Post on 17-Jan-2016
Why Benchmark?
+ Identify opportunities
+ Set realistic but aggressive goals
+ Challenge internal paradigms on what is possible
+ Understand methods for improved processes
+ Uncover strengths within your organization
+ Learn from the leaders’ experiences
+ Better prioritize and allocate resources
Performance Improvement
E&S Tucson - November 1999
• Is this process important to our customers?
• Would improvements in this process support our business goals and objectives?
• Is the process owner committed to making changes in this process?
Evaluating Targets
E&S Tucson - November 1999
Keys to Successful BenchmarkingWhat You Need to Make Benchmarking Effective
• Focus on the processes that are critical to your business• Willingness to admit that you’re not the best
• Openness to new ideas from potentially unexpected sources• Commitment to provide resources and to overcome resistance to
change• Recognition given to successful benchmarking teams
• Understanding of the benchmarking process• Communication to the organization about the objectives of the
benchmarking project
E&S Tucson - November 1999
When You Shouldn’t Benchmark
• it isn’t critical to the business
• You don’t know what your customers require from your process• Key stakeholders aren’t involved in the benchmarking project• Inadequate resources have been committed
• You have an unreasonable fear of sharing information with benchmarking partners
• There are no up-front plans for implementing your findings• You haven’t done your “homework” before contacting benchmarking
partners
• You’re benchmarking an organization rather than a process• There is a strong resistance to change • When you are expecting results instantaneously
E&S Tucson - November 1999
PLAN
ADAPT
COLLECT
ANALYZE
The Benchmarking ProcessFour-Phase Model
E&S Tucson - November 1999
PLAN
Planning Phase1. Form (and train, if needed) benchmarking
team
2. Analyze and document the current processa. Identify the area of focusb. Identify the critical success factors (CSF)s
for the areac. Develop measures for the CSFs
3. Establish scope of benchmarking study
4. Develop purpose statement
5. Develop criteria for benchmarking partners
6. Identify target benchmarking partners
7. Define a data collection plan and determine how the data will be used/managed/distributed
8. Identify how implementation of improvements will be accomplished
E&S Tucson - November 1999
COLLECT
Collection Phase1. Secondary research based on criteria
2. Evaluate results and identify potential partners
3. Develop data collection instruments
4. Pilot data collection instruments internally
5. Identify and contact best practice partners and enlist participation
6. Screen partners and evaluate for best “fit” with criteria
7. Develop detailed questionnaire
8. Conduct detailed investigationa. Detailed questionnaireb. Follow-up telephone interviewsc. Site visits
E&S Tucson - November 1999
ANAL YZE
Analysis Phase1. Compare your current performance data to your
partners' data– Sort and compile data– Make your performance data
comparable (normalize)– Identify gaps
2. Identify operational best practices and enablers– What are participants doing that you are not doing– How do they do it (enablers)
3. Formulate strategy to close the gaps– Assess adaptability of practices and enablers– Identify opportunities for improvement
4. Develop implementation plan
E&S Tucson - November 1999
ADAPT
Adapting Improvements
1. Implement the plan
2. Monitor and report progress
4 4 4 Celebrate ! ! ! 4 4 4(Acknowledge the benchmarking team)
3. Document the study- Communicate the results (internally and to
benchmarking partners)- Assist in the internal transfer of best practices
4. Plan for continuous improvement– Identify new benchmarking opportunities– Set new goals
10
Benchmarking• A control process.
– Involving employees in the process of evaluation and change.
– Philosophy one of self control rather than imposed control, where the person most closely associated with the task is involved in the cross measurement and assessment of practice.
– Places personnel in a position where their unquestioned beliefs (paradigm) may be challenged , creating opportunities for innovation and learning.
Total Quality Management - Spring 2010 - IUG 11
Benchmarking
Benchmarking is the process of continually searching for the best methods, practices and processes, and either adopting or adapting their good features and implementing them to become the “best of the best.”
Measuring your performance against that of the best-in-class companies, determining how the best-in-class achieve those performance levels, and using the information as a basis for your own company’s targets, strategies, and implementation.
