group 3 Benchmarking

Agustinus Setyawan / 222160504
Lily Purwianti / 2220217050007
Renny Christiarini / 222160515
Program Doktoral Manajemen Strategi
Universitas Trisakti
2017
98

WHAT IS BENCHMARKING?
Benchmarking is an ongoing process involving
industries from all walks of life and all categories of
production
The principle is that no company is 100% perfect, and
if you continuously search for better solutions, you
will improve your efficiency and become an
exceptional company, which can later form a
benchmark for similar companies.

DEFINITIONS FOR BENCHMARKING
Benchmarking is the process for improving
performance by continuously identifying,
understanding, and adapting the best practices and
processes followed by similar companies, and
implementing the results. (Wikipedia )
Benchmarking is the systematic search for best
practices, innovative ideas, and highly effective
operating procedures. (Besterfield et al. )

DEFINITIONS FOR BENCHMARKING
Benchmarking is the process used by the management in
which the busi-nesses use an industry leader as a model in
developing their business practices ( ASQ )
Benchmarking is a continuous systematic process of
measuring products, services, processes, or work practices
against the toughest competitors or those companies
recognized as the industry’s best. ( Xerox Corporation )
Benchmarking is the search for the industry’s best
practices and the adoption of such practices to ensure
superior performance. ( Robert Camp )

TYPES OF BENCHMARKING
Performance benchmarking: The company’s competitive
position is assessed, comparing the products and services
with those of other companies.
Product benchmarking: The basic functional performance
and quality features of a company’s products are
compared and benchmarked with competitors’ products,
with a view to improve the functional features.
Process benchmarking: The firm focuses its investigations
with a goal of identifying and observing the best practices
adapted in one or more benchmark firms, producing the
same or similar products in the cement industry

Strategic benchmarking: This involves the study of
corporate level strategies adapted by successful industries.
Generic benchmarking: Sometimes one type of industry
benchmarks a part of its products with that of other types
of industries that use these parts.
Functional benchmarking: Specific functions like billing,
distribution network recruitment are compared.
Competitive benchmarking: Here certain parameters are
compared to the competitors’ with their cooperation, after
obtaining special permission for getting vital information

Financial benchmarking: The annual financial results
are compared and analyzed in order to assess the
overall performance, productivity, and profitability of
the concern.
Operational benchmarking: This embraces everything
from staffing and productivity to the office flow, and
analyzes the procedures adapted.
Internal benchmarking: Assessment comparisons are
made within departments or within sister concerns.

Collaborative benchmarking: Sometimes
benchmarking is carried out collaboratively by groups
of companies either through common consultants or
by professional associations or bodies.
Metric benchmarking: This involves using information
on cost or production information to identify strong
and weak performing units.

GENERAL CONCEPT OF BENCHMARKING

PHASES OF BENCHMARKING
1. Preparatory phase: When a preliminary meeting
of all concerned people is called for and the details
are explained. The planned phases and procedures
are subjected to brainstorming based on which of
the subsequent phases are planned as explained
below. The purpose of this phase is to place bench-
marking activities on a firm footing.

2. Planning phase: This is the basic phase for
conducting a benchmarking investigation. Here the
plans are developed by addressing the key questions
of
What is to be benchmarked?
Who will be the benchmark partners?
What is the method of data collection?

3. Analysis phase: When the data collected is
analyzed for the purpose of comparison with other
benchmarked companies. The key questions to be
addressed here are:
What is the performance of the benchmark partners, for
each parameter?
What is our performance compared to theirs?
In what way, and in what parameters of their
performance are theirs better than ours?
What is the lesson to be learned from them?
How can we apply the lessons to our company?


4. Integration phase: When the goals are developed
and integrated into the benchmarked parameter or
process so that significant performance improve-
ments are made. The key questions in this phase
are:
What are the critical proposals given as a result of the
analysis?
Has management accepted the findings?
What are the goals that are needed to be modified and
what are the fi-nally drawn up goals?
Have all involved parties been clearly communicated to
about the goals?


