The following article aims to guide the reader, in the discovery of benchmarking, the definition, methodology, application, examples and other important aspects for their learning are described.
The relevance of knowing this topic lies in that benchmarking is a tool
very useful in the analysis of competitors, thereby promoting continuous improvement, leading to permanence in customer and market taste.
DEVELOPING
DEFINITIONS
Benchmarking is a systematic and continuous process to evaluate the products, services and work processes of the organizations recognized as the best, those who are the toughest competitors.
Benchmarking consists of taking the best as a reference and adapting their methods, their strategies, within the law. For example, you can adapt best practices in customer service and care. (KEARNS, sf)
Another definition is by the Board of Directors of the International Benchmarking Clearinghouse, of the American Productivity & Quality Center (APQC, 2016). benchmarking is a continuous and systematic evaluation process; a process by means of which the business processes of an organization are constantly analyzed and compared against the processes of the leading companies in any part of the world, in order to obtain information that can help the organization improve its performance-performance.
We are in a highly competitive world where companies have to compare themselves with the best on the market to gain an advantage in fundamental areas such as:
- Quality level: The value created on a product, taking into account its price and the costs necessary for its manufacture and sale. Productivity: Companies compare how much they produce and how much they consume to obtain that quantity in order to compare efficiency in the processes.
HISTORY
The English term b in chmark comes from the words bench (b anchor, table) and mark (mark, signal). In the original English meaning the compound word could however be translated as a measure of quality. The use of the term would come from nineteenth-century England, when surveyors made a cut or mark in a stone or wall to measure the height or level of a tract of land. The cut was used to ensure a support called a bench, on which the measuring instrument was later supported, consequently, all subsequent measurements were made based on the position and height of said mark.
This practice was born in the United States from the 1960s, thanks to the influence of both the Malcolm Baldridge quality award and organizations related to quality management and benchmarking, although it was not popularized until the late 1980s. Unlike European organizations, in which it did not have the same acceptance. The EC started promoting it from 1998, due to the knowledge of its potential benefits. For its expansion, the actions carried out by the European Quality Foundation (EFQM) since the end of the 1990s were counted.
The concept of "benchmarking" arose from the eighties, when the Xerox Company was interested in investigating how it compared its performance in relation to its competitors.
The use of benchmarking has traditionally been circumscribed in business organizations, but it has now been extended to different areas, with the consequent modifications in its implementation. This is the case of its use by public administrations (public benchmarking) and government agencies to improve their management processes and systems and evaluate the implementation of political actions, the strategic management of a city, etc. 1
The results obtained from the use of benchmarking applications in the public sector have evidenced the development of better services and organizations with more efficient environments. (HERNANDEZ, 2015)
BENCHMARKING TYPES
Various types of benchmarking can be established based on various aspects: process being studied, objectives of the analysis. The most used classification is the one that addresses the existing relationship with the company or organization that participates in the study. In this way it distinguishes between:
- Internal: compares processes within different areas of the same organization, to later apply this methodology to the rest of the organization Competitive: processes of competing entities in the same sector are compared, based on the mutual agreement between both organizations in the aspects to be treated and the scope of the process. The great obstacle in this type of benchmarking lies in the confidentiality of functional information: between organizations in the same sector that are not competing with each other Generic: oriented to similar business processes between companies belonging to different sectors According to the objectives of the benchmarking study, the following classification could be established: Strategic: it obeys reasons of positioning in the market,for which its endeavor is to improve the critical success factors, that is, those considered key to customer satisfaction. Functional: closely linked to the internal processes that are closest to the customer, hence its objective is to achieve a better customer perception and optimize the factors that increase their degree of satisfaction Op erative: responds to impulses to improve the operational organization and, in general, seeks to improve very specific aspects related to reducing execution time, the number of workers involved in the same area or avoid duplication of tasks within the organization. (AREVALO, 1999).closely linked to the internal processes that are closest to the client, hence its objective is to achieve a better perception of the client and optimize the factors that increase its degree of satisfaction. Op erative: it responds to impulses for the improvement of the operational organization and In general, it seeks to improve very specific aspects related to reducing execution time, the number of workers involved in the same area, or avoiding duplication of tasks within the organization. (AREVALO, 1999).closely linked to the internal processes that are closest to the client, hence its objective is to achieve a better perception of the client and optimize the factors that increase its degree of satisfaction. Op erative: it responds to impulses for the improvement of the operational organization and In general, it seeks to improve very specific aspects related to reducing execution time, the number of workers involved in the same area, or avoiding duplication of tasks within the organization. (AREVALO, 1999).the number of workers involved in the same area or avoid duplication of tasks within the organization. (AREVALO, 1999).the number of workers involved in the same area or avoid duplication of tasks within the organization. (AREVALO, 1999).
