6.

BENCHMARKING
5

3.5
3.3
3
2.8

2.4

2
1.8

1.4

0.5

• Sugata B Roy 80118180022

• Vikas Rajpal 80118180027 E-MBA | 2018-2020
• Anil Rajput 80118180028
• Tejashree Rane 80118180029 Managing Business Operations
• Pratik Sandbhor 80118180015 Faculty: Prof. Pradeep Tungare
WHAT IS BENCHMARKING

The continuous, systematic process of measuring one’s output and/or work processes
against the toughest competitors or those recognised best in the Industry

Quality
Why and how are others better?
Maturity

What can we learn and how can we

catch up? Set targets and KPIs for self.

National
How can be better and the best in our Leader
Best in
sector? Beating class
industry
Best in standards
Collect Firm
Learnings Ideas
WHY BENCHMARKING ?

Gap analysis Efficiency, Effectiveness

Between self and others Happier Customer
Set effective techniques
methods and process ‘DANTOTSU’
Striving to be best of the best

Studying provides
Set Targets
Strategic, Operational,
and Financial advantage.  Achievable
Tool for total quality management.  Validated
 Existing
 Realistic
 Possible
WHAT TO BENCHMARK?

1 2 3 4 5
Products & Work Support Organizational Strategies
Services Processes Functions Performance

Finished Manufacturing Human Sales and Cost

Goods Resource Profitability Leadership

Product Ordering and Financial Cost and Differentiation

Supplying Management Maintenance

Services Maintenance Marketing Quality

Features
Manpower
BENCHMARKING COMPONENTS
Enablers
1
2
Practices leading to performance
Improvement.

Outcomes
3
Performance outcomes
Assessment yielded by
Measuring own and implementing the findings.
partner’s
performance.
4

Process
Output
Specific investigation 5
Complex and
intensive.

“It is a lot easier to benchmark a process than to

benchmark an output” (Kaplan 1993)
BENCHAMRKING PROCESS AND STRATEGY

– Identify improvement opportunities

Adapt – Set target for improvement
– Develop implementation plan, monitor the progress
– Write final report

– Sort information & data

– Quality control information & data
Analyse – Normalise data if necessary
– Identify gaps in performance Level
– Identify causes for gaps

– Questionnaire sent to partner

Observe – Telephone contact
– Direct observation / site visit

– Select the process

Plan – Form Team

– Understand & document process
– Establish performance measure.

– Listing Criteria for partner selection

SEARCH – Conduct general / secondary research

– Decide the level to Benchmark
– Identify potential partners & contact
APPROACHES TO BENCHMARKING

1 Internal & External

Benchmarking
Make the best practices
your daily practices.

Performance or
Competitive

2 Benchmarking

Functional and
Generic

3 Benchmarking

Strategic
Benchmarking
4
Process Benchmarking
5 (ISO, 6 Sigma)
GAP ANALYSIS MODEL
EXAMPLES

Initiator Improvement Sought Target Firm

Indy 500 pit crews

Southwest Airlines Faster plane turnaround time

Xerox Warehousing operations L. L. Bean

Las Vegas Casinos
IBM Employee theft reduction

Benchmark Leaders Known for…

Toyota Processes
Intel Design
Motorola Training
Honda Rapid Product Development
HCL HR Practices
Scandinavian Airlines Services
BENCHMARKING
75
IN INDIAN TWO WHEELER INDUSTRY
25

Days Receivable of Industry Players

60 20
Days Inventory of Industry Players

15
45

10
30

15

0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 -5

15
100 Working Captal Cycle of Industry Players
Days Payable of Industry Players
90

80 0
70

60
-15
50

40

30 -30

20

10
-45
0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

Bajaj Auo Hero MotoCorp TVS Motor -60

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Eicher Motors Industry Average
THE AFTER EFFECTS...

 High cash conversion of revenues.

 Low dependency on working capital loans.

 Availing discounts by paying to its creditors faster than peers.

 This helps in lowering cost of raw materials, thereby improving operating margins.

 Higher cash available to fund CAPEX requirements.

 Higher pay-out to shareholders.

BENCHMARKING OF MUTUAL FUNDS
THE AFTER EFFECTS...

 Better portfolio attribution.

 Decision making on alpha generating stock picks, asset, sector allocation etc…
 Monitor rolling returns and risk return trade off better performance of the fund.
 Beat the industry (Nifty / BSE) benchmark.
 Generate high returns for the investor.
 Better wealth management.
 Push performance of the fund manager.
BENCHMARKING WILL GIVE YOU...
 Cost optimisation and control.

 Total Quality control and improvement.

 Production improvement and rapid development.

 Customer satisfaction.

 Increase brand equity.

 Meticulous inventory management.

 Loss prevention and security.

 Higher performance to become an Industry leader.