• Compare performance of an existing process against other companies’ best-in-class practices
• Determine how those companies achieve their performance levels
• Improve internal performance levels
Total Quality Management - Spring 2010 - IUG 12
Xerox 12-Step Benchmarking
Process
Phase 1: Planning1. Identify what to benchmark;2. Identify comparative companies;3. Determine data collection method & collect
data.
Phase 2: Analysis4. Determine current performance gap;5. Project future performance levels.
Phase 3: Integration6. Communicate finding and gain acceptance;7. Establish functional goals.
Total Quality Management - Spring 2010 - IUG 13
The Xerox 12-Step Benchmarking Process(continued)
Phase 4: Action 8. Develop action plans; 9. Implement specific actions & monitor
progress;10. Recalibrate benchmarks.
Phase 5: Maturity11. Attain leadership position ;12. Fully integrate practices into processes.
Benchmarking Concept
Creative
Adaptation
Breakthrough Performance
What is our performance level?
How do we do it?
What are others' performance levels?
How did they get there?
Reasons to Benchmark
Promotes continuous improvement Makes companies search for the best practices,
innovative ideas, and highly effective operating procedures
Can notify a company if it has fallen behind the competition
Inspires managers to compete Allows goals to be set objectively
6 General Steps to Benchmarking
1) Decide what to benchmark
2) Understand current performance
3) Plan
4) Study others
5) Learn from the data
6) Use the findings
Questions for Discussion
Explain how an organization might benefit from benchmarking organizations in a completely different industry…
Transparency 6-18Transparency 6-18© 2001 Prentice-Hall© 2001 Prentice-Hall
Gaining Insight Through Benchmarking
Gaining Insight Through Benchmarking
• Benchmarking is the sharing of information between companies, so that both can improve.
• The first step a benchmarking firm must take is to document current performance.
• If the managers in firm are unsure that they are pursuing a useful plan of action, benchmarking can help them understand how what they are doing stacks up against the master.
Transparency 6-19Transparency 6-19© 2001 Prentice-Hall© 2001 Prentice-Hall
Gaining Insight Through Benchmarking
Slide 3 of 5
Gaining Insight Through Benchmarking
Slide 3 of 5
Types of Benchmarking ( Table 6.1)
The goal of financial benchmarking is to perform
financial analysis andcompare the results in an
effort to assess your overallcompetitiveness.
Financial Benchmarking
In process benchmarking,the initiator firm focusestheir observations and
investigation on businessprocesses.
Process Benchmarking
Transparency 6-20Transparency 6-20© 2001 Prentice-Hall© 2001 Prentice-Hall
Gaining Insight Through Benchmarking
Slide 4 of 5
Gaining Insight Through Benchmarking
Slide 4 of 5
Types of Benchmarking ( Table 6.1)
Many firms perform productbenchmarking when
designing new productsor upgrades to current
products.
Product Benchmarking
Allows initiator firms toassess their competitiveposition by comparing
products and services withtarget firms.
Performance Benchmarking
Transparency 6-21Transparency 6-21© 2001 Prentice-Hall© 2001 Prentice-Hall
Gaining Insight Through Benchmarking
Slide 5 of 5
Gaining Insight Through Benchmarking
Slide 5 of 5
Types of Benchmarking ( Table 6.1)
Involves a company focusing its benchmarkingefforts on a single functionto improve the operations
of that function.
Functional Benchmarking
Involves observing howothers compete.
Strategic Benchmarking
Transparency 6-22Transparency 6-22© 2001 Prentice-Hall© 2001 Prentice-Hall
Problems With BenchmarkingSlide 1 of 2
Problems With BenchmarkingSlide 1 of 2
• 1. There is an enormous difficulty obtaining cooperation from other firms in your own industry.
Transparency 6-23Transparency 6-23© 2001 Prentice-Hall© 2001 Prentice-Hall
Problems With BenchmarkingSlide 2 of 2
Problems With BenchmarkingSlide 2 of 2
• 2. Your efforts will be wasted unless you fully understand your own processes before you benchmark against someone else.
• 3. Benchmarking is time consuming and costly.
Analyze the Information
Measure the gap between you and your competitor.
Be objective; do not place blame for performance difficulties.
Plot the key performance factors. Gain buy-in from employees. Know the outcome you want to achieve.
Self Notes!Benchmark - against the best & try to beat them!.