BENCHMARKING STEPS
Next, different phases are defined, which are:
- Planning Phase: The objective of this phase is to plan benchmarking investigations. The essential steps are the same as for any plan development - what, who, and how.
1.- Identify what is going to be benchmarked. In this step the key is to identify the product of the business function. Said product may be the result of a production process or a service. In this step we can help ourselves by declaring a mission for the business function to be benchmarked, which is a high level of evaluation. Once this is done, the productions are further divided into specific items to which to apply benchmarking.. It is important to document the business processes and see the performance evaluation systems, since the variables they measure can represent the important business variables to which the benchmarking study should be applied.
2.- Identify comparable companies. In this step it is of utmost importance to consider what type of benchmarking study you want to apply, internal, competitive, functional or generic, since this will largely determine which company we will not compare with, it is important to remember that whatever type study, Companies with the best practices should be searched to compare ourselves with them. To identify these companies we can help ourselves with tools such as public databases, professional associations and other sources limited only by the ingenuity of the researcher.
3.- Determine the method for data collection and collect the data. Data collection is of utmost importance, and the researcher can obtain data from different sources.
- Analysis Phase: After determining what, who and how, data collection and analysis has to be carried out. This phase must include a careful understanding of the current practices of the process as well as those of the partners in benchmarking.
4.- Determine the current performance gap. In this step, the difference between our operations and those of the benchmarking partners is determined and the existing gap between them is determined.
5.- Project future performance levels. Since performance gaps have been defined it is necessary to establish a projection of future performance levels, which is the difference between expected future performance and the best in the industry
- Integration Phase: Integration is the process of using benchmarking findings to set operational objectives for change. It influences careful planning to incorporate new practices into the operation and ensure that the findings are incorporated into all formal planning processes.
6.- Communicate the benchmarking findings and obtain acceptance. Benchmarking findings need to be communicated to all levels of the organization to gain endorsement, commitment and ownership. For communication, the audience and its needs must first be determined, a method of communication is selected, and finally, the findings must be presented in an orderly manner. In the process of obtaining acceptance, it is important to establish a multi-faceted communication strategy, apart from the declaration of a mission and operational principles, as well as seeing benchmarking as a change initiative by showing best practices and explaining the way in which they operate. It also aids acceptance by validating the findings from several different sources.
7.- Establish functional goals. At this point, they try to establish functional goals with respect to the benchmarking findings, and convert those goals into operating principles that change methods and practices so as to close the existing performance gap.
- Action Phase: Benchmarking findings and operational principles based on them must be converted into action. They need to be converted into specific implementation actions and a periodic measurement and evaluation of achievement needs to be created.
8.- Develop action plans. Two main considerations are included at this point. The first has to do with the tasks in the action planning which have to do with the what, how, who and when. Specifically, they include: specifying the task, tidying up the task, assigning resource needs, establishing the program, determining responsibilities, expected results, and supervision.
The second part relates to people and behavioral aspects of implementing change.
