thank youThank you