5. Action phase: When detailed action plans needed
to achieve the goals are drawn and developed. The
key questions that need to be addressed here are:
Will the plans allow the achievement of the stated goals?
How will progress be tracked?
What is the schedule for recalibration of the
benchmarks?

STAGE OF BENCHMARKING
1. Identify your problem areas
2. Identify other industries that have similar processes
3. Identify organizations that are leaders in these areas
4. Survey companies for measures and practices
5. Visit the “best practice” companies to identify leading
edge practices
6. Implement new and improved business practices
7. Repeat the process

Robert Camp, The Search for Industry Best Practices that
Lead to Superior Performance (1989), summarized the
above procedure in 12 steps as:
1. Select the subject ahead
2. Define the process
3. Identify the potential
partners
4. Identify the data source
5. Collect data and select
partners
6. Determine the gap
7. Establish the process
differences
8. Target future performances
9. Communicate
10. Adjust goals
11. Implement
12. Review/recalibrate

Xerox’s 10-step procedure :
1.Identify what is to be benchmarked
2.Identify comparable organizations
3.Determine data collection methods and collect data
4.Determine current performance gap
5.Project future performance levels
6.Communicate benchmark findings and gain
acceptance
7.Establish functional goals
8.Develop action plans
9.Implement specific actions and monitor progress
10.Recalibrate benchmarks

COSTS OF BENCHMARKING
Visit costs: They include travel, accommodation,
token gifts, and other miscellaneous expenditure.
Time costs: The benchmarking teams will be investing
time and energy in collection and analysis of the data
and for the implementation.
Database costs: After having collected and analyzed
the data, the companies find it useful to maintain a
database of the best practices.

ADVANTAGES OF
BENCHMARKING
Best practices could be incorporated in a company’s
operations; thereby productivity, sales, and profitability
would increase.
It provides targets that have been achieved by others.
Resistance to change from within would be less if ideas come
from outside.
Technical breakthroughs could be identified early, thereby
improving upon the quality of the product.
Advancement in employee’s knowledge and experience.
It helps the company to conduct SWOT analysis to learn its
weaknesses and the scope of improvement.
Customers’ requirements can be met in a more systematic
manner.
Effective goals can be set and achieved.

LIMITATIONS OF BENCHMARKING
It entails subjective judgment.
It is difficult to get useful information from the
competitors.
It requires a thorough understanding of current
products and processes.
It is purely a creative activity.
It is a costly and time-consuming activity.
It is still subject to resistance to change from
employees to some extent.

Journal #1: An empirical study of benchmarking
evaluation using multi criteria decision making in
service industries (Bhupender Sigh, Sandeep Grover,
and Vikram Singh, 2017).
Journal #2: Competitive service quality
benchmarking in airline industry using analytical
hierarchy process (Alok Kumar Singh, 2016).
Journal #3: Benchmarking the service quality of
airlines in the US : an exploratory analysis (Hokey
Min & Hyesung Min, 2015).
JOURNALS ON BENCHMARKING

Topic
Introduction
Research Gap
Literature Review
Research Questions
Methodology
Conclusion and Research Limitation.
OUTLINES

Article: An empirical study of benchmarking evaluation
using multi criteria decision making in service industries.
Author: Bhupender Sigh, Sandeep Grover, and Vikram
Singh.
Managerial Auditing Journal (2017)
The objective of this study is to review benchmarking
techniques to rank them for their applications in Indian
service industries. This study provides a model for
evaluation of benchmarking techniques for service
industries through Multi Criteria Decision Making
(MCDM) approaches.
TOPIC: ARTICLE 1

