Benchmarking
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Transcript of Benchmarking
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BenchmarkingTechniques & Application
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Benchmarking
• Used to identify standards that are critical to a company’s success
• Used to compare:– Actual Performance– Determination of gaps in performance– Implementation of improvements
• External benchmarks are typically best practice
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External Benchmarking
Productivity Measures• Productivity- ratio of outputs achieved to inputs into
production
• Objectives of Productivity Measures:– Were all inputs used needed to produce the actual
output?– Was the best mix of inputs used?
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Productivity Ratios• Total Productivity Ratios
(TPRs) Reflect the value of all
output relative to the value of all input.
• Consider all inputs and the prices of the inputs
• Calculation: Quantity of output produced/cost of inputs
• Partial Productivity Ratios (PPRs) Reflect the value of all
outputs as compared to the value of major categories of input.
•Concerned only with the quantity of a single output and not the price of input
•Calculation:Quantity of output produced/quantity of the single input used
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How to Externally Benchmark
• BOMA (Building Owners and Managers Association International)
• IMFA (International Facility Management Association)
• It’s good practice to compare “apples to apples”
• Common Benchmarks:– Safety, Security, and Workplace Standards– Cost Per Person, Gross Square Feet Per
Person
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Internal Benchmarking
Monitoring & Investigative Techniques:
1. Control Charts
2. Pareto Diagrams
3. Cause & Effect (Fishbone) Diagram
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Internal Benchmarking
1. Control Chartsa. 3 Basic Componentsb. Common Cause, “noise”c. Special Cause, “signal”
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Internal Benchmarking
2. Pareto Diagramsa. Useb. Interpretation
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Internal Benchmarking3. Cause and Effect Diagram• “Fishbone Diagram”
1. Machinery2. Method3. Materials4. Manpower5. Measurement
s6. Environment
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Process Improvements & Activity-Based Management
1. Activity Based Costing
a. Allocating Costs
b. Identifying Necessary Activities
c. Process
d. Determining Driving Costs
e. Companies with Multiple Products
f. Pricing and Outsourcing Decisions
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Process Improvements & Activity-Based Management
2. Activity Based Management
Using ABC to determine…
a. Where are Overhead Costs Allocated?
b. Should we Outsource Processes?
c. Should Prices Change?
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Process Improvements & Activity-Based Management
3. Cost Identification
a. Value Adding vs. Non-Value Adding Activities
b. Exact Costs of Each Unit
c. Cost Data by Activity
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