asian productivity organization benchmarking...

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©© APO APO 20032003 Benchmarking Presentation Benchmarking Presentation

11 March 2003 TAVANIR, Tehran

Presenter:Presenter:Megat Megat AkbarruddinAkbarruddin Megat Megat IsmailIsmailAPO, TESAPO, TES

ASIAN PRODUCTIVITY ORGANIZATIONASIAN PRODUCTIVITY ORGANIZATIONBENCHMARKINGBENCHMARKINGPRESENTATIONPRESENTATION

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BENCHMARKINGBENCHMARKINGPRESENTATION OUTLINEPRESENTATION OUTLINE

IntroductionIntroduction- TQM and Benchmarking - TQM and Benchmarking - What is Benchmarking ?- What is Benchmarking ?- Types of Benchmarking- Types of Benchmarking- Benefits of Benchmarking- Benefits of Benchmarking

Benchmarking Methodology Benchmarking Methodology- An Overview- An Overview- Operating Framework- Operating Framework

Benchmarking: The Malaysian Case Study Benchmarking: The Malaysian Case Study- Benchmarking On-Line Networking - Benchmarking On-Line Networking

Database (BOND) Database (BOND)- e-Benchmark- e-Benchmark

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TQM STRUCTURETQM STRUCTURE

MOTIVATIONMOTIVATION

TOOLSTOOLS

PURPOSESPURPOSESCUSTOMER SATISFACTIONCUSTOMER SATISFACTION

QUALITY ASSURANCEQUALITY ASSURANCE

CO

NC

EPT

CO

NC

EPT

TEC

HN

IQU

ESTE

CH

NIQ

UES

VEH

ICLE

SVE

HIC

LES

EDUCATION AND TRAININGEDUCATION AND TRAININGPOLITICAL STABILITYPOLITICAL STABILITY

MOTIVATIONAL APPROACHMOTIVATIONAL APPROACH

STRATEGIESSTRATEGIES

BENCHMARKINGBENCHMARKINGTOTAL QUALITY MANAGEMENTTOTAL QUALITY MANAGEMENT

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TOP TOP MANAGEMENT MANAGEMENT LEADERSHIP LEADERSHIP

AND AND MANAGEMENT MANAGEMENT

OF QUALITYOF QUALITY

SATISFACTION SATISFACTION OF CUSTOMEROF CUSTOMER

REQUIREMENTS REQUIREMENTS AND AND

EXPECTATIONEXPECTATION

USE OF QUALITY USE OF QUALITY DATA AND DATA AND

INFORMATIONINFORMATIONHUMAN HUMAN

RESOURCERESOURCE

DEVELOPMENT DEVELOPMENT AND AND

MANAGEMENTMANAGEMENT HANDLING HANDLING CUSTOMER CUSTOMER

COMPLAINTS FOR COMPLAINTS FOR QUALITY QUALITY

IMPROVEMENTIMPROVEMENT

QUALITY QUALITY ASSURANCE OF ASSURANCE OF

SUPPORT SUPPORT SERVICES AND SERVICES AND

VENDORSVENDORS

QUALITY AND QUALITY AND OPERATIONAL OPERATIONAL

RESULTSRESULTSCORPORATECORPORATE

RESPONSIBILITYRESPONSIBILITY

SELF SELF –– ASSESSMENT / LEARNING ASSESSMENT / LEARNING

DRIVERSDRIVERS PROCESSESPROCESSES RESULTSRESULTS

BENCHMARKINGBENCHMARKINGTQM/QUALITY EXCELLENCE FRAMEWORKTQM/QUALITY EXCELLENCE FRAMEWORK

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BENCHMARKINGBENCHMARKINGTHE SELF- ASSESSMENT THE SELF- ASSESSMENT

A process for evaluating the A process for evaluating the management practices of an management practices of an organization with a focus on organization with a focus on the continuous development the continuous development

and improvement of and improvement of organizational performance organizational performance

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What are the practices ofWhat are the practices ofthe best performers ?the best performers ?