9.- Implement specific actions and monitor progress. Such implementation can be done through traditional alternatives such as line management or project or program management. Another is the alternative of implementation through performance teams or by those closest to the process and who have the responsibility of operating it; and lastly, the alternative of naming a "process czar" who would be responsible for the implementation of the program. Likewise, it is important to supervise the process and make progress reports that help us increase the success of benchmarking.
10.- Recalibrate the benchmarks. This step aims to keep the benchmarks updated in a market with changing conditions so as to ensure excellent performance. It is important to carry out an evaluation in areas such as understanding the benchmarking process, understanding best practices, importance and value, what is appropriate to set goals and benchmarking communication within the company to see what aspect needs a recalibration of benchmarks through well-planned planning and repetition of the
10 steps to reach the institutionalization of benchmarking.
- Maturity Phase: Maturity will be reached when the best practices in the industry are incorporated into all business processes, thus ensuring superiority. Maturity is also achieved when it becomes a continuous, essential and self-initiated facet of the administration process, that is, it is institutionalized. (CAMP, 2014)
DATA ENVELOPMENT ANALYSIS (DEA)
DEA has become in recent years a method of Benchmarking widely used by companies. It is used to evaluate the efficiency of the number of producers studied and compared. A typical statistical trend is characterized as a central trend and evaluates producers based on or relative to an average producer. Instead DEA is a mathematical method that compares each of the producers only with the best producer. Methods comparing endpoints are not always the best methods but on specific occasions they are the best option.
This method is based on assuming that if a certain product (A) is capable of producing a certain number of products X (A) with a certain quantity of inputs Y (A), then all other producers must be able to produce with the same efficiency. It is for these that if a producer is more efficient than the others in a certain process and another producer is more efficient in a different process, the best processes can be exchanged and a virtual product can be reached with the best processes of each of the producers.
The important thing about the analysis is to find the best virtual producer for each of the real producers. If the virtual producer is better than the original producer, either by
produce more products with the same inputs or by producing the same amount of products with less inputs, then the original products are inefficient.
The procedure of finding the best virtual producer can be formulated as a linear program. Analyzing the efficiency of n producers is described in a group of n linear programming problems.
DEA is most useful when compared to the best in certain processes, where the analyst does not waste as much time on studies of poor and inefficient processes. DEA has been applied in many situations such as:
- Social security.Education.Banks.Manufactures.Evaluation of administrations.Fast food restaurants.
Some of the features that give DEA a certain advantage are:
Because this is an endpoint technique, noise like measurement errors can cause significant problems.
DEA is good at estimating the relative efficiency of producers but converges very slowly towards absolute efficiency.
Because DEA is a nonparametric technique, statistical hypothesis testing is very difficult to perform.
Because the standard DEA formulation creates a different linear program for each producer, computationally intensive problems can be caused.
See Appendix I for an illustrative example of how DEA is implemented in a baseball team by comparing each player. (PENAS, 2015)
CRITICAL SUCCESS FACTORS IN THE BENCHMARKING PROCESS.
From the simple question that we ask ourselves, what are we going to do Benchmarking?, The critical factors of success arise, are the aspects on the basis of which we are going to perform benchmarking.
It is vitally important to identify these as well as to clearly establish a scale with their appropriate conversions to carry out the different comparisons.
It is necessary to always keep in mind that one of the goals is to define the critical factors for success, as clear as possible. Xerox suggests asking the following questions:
- What is the most critical success factor for my function / organization? What factors are causing the biggest problem (for example, not meeting expectations)? What products are provided to customers and what services are provided? What factors explain customer satisfaction? What specific (operational) problems have been identified in the organization? Where are the competitive pressures felt in the organization located? What are the greatest costs (or "driver" costs) of the organization? Which functions represent the highest percentage of costs? Which functions have the greatest room for improvement? Which functions have the most influence (or potential) to differentiate the organization from competitors in the market?
There are three levels of specificity:
Level 1.- Defines a broad area or topic for research, which can range from a department to an organizational function. The subject is usually too broad to agree on any type of measure. Example: billing, purchases, corrective action procedures, levels of customer satisfaction, marketing, promotions.
