Benchmarking
...ontacts and will help the organization to be the best in class or the leader in the industry. 2.4 Other types of Benchmarking Explorative Benchmarking Explorative benchmarking is used to compare the performance of ones own organisation with other competitive and non-competitive organisations. This can be done both at organisational and functional level. Typically, the search for benchmarking partners is achieved via personal networking and/or brainstorming the names of and approaching ‘familiar’ companies. Explorative benchmarking has the advantage that data is easier to collect because the benchmarking partner typically is part of a personal network recommended by someone within the organisation. Current performance can be compared either by searching and analysing information in the public domain, or by requesting information from the organisation itself. Comparative Benchmarking Comparative benchmarking is used to compare the performance of ones own organisation with other competitive and non-competitive organisations. This can be done both at organisational and functional level. In either case, a set of appropriate measures is agreed, and current performance is measured. This is then compared with other organisations either by searching and analysing information in the public domain, or by requesting information from the organisation itself. Comparative benchmarking enables an organisation to position itself within its industry of function, and assess potential for improved performance. Examples of comparative benchmarking include the use of the EFQM Excellence Model for self-assessment, and the Best Value and Quality Services initiatives currently being pursued in the Public sector. 2.5 Reason for Benchmarking Product, service and process improvement can only take place in the relation to established standards, and the improvements then being incorporated into the new standards. Benchmarking, one of he most transferable aspects to total quality management, and thought to have originated in Japan, measures an organization’s operations, products and services against those of its competitors in a ruthless fashion. It is a means by which targets, priorities and operations that will lead to competitive advantage can be established. Benchmarking is the continuous process of measuring products, services and processes against those of industry leaders or the toughest competitors. This results I a search for best practices, those that will lead to superior performances, through measuring performance, continuously implementing change and emulating the best. There may be many reasons for carrying out benchmarking. Some of them are set against various objectives as in Table 1.1. the links between benchmarking and TQM are clear – establishing objectives based on industry best practice should directly contribute to better meeting of the internal and external customer requirements. Table 1.1 Reasons for benchmarking Objectives Without benchmarking With benchmarking Becoming competitive • Internal focused • Evolutionary change • Understanding of competitiveness • Ideas from proven practices Industry best practice • Few solutions •Frantic catch-up activity • Many options • Superior performances Defining customer requirements • Based on history or gut feeling • Perception • Market reality • Objective evaluation Establishing effective goals and objectives • Lacking external focus • Reactive • Credible, unarguable • Proactive Developing true measures of productivity • Pursuing pet projects • Strength and weaknesses not understood • Route of least resistance • Solving real problems • Understanding outputs • Based on industry best practices 2.6 Areas of Benchmarking Benchmarking can be done in lots of areas such benchmarking on: Marketing Promotion Price Customer Satisfaction Product or Services Sales Finance Management New Product Launching Employees Training Programs Benchmarking is the process of comparison and its can be used to compare any part of the organization or its businesses. Taking similarly related component and organizing in some meaningful fashion noting a variety of distinct differences which, is often a comprehensive list of variables. When related to customer satisfaction the “similarly related” part is major grouping of customers e.g. all customers for a specific product or service. The distinct differences can include one or more of the following: geographical orientations such as; country of origin, State/Province, county, and city, corporate status (large, medium, small, entrepreneur (self-employed), home-base with leans to financial status or human resources, departments, functional areas, methods, productivity, customer retention, marketing, promotion, advertising or sales strategies, or tactics. The goal is to understand how key “metrics” in your firm measure up, or "benchmark" to these other target organizations. Therefore these comparative entities may be either in or outside your industry where inside would be a competitive metric. The ultimate outcome of these studies is to gain a solid understanding of the best practices, which other companies have effectively implemented. Therefore, these all are the some of areas that can be benchmark by an organization to progress their business. 