Competitive benchmarking – study from distance – no contact
Cooperative benchmarking
It is not cheating, illegal, immoral, unethical.
In bm, two companies agree to cooperate. And the companies need not be competitor!
Best in class not willing to partner. Far away (geography).
Continued!Evaluating where you are – determining where you are going
How much water you use – how much coffee. Benchmark it
No need of spending time in lab for what you can learn from others.
In area where you lag far behind, world do not have time to give you for ci.
Look far and wide – thief @ warehouse – look how casinos stop theft.
Prerequisite to benchmarking: Before getting involved in BM
Will & commitment: Top management – process owner.
BM objective linked with strategic objective:
Goal is to become the best – not simply improved. It is not about incremental improvement, unless you are far below from world class.
Openness to new ideas: essence of bm to capitalize on the ideas of others! Thorough understanding of own processes, products, services, practices, customer requirements so we can know what needs to be benchmarked.
Processes must be completely documented too. So everyone working have similar understanding of the process.
Process analysis skills – self and partner.
Research (identify best in class process owners), communication and team-building skills (to carry out bm activity).
Obstacles to successful BM – why it can fail
Internally focused – not looking outside. Just improving from past.
BM objective too broad. Narrow it for example, invoicing issue.
Unrealistic timetable. It can take some time. 6-8 months. Evaluate if time is a year.
Poor team composition. Process users must be involved. They can pick subtle difference in our vs “their” process. Engineers and supervisors yes but process owners who use it are important.
Settling for “ok in class”: benchmarking best in class.
Insensitivity to partner: you are disrupting their routine. Taking valuable time from their key people. Observe common courtesy + protocol.
Limited support from top leadership.
Role of management in benchmarking:
Commitment to change – improve – becoming world class – learning from others – money & time can get wasted.
Funding – authorized by management. E.g you might have to travel to best in class.
HR available to benchmark.
How much process info to disclose.
Involvement. Which process to benchmark & who is target.
Benchmarking sequence – number of variations are possible but
Obtain management commitment – money available – key people available – they will need information in exchange which can be only authorized by management. You are looking for major changes. No management approval, stop!
Baseline your own processes – understand process – capability. Cant have lcl and ucl without understanding process.
Identify your strong (your partner will need info) and weak processes and document them. Working on weakest link.
Select processes to be benchmarked. – don’t benchmark what you don’t wish to change! It is not about satisfying curiosity.
Form benchmarking teams. Management representation – radical changes.
Research the best in class – who is willing. Process is account receivable – look for credit card company.
Select candidate best in class benchmarking partners. Competitor? U will share info?
Form agreements with benchmarking partners. Visit arrangements. Point of contact. Limits of disclosure.
Benchmarking sequence (continued)Collect data. Observe, collect, document everything about target process. Try to
understand underlying factors. They apply TPM, statistics, employee involvement. You are in different plant culture. Be open to why they do better. When you leave you should know how to adopt/adapt/implement that process, if not, more work required.
Analyse data and establish the gap. Cost of applying. Can we afford. Your plan is to be best in class, not just replicate the process.
Plan action to close the gap or surpass.
Implement change.
Monitor. SPC invaluable tool here.
Update benchmarks: continue cycle.
… … …
Competition and u on same level – no – surpass it! Bm is not about zero gap.
Added information you observed while observing the process.
Study atmosphere & environment play a big role on productivity. Try to bring good elements in your culture.
Never ending process. Knowledge you gain through bm (the process itself).
Stealing shamelessly – BM
No with permission – adapting, adopting ideas
BM Expensive – would it be relevant in the future
BM + Understanding what is the future!
How old is BM Concept – first time someone thought, learn from each other
Cheaper (cost), faster (time), better (quality)
Industry safeguard their secrets
BM – Neither quick nor easy
Best in class is a moving target! Productivity/quality race has no end point.
What makes BM Success!
Is organization ready? Process manager ready? KPI!
Attributes for theairline service
qualityProper baggage handling
Competitive airfare
On-time arrival/departure
Alterative flight arrangement for a missing flight
Smooth connecting flight
Airplane cleanliness
Availability of non-stop flights
Short wait at the ticket counter
Complimentary drinks/snacks
Complimentary pillows/blankets
Frequent flier program