Benchmarking and Best Practices in Benchmarking and Best Practices in The Retail Industry The Retail Industry Measur Measur e e Sharing Sharing Spirit Spirit Benchmarking Benchmarking Best Practices Best Practices factors that can impact profitability the need to collaborate more and make more fact- based decisions though benchmarking Key to success is “customer-supplier collaboration” and “real- time information” Majority of successful companies are already need to understand on how the collaboration and info sharing can contribute to profitability, cost competitiveness, efficiency and customer satisfaction
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Benchmarking and Best Practices in Benchmarking and Best Practices in The Retail IndustryThe Retail Industry
MeasureMeasure Sharing Spirit Sharing Spirit
BenchmarkingBenchmarking Best PracticesBest Practices factors that can impact profitability
the need to collaborate more and make more fact-based decisions though benchmarking
Key to success is “customer-supplier collaboration” and “real-time information”
Majority of successful companies are already sharing some information with their customers
need to understand on how the collaboration and info sharing can contribute to profitability, cost competitiveness, efficiency and customer satisfaction
Benchmarking and Best Practices in Benchmarking and Best Practices in Retail Industry (cont’d)Retail Industry (cont’d)
Retail Industry
Indicator Groups
Key Performance Indicators
(KPIs)
Definition
Sales Performance
Retail Sales Performance
Percentage change in sales-turnover of retail business in Malaysia
Inventory Turnover
Total inventory divided by last month’s sales
Employee Performance
Sales per Employee
Total sales divided by number of employees
Square Footage per Employee
Gross area inclusive of store room, toilet, office, aisles, etc., divided by number of employees
Labour Cost vs. Sales
Gross salary (basic payroll, EPF, overtime and allowances) for full time, part-time staff vs. gross sales
Staff Turnover Percentage of resignation on monthly basis
Absenteeism Rates
Number of staff times 26 days divided by number absent (AWOL), medical leave, absent without approval, unplanned leave, etc
BenchmarkBenchmark
Retail Industry
Best PracticesBest Practices
Benchmarking and Best Practices in Benchmarking and Best Practices in Retail Industry (cont’d)Retail Industry (cont’d)Emphasis on Membership Card Privileges & benefits to enhance relationship with loyal customers
Frequently review, innovate and improve own retail concept
Respond promptly towards changing consumer spending & behaviour
Most products new – fast moving products
Good relationship with suppliers
Aggressive promotional activities
Customers’ payment capabilities
Outlets to be more functional in relation to its customers’
logistical requirements
Outlets to be more aesthetically pleasing and attractive as shopping destination
Retail Industry
Best PracticesBest Practices
Benchmarking and Best Practices in Benchmarking and Best Practices in The Malaysian Retail Industry (cont’d)The Malaysian Retail Industry (cont’d)
““The retail industry is bouncing back after being hit by the The retail industry is bouncing back after being hit by the Iraq War Iraq War
Initial retail growth 5% but due to Iraq War, drop in April-May to 2-3%
Increased customer spending due to: Mega sales promotion help boost sales Bonuses to government servants Improved income and employment MIER projected private consumption to grow from 4.4
to 5-7% next year
How can industry integrate and share their How can industry integrate and share their experiences and best practices? experiences and best practices?
BenchmarkingBenchmarking
Benchmarking for Best PracticesBenchmarking for Best Practices
Benchmarking is the practice of being humble enough to admit that someone else is better at something, and being wise enough to learn how to match and even surpass them
at it.
Benchmarking is a systematic and continuous process of searching, learning, adapting and implementing the best
practices from within own organization or from other organizations towards attaining superior performance
- National Productivity Corporation, Malaysia
Types of BenchmarkingTypes of Benchmarking
Benchmarking
Market related(Competition analysis)
Internal Benchmarking External Benchmarking
Generic Processes(Best Practice)
Branch related(Trend research)
Plant related
e.g., safety performance measures
3 Basic Issues in Benchmarking3 Basic Issues in Benchmarking
Where?
Basic issues:
Where are you now?
Why is your organization atthis position vs the other?
What can be improved?
112
10
30
90
Company maxmin mean
Why?