2.7 A five-stage benchmarking process Stage 1: Planning the Benchmarking Project The first stage in benchmarking is to plan the exercise. This plan should fit within the mosaic of the company-wide quality plan, which, in turn, should be integrated with the strategic business plan. There are three levels of critical success factors: Level 1 defines a broad subject area - involving an organisational department or function eg approaching a benchmark partner on, say, billing is too broad a range. Level 2 defines a more specific investigation. It can be defined by some type of aggregate measure. Level 3 is the most specific level that can be defined particularly by means of some type of measure or specific process description that allows benchmarking partners to produce information comparable to own. Stage 2: Form the Benchmarking Team Objective: To select, train and manage the benchmarking team. Benchmarking exercises can be conducted by individuals, but most benchmarking exercises are team activities. Think of the workload and the knowledge requirements. A team represents the different perspectives, special skills, variety of business connections the individuals bring to the benchmarking process. The word 'team' has connotations of common purpose or goal, coordination, cooperation, communication, motivation. The team structure will be influenced by the size and scope of the benchmarking exercise which will depend on a number of factors such as: the size of the organisation how much the organisation is prepared to spend how many business processes it will benchmark how many locations the organisation operates from and wishes to benchmark at one time Stage 3: Collect the Necessary Data Objective: To identify best practice companies and to gather benchmarking information about the performances and practices of the best practice companies. Self analysis is an essential step to effective benchmarking. One of the fundamental rules of benchmarking is to know organization own processes, products and services before attempt to understand the processes, products and services of another organization. To identify how company currently performs the process, collect and review any information already available on the process. This may include: Flow charts - this involves taking the process to be analysed and drawing up a diagram to show each step in the process. This is useful to understand the process and its drivers. Customer feedback - this involves identifying customers and their needs to assess whether the process is performing well or not. Customers can be asked direct or by formal customer survey. Answers to these questions can give clear indications as to what aspects of the process should receive priority. A benchmarking partner is any person or organisation that supplies information relating to benchmarking exercise. There are a number of ways to find a benchmarking partner including : Trade and professional associations - can be useful particularly if company have decided that potential benchmark partners are likely to come from a particular industry or service sector. Consultants - may have databases of best practices and best practice organizations. They can also act as a third party. Stockbrokers - for background and structure of the potential benchmark partners. Major suppliers of company’s machinery, process technology, materials - can be sources of specific information regarding the potential benchmark partners. Stage 4: Analysing the Data for Performance Gaps Objective: To identify and analyse the gaps between best practice and your own business processes. All the collected information is used to identify performance gaps between benchmarking partners. When comparing the performance of companies, adjustments must be made for differences due to: economies of scale different management philosophies (outsourcing, decentralisation) product features and manufacturing processes operating environment (differing awards, regulatory constraints) Organization may have to develop a composite picture that reflects the input of many companies. Synthesise the process information have gathered in a way that is appropriate for your company's culture. This is an opportunity to compare current performance against the benchmark that have discovered. Stage 5: Take Action and Recycle the Process Objective: To develop strategies and action plans to close the gaps. What needs to be done to match best practice for this process? Identify tasks, responsibilities, resources and time targets for the change process. Prepare a budget and a cost benefit analysis, and put it into practice. Monitor performance indicators carefully as these should highlight improved efficiencies). 3. GD EXPRESS 3.1 GD Express Company Background GD Express Sdn Bhd is one of the fastest growing express carrier companies in Malaysia, offering wide range of logistical express solutions. GD Express has branches all over Malaysia and it delivers services worldwide. GD Express comprehensive network of branches, network partners and agents provide just-in-time service via a modernized schedule run line haul system for all major, medium and small townships in East and West Malaysia. GD Express focuses on high quality service has gained the support of many established customers for their logistical needs. It also gained the support of international integrators to deliver out of Malaysia through their vast international network. The idea of starting GD Express took root in 1996 when its operations director Yong Phie Loong saw the huge potential of establishing a domestic express delivery