Level 2.- Defines a much more specific area of investigation with respect to level 1, it is frequently defined by means of some type of aggregate measures, for example the number of customer complaints, the number of promotions per period of time, average salary levels, the overall number of billing errors.
Level 3.- It is the most specific, since particularly due to some type of measure or description of specific processes, your benchmarking partner can produce information comparable to yours.
Examples: annual budget, television advertising by market, processes to reduce product waste online, methods of determining delinquent debtor expenses as a percentage of sales.
Examples of Critical Success Factors
Market share:
- In units In monetary value
Cost effectiveness:
- Return on sales Return on assets Return on equity.
Competitor growth rates:
- Market share by segment
Raw Materials:
- Percentage cost on sales Unit cost of purchase Annual volume of purchases Exchange rates or Freight costs or Quality Yield (unit produced per unit employed).
Direct workforce:
- Percentage cost on sales Labor expenses distributed by department Hourly compensation · Benefits Average labor hours per week Extra hours Overtime rate Productivity per unit (units produced per hour - man) or Productivity by income (income per product and hour - man) or Demographic indicators (age, education, etc.)
Indirect workforce:
- Global costs as a percentage of sales Labor costs by function Salary levels Benefits Exchange rates Unit productivity Demographic indicators
Manufacture:
- Purchase or manufacturing decisions. o Levels of specialization of the plant. o Machinery used in production.Training levels of the workforce.Structure of the work area.
BENCHMARKING APPLICATIONS .
Many organizations use Benchmarking techniques when they want to implement a radical change in a certain process highly linked to the achievement of quality standards and best practices estimated on a global scale. This, added to the rhythm of permanent innovations and improvements in technological and service processes, conditions that Benchmarking constitutes a practice of permanent evolution and unfinished scope.
Benchmarking makes sense if it is aimed at identifying, learning, adapting and incorporating the best available practices.
Therefore, we can deduce that the use of the Benchmarking technique is adequate in the following situations:
When there is a need to improve the satisfaction of our customers through the improvement of certain key processes, be they technical production or customer service.
When you want or need to compete at a much higher level of quality and / or service.
When the level of organizational maturity, standardization of processes and perceived technical quality of services requires competing on an international scale.
When the development of strategic planning forces to establish service and quality standards that are much higher than the market average.
When seeking to establish best practices in certain key processes that allow achieving higher productivity and profitability.
When you need to be permanently informed about the global competitive level in terms of a certain process or practice in our industrial sector.
When it is required to generate a high competitive value that breaks the usual standard of the industrial sector.
When it is necessary to obtain information of high strategic value from other market competitors at a global level to move quickly in a process of improvement and / or obtaining results.
When it is required to incorporate a new emerging technological development that of high value to the technical quality of its products and / or services.
When the organization's management is oriented towards change and is committed to developing a strategy aimed at excellence.
When the organization is already immersed in the innovation and implementation of adjustments to its production or service processes.
When the dynamics of the industry (sector) is changing at an accelerated rate and these changes affect the productivity and results of the organization.
When a major change in key processes, products or services is required to meet and exceed consumer expectations. (MANENE, 2011).
BENCHMARKING BENEFITS
Perhaps the most important benefit of B enchmarking is its motivational value. When the results of a Benchmarking study are fully integrated into a company's responsibilities, work processes, and reward systems, it succeeds in making appropriate changes to work practices. The intention is to focus resources on core business practices for the purpose of solving basic problems.
The most important benefits that can be found doing Benchmarking are: increasing the probability of satisfying customer needs, ensuring that best practices are incorporated into work processes, calibrating true productivity, setting facts-based goals, and becoming more competitive.
Increase the likelihood of meeting customer needs
When these processes are internally oriented only, the end-user needs are likely to suffer. Only by having an outward orientation is it possible to adequately determine, document and satisfy customer needs. By comparing the work practices of those with the best returns, a company will generally be able to improve its ability to adjust to what its customers are asking for.