Multi Criteria Decision Making (MCDM) approaches:
ANP: Analytical Network Process (ANP). Similar to
AHP, ANP is based on deriving ratio-scale measures to be
used to allocate resources according to their ratio-scale
priorities.
Technique for Order Preference by Similarity to
Ideal Solution (TOPSIS) methods are used for ranking of
benchmarking techniques. TOPSIS is the best
established technique used by many researchers to model
the decision making processes which helps to evaluate the
alternatives with the ideal solution (Singh et al., 2014)
TOPIC: ARTICLE 1 (CONT’D)

Article: Competitive service quality benchmarking in
airline industry using analytical hierarchy process.
Author: Alok Kumar Singh.
Benchmarking: An International Journal (2016)
The purpose of this paper is to measure competitive
service quality (SQ) performances of domestic full
service airlines in India by providing a framework based
on analytic hierarchy process (AHP), in order to
benchmark their SQ thus, enhancing competitiveness
and gaining competitive advantage.
TOPIC: ARTICLE 2

Article: Benchmarking the service quality of airlines in
the United States: an exploratory analysis.
Author: Hokey Min and Hyesung Min.
Benchmarking: An International Journal (2015)
The purpose of this paper is to help airlines gain a
better understanding of passengers’ service concerns,
identify opportunities for continuous service
improvement, and then develop service benchmarking
standards that can be a yardstick for the airline’s
competitiveness.
TOPIC: ARTICLE 3

From the 3 (three) journal selected by our team, the
main topic is focus on Competitive Service Quality
Benchmarking.
SQ is more important determinant than price in
differentiating a service organization from its
competitors and in encouraging customer loyalty
(Kandampully and Suhartanto, 2000; Chow and Luk,
2005). Researchers have shown that superior SQ is an
essential strategy for winning and retaining
customer’s thus increasing market share and
profitability (Zeithaml, 2000; Chow and Luk, 2005).
INTRODUCTION

SQ is considered to be the most important critical
success factor of any service industry (Berry et al.,
1994; Kannan, 2010; Singh and Sushil, 2013). As per
American Management Association survey of North
American, Western European and Japanese managers,
it was found that 78 percent of the surveyed
managers believe that service improvements are
the key to competitive success (Min and Min,
1996).
INTRODUCTION (CONT’D)

Competitive benchmarking in the service sector is known
to improve service performance by as much as 60
percent in less than a year (Harrington and Harrington,
1996). Even though the application of competitive
benchmarking to the service sector is challenging due to
the intangible nature of service quality and the subsequent
lack of universal service standards, competitive
benchmarking has been successfully applied to
various service organizations such as hotels and
restaurants (e.g. Morey and Dittman, 1995; Min and
Galle, 1996; Min and Min, 1996, 1997, 2011; Phillips and
Appiah-Adu, 1998; Min et al., 2002).
INTRODUCTION (CONT’D)

No competitive SQ benchmarking study has been
undertaken till date on airline industry in Indian
context.
Benchmarking in Indian service sector is a moderately
new concept, which has been embraced universally as an
instrument of continuous improvement.
Although the critical importance of capturing and
combining a group of opinions with an integrated MCDM
has been highlighted in benchmarking literature, the
comparison among these techniques has not been
studied to determine the selection of the appropriate
method for a particular industry.
RESEARCH GAP

One of the earliest attempts to study airline service quality
includes Truitt and Haynes (1994) who observed that
larger aircrafts tended to improve passenger satisfaction
and subsequently enhance airline service quality based on
the structured interviews of airline passengers using
regional carriers in the USA.
Following suit, Rhoades et al. (1998) examined the
patterns of US airline service quality during 1987 and 1996
based on the secondary data available from the Air Travel
Consumer Report. They found that regional carriers
performed far worse than major national carriers in terms
of on-time performances, service-related complaints, and
mishandled baggage.
LITERATURE REVIEW

To build a theoretical base for airline service quality,
Sultan and Simpson (2000) introduced a SERVQUAL
model to examine if consumer expectations and
perceptions of airline service quality varied by
nationality. They discovered that service quality
expectations and perceptions significantly varied by
nationality based on the surveys of US and European
passengers. Thus, they concluded that culturally based
service ratings affected the ability of airlines to
accurately monitor customer expectations and
perceptions of airline performances.
LITERATURE REVIEW (CONT’D)