Tools:Tools:

How well is the systemHow well is the systembeing managed ?being managed ?

Does the organisationDoes the organisationhave a quality system inhave a quality system inplace ?place ?

BenchmarkingBenchmarking

Self - AssessmentSelf - AssessmentCustomer SurveysCustomer SurveysEmployee SurveysEmployee SurveysQuality AwardsQuality Awards

ISO ISO 90009000

BENCHMARKINGBENCHMARKINGTOTAL QUALITY MANAGEMENTTOTAL QUALITY MANAGEMENT

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BENCHMARKINGBENCHMARKINGTHE KEY QUESTIONSTHE KEY QUESTIONS

How well are we doing compared to How well are we doing compared to others ? others ?

How good do we want to be ? How good do we want to be ?

How can we be better than the best ? How can we be better than the best ?

How do they do it ? How do they do it ?

How can we adapt what they do How can we adapt what they do to our organization ? to our organization ?

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BenchmarkingBenchmarkingacceleratesacceleratesinnovationinnovationand changeand change

ContinuousContinuousImprovementImprovement

BreakthroughBreakthroughImprovementImprovement

ContinuousContinuousImprovementImprovement

PPEERRFFOORRMMAANNCCEE

T I M ET I M E

Organizational LearningOrganizational Learning Performance ImprovementPerformance Improvement

BENCHMARKINGBENCHMARKINGCONTINUOUS IMPROVEMENT TOOLCONTINUOUS IMPROVEMENT TOOL

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Benchmarking is a systematic and continuous Benchmarking is a systematic and continuous process of searching, learning, adapting and process of searching, learning, adapting and implementing the best practices from within implementing the best practices from within

the same organization or from other the same organization or from other organizations towards attaining superior organizations towards attaining superior

performanceperformance

BENCHMARKINGBENCHMARKINGWHAT IT IS ?WHAT IT IS ?

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Benchmarking is about searching for industry Benchmarking is about searching for industry best practices and learning from the best in best practices and learning from the best in

order to become the best in the industry order to become the best in the industry

- ROBERT C. CAMP- ROBERT C. CAMP

Benchmarking is the practice of being humble Benchmarking is the practice of being humble enough to admit that someone else is better at enough to admit that someone else is better at something and being wise enough to try and something and being wise enough to try and

learn how to match and even surpass them at itlearn how to match and even surpass them at it

- MARION HARMON- MARION HARMON


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OrganizatioanalOrganizatioanal learninglearning atat itit’’ss core:core:•• FindingFinding thethe bestbest wayway toto performperform aa particularparticular tasktask•• UnderstandUnderstand howhow itit isis beingbeing donedone•• ImplementImplement thethe bestbest approachapproach inin youryour organizationorganization•• DoDo itit continuouslycontinuously


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A reference of excellence level of A reference of excellence level of performanceperformance

Example:Example:

- customer retention rate - customer retention rate 98%98%

- % of expenditure on training - % of expenditure on training 10%10%

BENCHMARKINGBENCHMARKINGWHAT IS A BENCHMARK ?WHAT IS A BENCHMARK ?

What is a What is a Benchmark ?Benchmark ?

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COSTCOST

•• Order Cost Per Unit Order Cost Per Unit•• Average Hourly Average Hourly LabourLabour •• Production Overhead Cost Production Overhead Cost•• Training Expense Per Employee Training Expense Per Employee

BENCHMARKINGBENCHMARKING WHAT IS A BENCHMARK ? WHAT IS A BENCHMARK ?

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SERVICESERVICE

•• Promotion Expense / Sales Promotion Expense / Sales•• % Delivery on Time % Delivery on Time•• % Customer Retention % Customer Retention•• % Complaint Resolved % Complaint Resolved

BENCHMARKINGBENCHMARKINGWHAT IS A BENCHMARK ?WHAT IS A BENCHMARK ?