Ensure that best practices are incorporated into work processes
This requires continuous evaluation of the external environment. What must be accomplished is to use what has been learned about your company and its competitors as the means to identify what is best of the two, and then exploit this perception as creatively as possible.
Calibrate true productivity
True productivity is the result of all employees in the company solving real problems. This only happens when there is a clear understanding of
what the company does well and a real perception of how other organizations carry out comparable functions.
Set goals based on facts
To be competitive, a company must, of course, understand the competition, but it must also question its current way of doing things.
This is best done by adopting new ideas and practices from abroad. When they are based on solid facts, they will form the basis for the construction of business plans and functional strategies that will become valuable operating plans and resources.
Becoming more competitive
Companies typically don't make the changes until the pain of competition becomes severe. Too often, when this point is reached your existence is being threatened or the initiation time is not enough to allow you to catch up. The actual process of seeking strategic information and commitment to using what has been learned are what will ultimately lead to the company becoming competitive.
Benchmarking is capable of increasing managers' performance because it enables them to capture best practices from other industries and incorporate them into their own operations. Second, it provides the people who participate in the process (the manager's employees) with both the encouragement and the motivation to improve their performance, as their awareness and interest in improving the process increases. (ECON, 2016)
WORLD-WIDE EXAMPLES
Currently, there are countless companies worldwide that employ benchmarking tactics. Just to mention some we have:
Xerox, one of the pioneers in this field, who since 1979 has been using this technique to compare various aspects of products, services, and processes against other firms.
USSA, an insurance company, implemented benchmarking in customer service processes to increase their satisfaction.
AG Edwards & Sons, a brokerage company, say they have achieved financial stability and growth through this process.
Florida Power and Light, implemented benchmarking in statistical process control.
Walt Disney Productions used benchmarking to improve staff training and motivation processes.
American Express: applied the tool to the processes of account statements achieved precision in accounts and resolutions.
Marriot Corporation: Customer analysis, got a quick response and immediate resolution.
Lasist, a Spanish company specialized in information systems, has a database that houses information from 180 hospitals and about two million discharges. Its way of working is relatively simple: a center that decides to participate in a benchmarking strategy provides its data to the company, which is responsible after comparing it with that of another of similar characteristics.
Bristol-Myers who has its own seven-step model for benchmarking.
Leadership 21: world-renowned international business management consulting company, whose services include benchmarking consultancies. (GONZALEZ, 2012)
CONCLUSION
Benchmarking offers the administrator a framework in which he can discover new perceptions, by learning practices that others use and that are better than those that he currently uses.
Likewise, it increases the possibility that you will be able to carry out a significant advance or improvement derived from this process. Observation and analysis are the cornerstones of this game.
THANKS
Thankful to God for all his blessings, also for the opportunity to work in the process of improving myself.
To my “alma mater” the Orizaba Technological Institute for their dedication in training quality professionals, to my MAE Professor Fernando Aguirre y Hernández for their dedication, dedication and commitment in sharing their knowledge.
To God for life and for science!
THESIS PROPOSAL
DESIGN OF A BENCHMARKING METHODOLOGY IN PEPSI ORIZABA PLANT
BIBLIOGRAPHY
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www.monografias.com/trabajos3/bench/bench.shtml
ECON. (2016). ECON. Obtained from www.econ.uba.ar/www/seminario/g268/benchmarking.doc
GONZALEZ, PF (2012). VAGUE CORNER. Obtained from
HERNANDEZ, JG (2015). WORDPRESS. Obtained from
KEARNS, DT (sf). DEBITOR. Obtained from https://debitoor.es/glossary/definicion-de- benchmarking
MANENE, LM (2011). BLOG. Obtained from https://luismiguelmanene.wordpress.com/2011/04/15/benchmarkingdefiniciones- applications-types-and-phases-of-the-process /
PENAS, JM (2015). DOCUMENTS. Obtained from
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