outfit. Yong, who is considered a pioneer in the local industry because of his experience as chief general manager of Nationwide Express, saw the potential for another express delivery service. Within Malaysia, we have an extensive network of stations spread across the country to provide service to our customers. On the international front, we work with established foreign express carriers to offer express delivery services to over 212 countries worldwide. Our distribution network facilities include the following : A 25,000 sq feet central all-weather clearing hub Comprehansive security surveillance system More than 100 delivery vans and trucks Over 60 stations State-of-the-art IT system with proprietary software A 10,000 sq feet packaging and warehouse complex Customised storage and bulk-handling equipment More than 1000 staff ORGANIZATION CHART GD Express Vision - To be a market leader and industry role model providing high quality, value for money, technology driven express delivery service. GD Express Mission - To deliver the most trusted and professional express carrier service in Malaysia. 3.2 Benchmarking practicing by GD Express Benchmarking is the main strategy used by GD Express to improve its business and building bright future for the company. GD Express currently seriously involved in the benchmarking process in its aim to be the best and leading courier service company. GD Express MD and CEO Mr. Teong Teck Lean have come out with main four areas to benchmark which are the customer satisfaction, website performance, training and development for employees and service responsibility. To implement this benchmarking GD Express has chosen the best in class organization such as FedEx, Keynote, and HP. All this companies has proven to be the most excellent organizations in its category. GD Express using the Best-Practice Benchmarking for the company and it is because best practice benchmarking is the correct method to use to be the market leader in future as it is the vision of the company. 3.2.1Benchmark FedEx on Customer Satisfaction FedEx ranks highest in business customer satisfaction, not only in air and international delivery categories, but in ground delivery as well. FedEx performs particularly well in the areas of shipping and delivery, value, invoicing, and driver relationships. Following FedEx in the air, ground and international rankings is UPS. “One size does not fit all,” said Curt Carlson, director of custom research at J.D. Power and Associates. “As carriers create one-stop shopping for delivery services, they need to be certain their performance in key factors that determine overall customer satisfaction is outstanding, and those factors vary in importance among air, ground and international services. Failure to do so puts the loyalty of their customers at risk.” The J.D. Power and Associates 2002 Small Package Delivery Service Business Customer Satisfaction Study SM finds that while pickup and delivery factors are very important for all three types of service (especially ground service), “value for the price paid” is also important for both air and international services. Additionally, air service business customers look for good driver relationships, while international customers appreciate good account executive performance to help resolve problems. The 2002 Small Package Delivery Service Business Customer Satisfaction Study is based on 922 telephone interviews with shipping managers and other business personnel from a representative sample of U.S. businesses that have at least 10 employees and that spend $10,000 or more annually to ship small packages (up to 150 lbs.). GD Express can benchmark on FedEx to improve to customer satisfaction and also follow their strategies on how to make variety of service customization to meet and exceed all the customers individually. It is one of the strategies which have never done by any company except FedEx. If GD Express benchmark on this strategy to improve their customer satisfaction it will lead them to a bright future. 3.2.2 GD Express Benchmark Keynote for Website performances Founded in 1995, Keynote, The Internet Performance Authority, is the worldwide leader in e-commerce benchmarking and Web performance management services that improve the quality of e-business. The company's low-cost and hassle-free performance measurement solutions are used by more than 2,900 B2B and B2C e-businesses, Web-hosters, Internet Service and Content Delivery Providers. Keynote, The Internet Performance Authority, today announced that GD Express has selected Keynote Perspective to provide real-time, performance measurements for its Web site. Through the GD Express web site, customers are provided online shipping and package tracking services for GD Express and GD Express Ground, saving them the time and effort associated with handwriting shipping documents. Keynote's worldwide infrastructure of measurement computers provides accurate measurements and diagnostic data on GD Express end-user experience. This snap-shot of a user's overall Web experience enables GD Express to proactively resolve problems before they impact online access and assure its products and services are downloaded quickly and reliably. GD Express was able to benchmark its quality of service when Keynote released its annual e-Shopping Holiday Report, which measured the performance and availability of top e-commerce sites for the weeks of Nov. 5 thro...