 Importance of Business Process Benchmarking

(BPB) a TQM tool

 Triggers for benchmarking
 Types of benchmarking
 Benchmarking partner
 Benchmarking process models
 Reasons for failure of benchmarking
Benchmarking is a process of comparison of two or
more products, services, processes or
organizational practices.

Business Process Benchmarking is comparing a

business process with the best process in the
area.

Benchmark is “ standard or point of reference “

(dictionary meaning)
Benchmarking computer systems involves
executing a set of common programs developed
by independent agencies to ascertain the relative
performance of computers of various makes.

Benchmarking computers is a process of comparing

performance of computer systems.

The measurement and comparison of performance

of processes is known as Business Process
Benchmarking (BPB)
ROBERT C. CAMP define benchmarking on his
book “ Business Process Benchmarking “

“ A basis for establishing rational performance goals

through the search for industry best practices that
will lead to superior performance “
(a) Problem Based Benchmarking (reactive
approach)
- arises out of a problem in the organization

i. Adverse feedback from customer

ii. Increasing quality cost
iii. Alarming error rates
iv. Increase in cycle time
(b) Process Based Benchmarking (proactive
approach)
- initiated as a part of process improvement

i. Defined mission
ii. Defined objectives
iii. Defined priorities
Performance of benchmarking is not only to
measure the current level of performance of the
process or the product or services, but also to
improve to the level of the competitor or the
market leaders or to the level indicated in the
mission statement.
o Internal Benchmarking

The organization need not to always look outside

to find out best practices. They could study the
best performing division in-house.

o Competitive Benchmarking

To improve the performance to the level of the

competitors. The competitor’s performance data is
collected from published data
o Functional Benchmarking

Comparing the methods of organizations with

similar processes.

Comparison of similar processes in both the

organizations can be made for carrying out
benchmarking
Benchmarking is carried out to bring out clearly
and objectively the real status with regard to the
performance of the organization as well as the
processes.

Benchmarking is a way to improve the processes

to reach the top. With time, competitors will also
improve their performance.
 Inputs are what are supplied to the process
Process are the repeatable sequence of events
Output is what is delivered

Example:

Job Completion Billing task Bill

Example of Billing Process

 Check patients and Diagnostic
A prescription measure pathological
of a physician report
parameters

What to benchmark is essentially the performance

measures of the output of the process.
 Select Processes

It is important to select the right processes for

benchmarking. The appropriate processes are
those which when improved will give the highest
return of investment.
To identify all the processes, there is no better
method than formulating a process flow chart of the
organization.
 Determine Vital Measures

One should select a few vital performance

measures for each process for benchmarking.
Improvement of such selected measures should in
return be able to improve the current performance
of the process to the level of industry leaders.
 Prioritize Processes

A duly constituted team for prioritization should

carry out an objective study. The team assigns
priority to the processes to be benchmarked in the
organization.
The team for finding out the few vital
processes, which can yield higher returns, could
carry out a Pareto analysis.
The organization should also look for statements
of pride made by the good performers in the
press, Annual General Body Meeting (AGM). After
a detailed study, they should make a list of
potential organizations, which could be imitated
through benchmarking. The organization chosen
as a role model is the organizations benchmarking
partner.
 Selection of Process
Improvement Team

Prepare a Process
Description

Identification of
Benchmarking Partners

Adopt a suitable
Benchmarking Process
Model

Carry out Benchmarking

 The management should select a cross
functional team and persons working in the process
and constitute a process improvement team for
benchmarking.
It is therefore, essential to involve those
engaged in the process in the benchmarking team.
i. Purpose
ii. Process selected
iii. Reasons for selection
iv. Scope
v. Description of key practices
vi. Process measures identified
vii. Estimated opportunity for improvement
viii. Anticipated impact after benchmarking is
completed
The team after discussing with various employees
in the organization, process owners, external
suppliers, customers and other external experts will
prepare a list of benchmarking partners.
Benchmark Process Model
 Get sponsorship of the management and process
owners
 Document the process flow
 Measure process performance and record
 Plan visits to partner organization
 Study partner’s process
 Know partners process performance
 Discuss modification to the process
 Carry out brainstorming
 Evolve modified process
 Convince process owners
 Take approval of QC for pilot implementation
 Implement on pilot basis
 Train the process owners
 Carry out improved process measurements
 Fine tune the process based on results
 Finalize the report
 Submit the report to QC
 After approval standardize the process
 Carry out measurements
 Lack of Commitment
 Wrong Selection of Process
 Not Being Cost Effective
 Wrong Selection of Team Members
 Under Estimating the Time Required
 Not Positioning the Benchmarking within a Larger
Strategy
 Lack of Involvement of Management
Lack of Commitment
The benchmarking process should be started
only after taking the consent and cooperation of the
process owners and top management.

Wrong Selection of Process

The organization should be selective in
deciding the processes for benchmarking. They
should select the process where, through
benchmarking highest return on investment can be
achieved.
Not Being Cost Effective
They should see whether there is an
organization like ITI in the country, which can give
information at a very low cost.

Wrong Selection of Team Members

It is ideal if the team consists of members who
are working on the process to be benchmarked in
addition to cross-functional experts.
Under Estimating the Time Required
Depending upon the complexity of the problem
and the level of improvements proposed to be
made, the efforts required will also vary. If efforts
needed are under estimated then the project might
fail in the middle.

Not Positioning the Benchmarking within a Larger

Strategy
It has to be combined with the TQM strategy to
bring in the results such as reduced cycle time,
reduced cost, reduced variation, which will all give
visibility to the benchmarking project.
Lack Involvement of Management
Therefore, like other TQM concepts,
benchmarking can only be successful with the
support and active involvement of the top
management.
THE END!