ADVANTAGES &

WHY BENCHMARKING DISADVANTAGES

WHAT IS TYPES OF
BENCHMARKING ? BENCHMARKING

BENCHMARKING
PROCESS

BENCHMARKING
BENCHMARKING
APPROACH
  A method for identifying and importing
best practices in order to improve
performance
WHAT IS
BENCHMARKING ?
 The process of learning, adapting, and
measuring outstanding practices and
processes from any organization to
improve performance
WHY BENCHMARKING

 Identify opportunities to improve

performance
 Learn from others’ experiences
 Set realistic but ambitious targets
 Uncover strengths in one’s own
organization
 Better prioritize and allocate resources
 How public, private, and
nonprofit organizations compare
STRATEGIC with each other. It moves across
BENCHMARKING industries and cities to determine
what are the best strategic
outcomes.

TYPES OF How public, private, and nonprofit

BENCHMARKING organizations compare
themselves with each other in
PERFORMANCE terms of product and service. It
BENCHMARKING focuses on elements of cost,
technical quality, service
features, speed, reliability, and
other performance comparisons.

How public, private, and

nonprofit organizations
PROCESS compare through the
BENCHMARKING identification of the most
effective operating
practices from many
organizations that perform
similar work processes.
 Internal benchmarking is used to
compare the work of separate teams,
units or divisions to identify the ones
INTERNAL that are working better and share the
BENCHMARKING
knowledge throughout the company
GENERIC to other teams to achieve higher
BENCHMARKING performance.

Competitive benchmarking is a direct

competitor to competitor comparison
It refers to comparisons, which of a product, service, process, or
“focus on excellent work processes EXTERNAL OR method. This form of benchmarking
COMPETITIVE provides an opportunity to know
rather than on the business practices
BENCHMARKING yourself and your competition better;
of a particular organization”. For BENCHMARKING
APPROACH combine forces against another
example, your company tries to
common competitor.
improve its marketing capabilities
and benchmarks itself against
company ‘A’. While observing Functional benchmarking is a comparison to
company’s ‘A’ marketing processes similar or identical practices (e.g., the picking
you also notice how well their human process for assembling customer orders,
resources are managed using ‘big maintaining inventory controls of spare
data’ analytic. This gives you an idea computer parts, logistics to move operational
to implement the data collecting and FUNCTIONAL forces, etc.) within the same or similar
analysis team in your own company BENCHMARKING functions outside the immediate industry.
to significantly improve its overall Functional benchmarking might identify
performance. practices that are superior in your functional
areas in whatever industry they may exist.
 COLLECTION
OF DATA

EXAMINATION

PLANNING AND
RESEARCH

IMPROVING
IMPROVING

BENCHMARKING
PROCESS
DEVELOPMENT
 PLANNING AND RESEARCH
In this planning and research phase, the company
provides necessary information about the different
aspects of their company. After understanding all the
aspects of the company, the company arranges for
planning phase where these aspects of companies are
examined for the goodness sake of the company and
finally it goes through a research phase where all the
planned aspects are researched completely for the best of
the companies.
 COLLECTION OF DATA

Data will be collect may come from primary data and

secondary data. Primary data can be collect by the
benchmarked company. While secondary data may
collect by media, publication or research. Therefore,
these methods help the company provide the final and
comparative aspects of the company which can
consider themselves different from the rest of the
company. And the final data collected through this
collection stages are considered as a fact of comparison.
 EXAMINATION
Once data are collected, the proper analysis
will be conduct to get the result. Any data
result will be present and performance gaps
will be analysed. Any gaps on performance
will be required to carry out
 IMPLIMENTATION

At this stage the applying or implementation to the

company. At this stage also, any changing and any
performance gaps exist between target and actual will
eliminate. The commitment between staff and
management is the most element to ensure the
process and sufficient will be cost.
 DEVELOPMENT
At this stage of benchmarking the final
examined data collected from the
examination stage can be provided with the
necessary recommendation of development
of the company. After examining the output
of the benchmarking aspects of the company,
the same company will create some
development programs within the company
to improve their working efficiency of the
company.
 IMPROVING

This is the final stage of benchmarking. With all the aspects

that are examined and developed are finally incorporated in
the company for the overall development of the company. A
systematic evaluation will be conduct to finding the aspect
which needs to be incorporated in the company, the
company can provide a particular supportive environment for
such change in the company. Any best result or way will be
use as standard procedure for company to achieve their goals.
 BENEFITS AND DISADVANTAGES OF
BENCHMARKING
IMPLEMENTS CREATIVE STABILIZED STANDARDS
IDEAS
INSUFFICIENT
INCREASED INFORMATION
COMPETITIONS

DECREASED RESULTS
DEVELOPING
IMPROVEMENT LACK OF CUSTOMER
SATISFACTION
IDENTIFIES ESSENTIAL
ACTIVITIES LACK OF
UNDERSTANDING
QUALITY OF WORK

