Benchmarking

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Presentation Design Service
Benchmarking
Benchmarking Industry Best Practices
May 21, 2013
Benchmarking is process of comparing one's business processes and performance
metrics to industry bests or best practices from other industries. It does this by
capturing performance metrics and comparing their values with a comparable set of
previously recorded measures. This document explains the Benchmarking process,
its benefits, limitations, costs, methods/frameworks, types, approach, and more.
ORIGINAL PROJECT DETAILS
http://pptlab.com/ppt/Benchmarking-2

PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 2
PPT Lab (www.pptlab.com) is the only crowdsourced
presentation design service. Get consulting-quality
presentations at a fraction of the cost!
Each month, we will create well over 50 slides of for our members.
As a member, you will drive what business slides we create by
submitting your own presentation projects to our team. All
presentations will be created by a team of management
consultants and follow the Consulting Presentation Framework.
www.PPTLab.com
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Contents
 Overview 4
 Characteristics 9
 Approach 15
 Appendix 18

Benchmarking is tool that allows an organization to judge its performance
in relation to its former self, key competitors, and the overall industry
Executive Summary
A benchmark is a point of reference for a measurement. Benchmarking is process of comparing one's
business processes and performance metrics to industry bests or best practices from other industries.
It does this by capturing performance metrics and comparing their values with a comparable set of
previously recorded measures. This comparison set can be taken from a variety of sources--e.g. from
within the same organization at a different times, from competitors, from similar processes within the
industry. Typical dimensions measured are quality, time, and cost.
Benchmarking models are useful to determining how well an
activity, process, business unit, division, or corporation is
performing compared with other similar organizations.
Benchmarking aims to achieve maximum effectiveness of
learning from the best and helps to move the organization from
its current state to desired “best practice” future state.
To be implemented successfully, there must be active
engagement of management, clear objectives, and ongoing effort.
Benchmarks represent what best practices should be.
The term "benchmark" presumably
originates from the practice of
making dimensional height
measurements of an object on a
workbench using a gradual scale or
similar tool—and then using the
surface of the workbench as the
origin for the measurements.
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Benchmarking allows us to evaluate ourselves and our competition
“If you know the enemy and know yourself, you need
not fear the results of a hundred battles.”
– Sun Tsu, The Art of War

There are 10 types of benchmarking that are commonly performed
10 Types of Benchmarking
Internal
Benchmarking
Competitive
Benchmarking
Functional
Benchmarking
Generic
Benchmarking
Collaborative
Benchmarking
• Benchmarking within an
organization—e.g.
among different business
units—covering
everything from staffing
and productivity to office
flow and analysis of
procedures performed
• Benchmarking
performance or
processes against
competitors
• Benchmarking similar
processes within an
industry—complex
functions (e.g. HR,
Finance, IT) are unlikely
to be directly comparable
and may need to be
disaggregated
• Comparing operations
between unrelated
industries
• Benchmarking carried
out collaboratively by
groups of companies—
e.g. among subsidiaries
of a multi-national in
different countries or and
industry organization
1 2 3 4 5
Financial
Benchmarking
Performance
Benchmarking
Strategic
Benchmarking
Product
Benchmarking
Investor-based
Benchmarking
6 7 8 9 10
• Performing a financial
analysis and comparing
the results in an effort to
assess your overall
competitiveness and
productivity
• Allows the initiator firm to
assess their competitive
position by comparing
products and services
with those of target firms
• This involves observing
how others compete.
This type is usually not
industry specific,
meaning it is best to look
at other industries
• The process of designing
new products or
upgrades to current ones
—can sometimes involve
reverse engineering to
find strengths and
weaknesses
• This extends the
benchmarking to also
compare to peer
companies that can be
considered alternative
investment opportunities
from the perspective of
an investor

Benchmarking, if done correctly, provides numerous benefits and
advantages that span both strategic and operational gains
Benefits and Advantages
 Can be leveraged to determine the optimal price per unit of your product or service
 Results can be used to improve organization strategy
 Can inform us about the status of long term goals
 Supports decision making
 Measures customer satisfaction and loyalty
 Supports budgeting decisions
 Ranks your organization in the market (typically operationally)
It’ll highlight what processes we can improve
on and where our competencies are

