Benchmarking is the process of continuously measuring
& comparing ones organisational processes against comparable processes in leading organisations, to obtain information, that will help the organisation, identify & implement improvements. (Kaiser Associates)
Search for industry best practices that lead to superier
performance. (Robert Camp-Xerox) A standard of excellence or achievement against which other similar things mustbe measured or judged. (sam Bookhart Dupont)
Benchmarking is an essential part of TQM for continuous improvement
History
Benchmarking is borrowing best practices.
Benchmark A surveyers mark - reference point. No reference to benchmark in dictionary up to
1987. No reference for benchmarking till date.
Ford Motor company - 1912 slaughter house visit of
Henry Ford Benchmarking is not coppying, but adapting good practises
BENCHMARKING / BENCHMARKS
BENCHMARKING
Ongoing search for best practices that produce superior performance when adapted & implemented in organisation.
BENCHMARKS
Measurements to guage the performance of a function /operation.
Best practices benchmarking :Metrics Process
Benchmarks
Operating Statistics
Benchmarking
Practices
FAST LEARNING THROUGH ADAPTATION
Example of Sam Walton Owner of Sam Walton
superstore chain. Look at what everybody else does take the best of it & make it better. Fast learning has competitive advantage. Earlier philosophy - Competitive advantage through superior technology, Lower cost, Patents, Protections, Proprietary products. New Philosophy - Competitive advantage through fast learning. The ability to learn faster than your competitors is the only sustainble competitive advantage.
FAST LEARNING THROUGH ADAPTATION
FLO & FLE - Fast Learning Organisation / Fast
Learning Employees
FLO train employees quickly & effectively.
FLOs are peopled by FLEs.
FLOs leverage past successes & failures to
continuously improve their products, process & services.
FLOs adapt quickly FLOs are fast & time responsive
Benchmarking origin - Why Benchmarking
New Philosophy - Dont reinvent here, what others
have learned to do better.
Adopt, Adapt, Advance. Imitate creatively. Adopt Innovately.
If we Dont change our direction, we might end up where we are headed
Benchmarking origin - Why Benchmarking
Gained momentum after TQM Pioneer Xerox - 1979
Xerox indirect to direct staff was twice that of
competitor. Nine time the no. of production suppliers. Assembly line rejects - ten times worse. Product time to markets - twice as long. Defects per 100 machines - seven times worse. Rapid pace of change Customer requirement - Faster, Cheaper, Better. Old philosophy - If it cant be invented here, it cant be any good.
The Benchmarkers objective
Improved performance,
Leading to satisfied or delighted customers
Hence towards sustained competitive
advantage. It is an integral part of improvement
strategy.
Solving Business Problem
Benchmarking - an all Encompassing tool
What is benchmark ? What is benchmark ? What process, methods, practices ?
Establish needs of customer & product spec. for satisfying those needs
Design a work process that is capable of delivering customer requirements
Change for achieving banchmark status
Produce output
What is benchmark ? Where do we stand ? Could we to better ?
Evaluate how accurately the requirements of the customer have been met.
Benchmarking helps in speeding up
BENCHMARKING PROCESS
Identify What is to be Benchmarked
Planning
Identify World class Companies for BM
Determine Data collection Method & collect data
Establish GAP & analyse Set targets to bridge the GAP
Analysis
Recalibration of BM
Communicate to all level
Integration
Analyse resisting forces Establish Action plan
Analyse driving forces
Action
Implementation & monitoring
MBNQA - Malcolm Baldridge National Quality Award
Emphasis on benchmarking Benchmarking references influenced 550 out of 1000 points
Customer satisfaction 520 Points No other business concept has so much influence. MBNQA - 1988-175 Points - 1989-190 Points World class & role model companies. GTE telephone operations - MBNQA finalist of 1989 Evidence of increasing customer satisfaction Improved system speed Efficiency Declining error rates
All in USA.
IMC RB NATIONAL QUALITY AWARD 1999
6. Customer Focus 100
5. Process Management 140
1. Leadership 100
4. Human Resource Development Management 100
7. Business Results 400
3. Strategic Planning 80
2. Information and Analysis 80
Importance of Benchmarking
New way of doing business. External view for correctness of objective setting.
Testing of internal actions against external
standards.
Removes subjectivity from decision making.
Applied to virtually every function in the company.
Importance of Benchmarking
Business Planning
Company vision Setting of strategic goals Putting together the unit operating plan
Policy Deployment
Helps in finding best practices, which will assist in the achievement of goals Continuous Improvement Customer satisfaction Percentage satisfied Repurchase intention Overall satisfaction Cultural change Focus for improvement is based on external data. Continuous learning Managing by fact Business process improvement
Benchmarking Myths
Benchmarking is copying
Differences in company Adapt to your needs
cultures / resources
Benchmarking is about numbers Numbers help in calibrating performance gap Processes behind results will reveal How those numbers were achieved Competitions will not reveal their winning formula be willing to share processes Bench marking is for reducing resources. It is a programme and not ongoing management process Not a cookbook process - Discovery process New way of doing business
Will
Benchmark - processes & not numbers
What is process ?