Extending the work of Sultan and Simpson (2000),
Tiernan et al. (2008a) compared the service
quality performances of strategically aligned US
and EU member airlines and found that airline
alliances did not affect service quality. In another
related study, Tiernan et al. (2008b) also discovered
that both US and EU airline passengers’ perceived
service dissatisfactions were far worse than actual
service failures (e.g. flight delays, lost baggage, and
cancelled flights).
LITERATURE REVIEW (CONT’D)

Kannan (2010) applied AHP for benchmarking the SQ
of ocean container carriers in India. The author carried
out competitive benchmarking using AHP with seven
service criterions and four ocean container carriers. The
author further carried out competitive gap analysis to
establish which service attributes require improvements
and identified specific areas of comparative advantages
and disadvantages. Min and Min (2011) developed a set of
benchmarks that helps fast food restaurants monitor their
service delivery process, identify relative weaknesses
against their competitors and take corrective actions for
continuous service improvements using AHP and
competitive gap analysis.
LITERATURE REVIEW(CONT’D)

Which elements comprise customer service attributes
that influence the airline passenger’s perception of
service quality?
Which service attributes are most important for
customer satisfaction?
Which airline is perceived to be the industry leader
with respect to its service performances?
How do we compare the airline’s service performance
with that of the industry leader using competitive
gap analysis?
RESEARCH QUESTIONS

How do we develop a strategic action plan for
continuous improvement of the airline service
quality?
How significantly does airline service quality
impact customer loyalty?
RESEARCH QUESTIONS (CONT’D)

METHODOLOGY – ARTICLE 1
 Research Design: Methodology Consists of three phase:
The define phase includes definitions, factors of
Benchmarking as literature outcomes, Questionnaire
survey and outcome of survey.
 Sample: The Indian companies were selected included for
survey where 120 from Automobile service sector, 40 from
Communication sector, 60 from Banking sector and 33
from Hotel industries.
 Analysis of collected data and applications of Multi
criteria decision making approaches (TOPSIS and ANP)
are used. The last phase includes comparison of results
which gives validation in similarities of ranking obtained.

 Research Design: The present study has used the AHP
methodology to benchmark the SQ of airlines in India.
 Sample: A total of 400 questionnaires were administered
to passengers during May 2012 to August 2012 at IGI
airport, New Delhi.
 Competitive SQ gap analysis is performed to evaluate
and compare strength and weakness of focal firm (Airline
“B”) against its competitors.

 Research Design: Develops a set of target performance
standards that helps airlines monitor their service delivery
process, identify relative weaknesses, and take corrective
actions for continuous service improvements.
 Sample: 171 airline passengers who have taken either
domestic or international carriers (Delta, Southwest,
Continental, United, American, US Airways, AirTran,
Spirit, Frontier, JetBlue, and Hawaiian)based in the USA
during the period of January of 2011 through November
2012.
 Using exploratory data analysis and competitive gap
analysis.

The study identifies seven different benchmarking
techniques. To rank benchmarking techniques, Order
Preference by Similarity to Ideal Solution (TOPSIS)
and Analytical Network Process (ANP) methods are
used. When applying (MCDM) approaches. The
TOPSIS and ANP analysis both show that External
Benchmarking, Performance Benchmarking and
Internal Benchmarking are ranked as the first three
techniques used as the basis for several CSFs used in
service industries namely: Planning, Reliability,
Standardization, Time Behavior, Usability, etc.
CONCLUSION