INCREASED INCREASED
PERFORMANCE DEPENDENCY
 CONCLUSION
• benchmark is the best tool to measure the performance of the business
• not only for big and establishes company but also can be implement by SME (small-
medium enterprise)
• managers should not only focus on financial information to improve the performance
company but it will be much better if they can generate and use the non-financial
information in their organization as well.
• Even though it’s hard to start the but once they practicing the benchmarking, they
will feel the result.
APPLICATION TO INDUSTRY
 Current practice benchmarking used by the respondent, the most current
practice approach that be used are on the turnover of workers by evaluate the
worker’s performance. The Project Manager also will evaluate the sub-contractor
turnover performance and the marks will be benchmarked for the next sub-
contractor that considered to be hired. Also, by implement SHASSIC approach
provided by CIDB, a project will be evaluating every three months and mark is
given based on the level of safety and health.

The passing mark is increase to 75% and will be increasing until zero hazards are
achieved. While, benchmarking concept may fit into the improvement of safety
performance by involvement a commitment at all levels in the management,
starting with top management, to the process of benchmarking in safety
performance. Everyone should recognize that safety performance is important for
the success of the project and that the benchmarking process is a valuable tool
for improving safety performance. Without such commitment, real change is
unlikely to result.

Based on the result, about 40% responses stated that they do not practice the
benchmarking. The improvement of benchmarking in health and safety
performance can be getting through the approaches provided by CIDB for
example. By seeking the best partner and review the processes of benchmarking
and the elements that should be benchmark will improve the safety performance.
Other than that, action plan
PAST YEAR QUESTION JUNE 2018 (Q2)
 PAST YEAR QUESTION - ANSWERS
JUN 2018 (Question 2 a)
To : Management of Mandiri Berhad
From : Nor Aimi Mazlan, Management Accounting
Re : The Importance of Effectiveness Benchmarking

I have been given the task to prepare this report to the management of Mandiri Berhad
(MB) in order to explain the advantages of exercising internal benchmarking. The common
benefit of benchmarking is help company to improve the productivity of company.

The advantages internal benchmarking is easy access to sensitive data and giving
information sharing with other division. Therefore, the outcome of an internal benchmarking
can be presented quickly.

Besides that, benchmarking process can give a good practice/training to the MB staffs
and it can be a good starting point for future benchmarking studies. Through benchmarking, it
also can give a deeper understanding of MB’s division process.

Other than that, internal benchmarking can ability to deal with partners who share a
common language, culture and system. So, it easy to transfer the lesson learned and it is the
most cost effective.

Thank you.

NorAimi
 PAST YEAR QUESTION - ANSWERS
JUN 2018 (Question 2 b)
3 reasons the current performance monitoring and benchmarking system implemented by MB
is inappropriate.

i. The current performance measures used are not sufficient enough to give a true
performance of the divisions and company. This is because the existing system only
focusing on financial performance of the business units, neglecting the other
performance perspectives. Focusing too much on financial health is not helping the
company to be better in the market, because financial result is depending on many other
factors of the business.

ii. The performance measurement system must be comprehensive that covers all important
aspects of the business including the quality issues. It needs to include the range of
factors that contribute to the organization’s success such as competitive performance,
quality of service and innovation. This requires a range of financial and non-financial
indicators.
iii. The existing system is only focusing on internal standards, when the company compares
its divisional performance among the divisions within the company and against the past
performance results. Comparing performance internally is not an appropriate practice
where it fails to consider the external standards in the market. The company will lose its
competitiveness as its internal standards maybe not as high as the external standards
in the market. The firm might fail to detect or realise its existing and potential problems
and therefore will not be able to improve the future performance. The company might fail
to sustain in the future as it will be less competitive.

To improvise the current performance management, the company can identify external
benchmarking partners among the best performing in the industry. Through industry or
competitive benchmarking, the company will be able to learn how to do business more
efficiently that competitiveness of the business can be enhanced.
 PAST YEAR QUESTION - ANSWERS
JUN 2018 (Question 2 c)
5 non-financial performance measures for the service industry are:
i. The competitiveness
The competitiveness is an important for a firm in the market to compare with other
market. The competitiveness of a business restaurant maybe assessed by looking at the
company’s annual sales growth rate, relative market shares and position.

ii. Utilization of resources

It is important aspect in the business processes in order to reduce cost. The measures
can be used to assess effective resource utilization include raw materials consumption,
power and energy utilization, productivity etc. Cost reduction maybe successfully
materialized when all resources are utilized effectively and wastage are eliminated.

iii. Quality of product

The service quality is almost important in a food serving business. This is to ensure
continued support from satisfied customers. The business can measure its product
quality by looking at the number of reject products, number of complaints from customers
regarding the foods and beverages served.

iv. Quality of service

This service quality to ensure satisfaction of customers is guaranteed. It may be
assessed by looking at the time taken to serve the customers, the courtesy and
responsiveness of the waiters, the availability of the products offered in the menus and
cleanliness of the restaurant.

v. Flexibility
It is the term of volume of foods served to customers. The business in term of menu or
food offered to customers as well as in term of speed.