A process is the mechanism by which inputs are converted into outputs.
Inputs include:
Materials, Skills and Procedures, Equipment. Information,
A process transforms these into outputs which also include products, services, materials, procedures, information, skills, etc. but which in some way differ from the inputs. of course, the outputs of all processes are invariably the inputs of other processes.
Definition of Process
A Process is simply a structured, measured set of activities designed to produce a specific output for a particular customer or market. - Thomas Davenport Characteristics: A specific sequencing of work activities across time and place A beginning and an end Clearly defined inputs and outputs Customer - focus How the work is done Process ownership Measurable and meaningful performance
Process
Materials Procedures Methods Information FEEDBACK Products Services
People
Skills Knowledge Training Plant / equipments INPUTS
PROCESS
Information Analysis and Reports OUTPUTS
Process in a company can be essentially of three different kinds:
Individual processes, carried out by separate individuals Functional processes or vertical processes, belonging to activities associated with a certain department or unit
Business processes or horizonatal processes, which cut through the company and whose final result provides the company with its profit
PROCESS MANAGEMENT CAN BE DEFINED AS :
Consistently and optimally delivering customer and other stakeholder value.
The first step in any organisation is to draw a flow diagram to show how each component depends on others Then everyone may undersatand what his job is. If people do not see the process, they cannot improve it.
W Edwards Deming, The New Economics
What to Benchmark
Business Goal
To be lowest price producer
Typical Benchmarks
Cost Materials cost per product Labour costs per product Overheads per unit of production Cost of distribution channels Procurement Product differentiators Customer service Product/service functionality Product development time
To maintain or increase market share.
What to Benchmark
Business Goal
To maintain service at a reduced cost
Typical Benchmarks
Resource utilisation Value added per employee System efficiency. Effectiveness of automation
To maintain and increase customer loyalty
Product differentiators Volumes of repeat business Levels of customer complaint Delivery performance Complaints procedure
What to Benchmark
Business Goal
To be most innovative producer
Typical Benchmarks
Innovation process Time to market Number of patents per year Investment in training
Product differentiators Set up time Direct to indirect labour cost Efficiencies Procurement Stock levels Supplier relationships
To generate cash
Benchmarking subjects are identified at business planning stage
Benchmarking is about planned reasearch. It starts from a companys recognition that is needs to make improvements in critical business area. Improvement, generally, is intiated by asking the following Where do we want to be ? Where are we now ? What do we need to do to get from here to there ?
STEP 1 : Planning your Benchmarking Activity
Planning is critical part of the benchmarking process. It is the key to ensuring that the benchmarking is effective
Process
Select process to benchmark
Choose Team
Study & understand own process
TOOLS, TECHNIQUES AND POINTERS
Small team : peple doing job(3-6) Relevant process knowledge Collect current process metrics Identify what needs to be measured Summarise current state of process Internal sources External sources Concentrate on key points focusing on the How? rather than the What? Arrange questions in groups relating to parts of the process Familiarisation & planning meeting to outline objectives
Form Implementation plan
Draw up list of potential benchmarking partners
Develop questionnaire
Approch benchmarking partners
Analysing Benchmarking Data
There are three key benchmarking data: aims in analysing
1 To accurately interpret the information collected 2 To identify the best prctice performance 3 To maintain confidentiality of participants These are best achieved by taking the raw data and using a combination of spreadsheets and databases to generate graphical results.
STEP 4 : Act on Benchmark Findings
A benchmarking exercise is only useful if improvement resulting from a visit are actually implemented based on the teams findings. The following steps are involved to act on benchmarking findings
Process
Adopt / adapt as best practice Draw up list of Potential Benchmarking partners
TOOLS, TECHNIQUES AND POINTERS
Include goals and actions required to achieve them If adopting best practice make necessary modifications to fit Communicate altered process, document and standardise Continuously re-assess and map the performance gap Track progress and the performance resulting from the improvements made Feedback details Communicate teams results to those using the process
Integrate into current process or re-engineer
Monitor progress
Feedback progress
Review teams benchmarking performance
How to get started
A. Information sources - Getting started
Focus on an Area/ Element that Need to Be Pursued
1 Order entry 2 Service dispatching 3 Warehouse storage Contact a Business Library Request a search of information produced in the last three to five years for yours topic of interest Library will identify articles / sources from. 1 External reports 2 Public magazines 3 Industry journals 4 Annual reports
How to get started
Contact Internal Experts Market research Competitive analysis Functional Experts Survey Internal Reports / Studies Special studies Surveys Market research
How to get started
B. Information sources - Specific / Functional
Subscribe / Monitor trade periodicals Professional Associations
1 News letters 2 Seminars (Especially speakers / tours) 3 Bibliographies 4 Special libraries. Service Agencies / Bureaus in the business function Ask if they can share anonymous experiences from their client companies. 1 Industry practices or methods 2 State-of-the-art-methods/practices.