Benchmarking also has many limitations that we should be mindful of
Limitations
 Benchmarking is a tough process that needs a lot of commitment to succeed
 Time-consuming and expensive
 Benchmarking projects often end with they-are-different-from-us syndrome or competitive
sensitivity that prevents free flow of information that is necessary
 Comparing performances and processes with “best in class” is
important and should ideally be done on a continuous basis
 Sanity Check: Is the success of the target company really attributable to the practice that
is benchmarked? Are the companies really comparable in strategy, size, model, culture?
 Sanity Check: What are the downsides of adopting a practice?
More on costs
on the next slide
Remember! The competition is
improving its processes too

C.K. Prahalad argues that organizations should look for Next Practices, and
not be focused on Best Practices
Best Practice vs. Next Practice
Benchmarks provide guidance to what best practices are. Business strategist C.K. Prahalad
argues that best practices can only take a company so far. They allow businesses to catch up to
competitors, but not become the market leader. To gain the leadership position, an organization
must look for next practices.
To find next practices, C.K. Prahalad recommends addressing 6 key questions:
Is the problem widely recognized?
Does it affect other industries?
Are radical innovations needed?
1
2
3
Can a next practice impact the economics of
the industry?
Can a next practice be a source of
competitive advantage?
Can a next practice create a big opportunity
for the firm?
4
5
6
Source: Best Practices Get You Only So Far, HBR, Prahalad

The benchmarking process follows an 8 phase approach
Approach (8 Phase)
Benchmarking is an exercise that should be repeated and re-validated on
an ongoing basis.
Scope
Definition
Partner
Selection
Methods
Determin-
ation
Data
Collection
Discrep-
ancy
Analysis
Results and
Discussion
Improve-
ment Plan
Monitoring
and Next
Steps
• Define the
scope of the
benchmarking
exercise
• Select
benchmark
partner(s)
• Determine
measurement
methods, units,
indicators, and
data collection
method
• Collect the
benchmarking
data
• Analyze any
discrepancies
• Present the
results and
discuss
implications,
areas of
improvement,
and goals
• Make
improvement
plans on new
procedures
• Monitor
progress and
develop plan
for ongoing
benchmarking

Here is an alternate 12 phase approach
Approach (12 Phase)
Benchmarking is an exercise that should be repeated and re-validated on
an ongoing basis.
Source: TThe Search for Industry Best Practices That Lead to Superior Performance, Camp
Select
Subject
Define the
Process
Identify
Potential
Partners
Identify
Data
Sources
Collect Data
and Select
Partners
Determine
the Gap
Target
Future
Perform-
ance
Communi-
cat
Adjust Goal Implement
Review and
Calibrate
Establish
Process
Differences

Here is a list of software that can be used for benchmarking
Benchmarking Software
SOFTWARE NAME PUBLISHER TYPE DETAILS
Combo
Benchmark
Compare to
Compete Online
Benchmarking
Web-based
database
 This web-based database is suitable for groups of
competitors to benchmark individual performance
against group performance
 All process and performance benchmarks can be
processed in this software, providing interesting analysis
tools and complete benchmarking report
GOBENCH
INDEC GmbH &
Co. KG
Web-based
database
 The web-based database supports different kinds of
benchmarking categories (product, process, competitor,
customer, reverse engineering, marketing, patents,
technologies, innovations, etc.)
 It is a very powerful analysis tool
Microsoft
Excel
Excel Desktop
spreadsheet
software
 Excel is your standard spreadsheet software and is
often used for smaller projects
 Benchmarking data can be captured, stored,
manipulated, and analyzed within Excel

Below is a list of commonly used benchmarking methods and frameworks,
each having different analytical focus
Benchmarking Methodologies / Related Frameworks
 Matrix Technology
 Comparison Tables
 Graphs (e.g. pie chart, bar chart, waterfall, etc.)
 SWOT Analysis
 Potential/Resources Analysis
 Price/Performance Ratio
 Potential Analysis
 Life Cycle Analysis
 Market Growth/Share Portfolio
 Market Attractiveness/Competitive Strength
Portfolio
 Portfolio Attractiveness Customer
Technology/Resource strength
Market Position/Technology Position Portfolio
Contribution Margin/Cost Development Portfolio
Customer Satisfaction Portfolio
Revenue Share/Revenue Portfolio
Spider Web Diagram
Supplier Position

PPT Lab (www.pptlab.com) is the only crowdsourced
presentation design service. Get consulting-quality
presentations at a fraction of the cost!
Each month, we will create well over 50 slides of for our members.
As a member, you will drive what business slides we create by
submitting your own presentation projects to our team. All
presentations will be created by a team of management
consultants and follow the Consulting Presentation Framework.
www.PPTLab.com
support@pptlab.com

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