 In this research work, total of 23 SQ attributes and five
dimensions have been identified based on extensive
literature review, focus group brainstorming and experts
opinion from the Indian airline industry. The study
reveals that air travelers rate assurance as the most
important criteria and safety as the most important sub
criteria followed by on time performance, performing the
services right, the first time and remedial process for
delayed or missing baggage. Furthermore, based on AHP
methodology, the result shows that Airline “A” has
emerged as a market leader and is considered as a
benchmark airline.
CONCLUSION (CONT’D)

This study reveals that a service attribute considered most
important to the airline customers’ impressions of service
quality are air safety. This result reflects a growing concern
over potential terrorism against airlines in the wake of the
September 11 incident. The authors also found that proper
baggage handling, competitive airfare, and on-time
arrival/departure were next most important service
attributes, whereas frequent flier and code-sharing
programs were least important. Furthermore, the authors
discovered that airline passengers’ perceived service quality
influenced their choice of airlines. That is to say, airline
service quality can be an important gauge of airline
market share and revenue.
CONCLUSION (CONT’D)

The limitation is the assumptions made by MCDM
approaches which may affect the analysis of the study as
these are taken theoretically.
 In the present research work only those air travelers
were taken into consideration that had experience of all
the three airlines under study which is a necessity in
AHP-SQ framework methodology.
The present research work did not investigate the
switching behavior pattern of air travelers and the effect
of other marketing variables such as brand image,
customer loyalty, perceived value, etc. on SQ dimensions,
which can be the scope of future research.
RESEARCH LIMITATION

The present research is only limited to domestic full
service airlines in India, while further research work
can be conducted to study international and low-cost
airlines in India or in any other context. The
framework discussed in this research work helps to
identify SQ gaps between the focal airline and the
benchmark airline, however the present approach
does not address “how” to fill this gap and what future
action needs to be taken in order to address these
deficiencies.
RESEARCH LIMITATION (CONT’D)

The current study is limited to the evaluation of
comparative service quality of airlines in the USA.
Thus, this study cannot be generalized to the airline
passengers’ perceived service quality in other countries
or different cultural settings.
Also, this paper focuses on the performance aspect of
benchmarking rather than the strategic aspect of
benchmarking.
RESEARCH LIMITATION (CONT’D)

IS Benchmarking a legal activity?
Benchmarking is a legal activity. Because
benchmarking has been applied in a formal fashion
(following strict rules) to all manner of technical and
administrative procedures. There is legal authorities
on information exchanges ( major area of antitrust
concern applicable to benchmarking )

Both small and big company can do a benchmarking
is a way of discovering what is the best performance
being achieved, whether in a particular company, by
a competitir or b an entirely different industry. Every
company has core comppetency and the information
can then be used to identify gap in an organization’s
processes in order to achieve a competitive advantege

Advantages Benchmarking
compared with other tools
Benchmarking is an effective technique, which helps
organizations to create quality targets in the strategic
quality management process.
Benchmarking is systemmatic method by which an
organization can continuosly measure themselves
against the best industry practices or world class or
best inclass and improve accordingly.

Lack of benchmarking compared
with other tools :

References
Kiran (2017) Total Quality Management: Key
Concepts and Case Studies. BSP Books Pvt. Ltd.
Published by Elsevier Inc. All rights reserved
Min Hokey & Min Hyesung, (2015),"Benchmarking the
service quality of airlines in the United States: an
exploratory analysis", Benchmarking: An International
Journal, Vol. 22 Iss 5 pp. 734 - 751
Singh G, Grover S, Singh V , (2017)," An Empirical Study of
Benchmarking Evaluation using MCDM in Service
Industries ", Managerial Auditing Journal, Vol. 32 Iss 2


References
Sing, A. K ( 2016 ) Competitive service quality
benchmarking in airline industry using AHP",
Benchmarking : An International Journal, Vol. 23
Issue: 4, pp.768-791,

Do you have any question for us?
Thanks a lot Prof. Ir. Syamsir Abduh, MM, PhD for the
guidance, great sharing, and constructive
feedback/input to our team (group 3 – Benchmarking).
END OF PRESENTATION

group 3 Benchmarking

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