How to get started
Consulting Firms Functional experts Ask if they are aware of particular breakthroughs / practices in a specific area. Industry Experts Department heads of noncompetitors Teachers / Professors at school / universities Systems software development and Hardware vendors Ask about their experience working in your functional area
Benchmarking Forward Path
CTS-Marketing team - old approach - Needs to be reviewed Every plant to have own benchmarking team - Process/CTS Start with internal benchmarking / Competitve benchmarking Internal Benchmarking - within HZ complex / PG/Hz complex
Various
TQM processes Various training activities
Various
maintenance processes
CTS / process interfaces
CES / plant Interfaces
Good practices will come forward
Benchmarking Forward Path
Competitive Benchmarking :
Lot of data available with various plants regarding other licensee plants Benchmarking should become an integral part of itinery of RIL staff. attending technical Seminars / Information exchange meetings
Functional Benchmarking :
Warehousing Procurement
operations operations Catering services Stores services Attendance / Salary systems Training process Contracting process Reduction of paper
Benchmarking Forward Path
Training on Benchmarking :
Creation of awareness among core group
3 good books on benchmarking in our library :- Robert C. Camp
Benchmarking
Practical benchmarking :- M. Zain &Paul - Leonard a complete guide Benchmarking for best practices : Bogan & English
Human resources
1 2 3 4 5 6 7 8 9 Educating Training Empowerment Reward Recognition Compensation Recruitment / Selection Job flexibility Various programmes - Quality Circles - Suggestion scheme 10 Performance appraised systems 11 Validation methods 12 Use of Quality improvement tools 13 Catering service 14 Mail distribution service
Human resources
15 Staff turnover 16 Absentism / Sickness 17 Grievances 18 Accident levels 19 Lost time Accidents
Process Management
1 Productivity / Employee 2 Process capability 3 Sampling 4 Process monitoring 5 Raw material / Utility consumption norms. 6 Filures 7 Maintainance practices PM CM Work order sytem Planning Spare Management 8 Failure analysis 9 Field changes 10 Procurement
Supplier Performance
1 Delivery Performance 2 PR / Indent / PO release time / Process. 3 Rejection rates 4 Identification of suppliers
REASONS FOR BENCHMARKING
Without Benchmarking With Benchmarking DEFINING CUSTOMER REQUIREMENTS Based on History or Market reality gut feel
Perception
Low fit
Objective evaluation
High conformance
REASONS FOR BENCHMARKING
Without Benchmarking Lacking external focus Reactive Lagging industry
With Benchmarking Credible, unarguable Proactive Industry leading
ESTABLISHING EFFECTIVE GOALS AND OBJECTIVES
REASONS FOR BENCHMARKING
Without Benchmarking Pursuing pet projects Strengths and weaknesses not understood Route of least resistance
With Benchmarking Solving real problems
DEVELOPING TRUE MEASURES OF PRODUCTIVITY
Understanding outputs
Based on best industry practices.
REASONS FOR BENCHMARKING
Without Benchmarking With Benchmarking BECOMING COMPETITIVE
Internally focused Concrete understanding of competition Evolutionary change New ideas of proven practices and technology
High commitment Low commitment
REASONS FOR BENCHMARKING
Without Benchmarking With Benchmarking INDUSTRY BEST PRACTICES Not invented here Few solutions Average of industry progress Frantic catch up activity
Proactive search for change
Many options
Business practice breakthrough Superior performance
The Leaders in Benchmarking
Companies - having benchmarking practices
Rank Xerox - The leader Post office counters - The Royal Mail Price waterhouse MCKinsey & co. AT&T Alcoa Florida power & light Cadillac Marlow Industries Kodak Limited
courier company
KEY SUCCESS FACTORS
Benchmarking training for the project team Resources Understand your own processes
through thorough knowledge of your own processes, their strengths, weaknesses and measures, you will be in a better position to ascertain what it is you want (and need) to learn.
Sponsorship
Senior managemant need to be aware and supportive of a benchmarking study. Make the necessary people aware of the time, effort and resources required for a successful study.
Correct team members
Those involved in the visit should be the same people who own the process or work in it. These people will be more likely to identify areas where benchmarking best practices may be adopted.