What?
Wai
ting
Tim
e fo
r Adm
issi
on[m
inut
es]
Benchmarking : An Overview Benchmarking : An Overview
Comp2
Comp3
Comp1
InternalBenchmarking
SE
Cmonth
2000
1999
CompanySpread Sheet
Energy ProductMon
Jan
Feb
Mar
CompetitiveBenchmark
What Is Benchmark?What Is Benchmark?
A measured “best-in-class” achievement, recognized A measured “best-in-class” achievement, recognized as the standard of excellence for a particular processas the standard of excellence for a particular process
Examples:Examples:
• Rate of customer complaint Rate of customer complaint 5%5%• Employee satisfaction rate Employee satisfaction rate 95%95%• Customer retention rate Customer retention rate 90%90%• Information retrieval time Information retrieval time 5 seconds5 seconds• Customer response time Customer response time 15 min.15 min.• Medical Cost per EmployeeMedical Cost per Employee RM16.89RM16.89• MC RateMC Rate 0.5%0.5%
What Are Best Practices ? What Are Best Practices ?
Examples :Examples :
• Development of in-house trainers and training academyDevelopment of in-house trainers and training academy• Visual management to inculcate culture of excellenceVisual management to inculcate culture of excellence• QCC in building knowledge-based workforceQCC in building knowledge-based workforce
Best practices are a relative term indicating Best practices are a relative term indicating
outstanding business practicesoutstanding business practices which have been which have been
identifiedidentified as as contributing to significant improved contributing to significant improved
performancesperformances in leading companies in leading companies
Importance of Benchmarking Importance of Benchmarking
Objective Without Benchmarking With Benchmarking
To become more adaptive Evolutionary Change Understanding of competition ideas from proven practices
Implement Industry best practices
Few solutions, Frantic catch up activity
Many options, Superior performance
Defining customer requirements
Based on history, Gut feeling or Perception
Market reality, objective evaluation
Establishing effective goals & objectives
Lacking external focus, Reactive
Credible unarguable, Proactive
Developing true measures of productivity
Pursuing projects, strength/weaknesses not understood, Route of least resistance
Solving real problems, Understanding output based on industry best practices
Benefits of Benchmarking Benefits of Benchmarking Improves organizational quality
Leads to lower cost
Creates buy-in for change
Exposes employees to new ideas
Broadens organization’s perspective
A catalyst for learning
Increase employee satisfaction
Test the internal operating target
Raise the level of potential performance
Sharing of best practices
Understanding world-class performance in-depth
Encourage and stimulate innovation
“If you know neither yourself nor your enemy, you will succumb in every battle.
If you know yourself but not the enemy, for every victory gained you will suffer a defeat.
If you know yourself and your enemy, you need not fear of a hundred battles.” - Sun Tzu
NPC Benchmarking Model NPC Benchmarking Model Phase 1
BENCHMARK
Start
1. Agree On Benchmarking Topic
2. Finalise On Scope; Measures & Definitions
3. Data Collection : Survey
4. Share Strengths
Phase 3IMPROVEMENT
New Area
9. Plan to Adapt Best Practices
10. Implement Best Practices
11. Monitoring Result
12. Standardization
13. Daily Control
Continue Existing Project?Yes
No
Phase 2BEST PRACTICES
5. Plan for Site Visit
6. Data Collection
7. Recommend Improvement
8. Share FindingsYes
2nd Site Visit
(Focus Visit)
Community of Practice (CoP)Community of Practice (CoP)
CoP is a smallCoP is a small group of group of peoplepeople who comes together who comes together to explore opportunities forto explore opportunities for
benchmarksbenchmarks andand best best practices sharingpractices sharing onon
common interest areascommon interest areas
Benchmarking Community of Practices (CoP)Benchmarking Community of Practices (CoP)
Clusters e.g., Hypermarket, Supermarket,
Specialty Store,Pharmacy
Industries e.g., Retail
Sector e.g., Distributive Trade
Processes e.g., Delivery, Handling Customer
Complaints
Functionale.g., Marketing, HRM
Communities of Practices (CoP)Communities of Practices (CoP)SMIs