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TIMETIME

•• Delivery Time Delivery Time•• Product Cycle Time Product Cycle Time•• Work in Process Inventory Work in Process Inventory•• % Downtime % Downtime•• New Product / Service Development New Product / Service Development


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QUALITYQUALITY

•• % Defect / Reject % Defect / Reject•• % Customer Satisfaction % Customer Satisfaction•• Sales / No. of Complaint Sales / No. of Complaint•• % Defect Free Delivery % Defect Free Delivery


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PRODUCTIVITYPRODUCTIVITY

•• Value Value –– Added per Employee Added per Employee•• Value Value –– Added per Unit Added per Unit LabourLabour Cost Cost•• Total Output per Employee Total Output per Employee•• Total Output per Fixed Asset Total Output per Fixed Asset•• LabourLabour Cost per Employee Cost per Employee


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BENCHMARKINGBENCHMARKINGPROCESS MEASUREMENTPROCESS MEASUREMENT

TYPES OF MEASURESTYPES OF MEASURES

INPUT MEASURES INPUT MEASURES Describes the Describes the

resources required resources required to achieve resultsto achieve results

OUTPUT OUTPUT MEASURES MEASURES

Represents levels Represents levels of products and of products and

services providedservices provided

OUTCOME OUTCOME MEASURES MEASURES Focus on the Focus on the

results or rather results or rather the impact of the the impact of the

output on the output on the stakeholdersstakeholders

IN - PROCESS MEASURES IN - PROCESS MEASURES

MonitorMonitor activitiesactivities performanceperformance withwith respectrespect toto volume,volume, cyclecycle times,times, defects,defects, rework,rework, scrap,andscrap,and costcost

PerformancePerformance measurementmeasurement cancan bebe quantitativequantitative andand qualitativequalitative andand servesserves asas yardsticksyardsticks forfor qualityquality improvementimprovement andand goalgoal settingsetting

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BENCHMARKINGBENCHMARKINGBENCHMARK:PROCESS MEASUREMENTBENCHMARK:PROCESS MEASUREMENT

•• PRODUCTIVITYPRODUCTIVITY Which quantifies the outputs and inputs of an organization Which quantifies the outputs and inputs of an organization and expresses the two as a ratio. and expresses the two as a ratio. •• EFFECTIVENESS EFFECTIVENESS Which determines the relationship of an organization Which determines the relationship of an organization’’ss outputs to what an organization is intended to accomplish outputs to what an organization is intended to accomplish •• QUALITY QUALITY Which examines an output or a process by which an output Which examines an output or a process by which an output is produced. Quality is indicated by attributes such as is produced. Quality is indicated by attributes such as accuracy (or error rate), thoroughness, and complexity accuracy (or error rate), thoroughness, and complexity•• TIMELINESS TIMELINESS Which evaluates the time involves producing an Which evaluates the time involves producing an appropriate output appropriate output•• COST COST Which measures the cost of producing an output Which measures the cost of producing an output

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ProcessProcess

Best- practice is a relative term indicating Best- practice is a relative term indicating outstanding business practices which have been outstanding business practices which have been

identified as contributing to improved performance identified as contributing to improved performance significantly of leading companiessignificantly of leading companies

What is Best What is Best –– Practices ? Practices ?

BENCHMARKINGBENCHMARKINGWHAT IS BEST- PRACTICESWHAT IS BEST- PRACTICES

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ProsesProses

ORGANIZATIONAL EXCELLENCEORGANIZATIONAL EXCELLENCEWHAT IS BEST WHAT IS BEST –– PRACTICES ? PRACTICES ?

When it leads to superior results or performanceWhen it leads to superior results or performance When it involves new or innovative use of resources When it involves new or innovative use of resources

such as manpower or technology such as manpower or technology When it is recognized by a reputable individual or When it is recognized by a reputable individual or

organization organization When it is acknowledged by a significant number When it is acknowledged by a significant number

of the organization of the organization’’s customers or supplierss customers or suppliers

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MAS Electronic Ticketing (MASET)MAS Electronic Ticketing (MASET)

•• Calling MAS Reservation to makeCalling MAS Reservation to make a booking a booking•• Effecting payment at any Effecting payment at any MaybankMaybank or or MaybanMayban Finance ATM Finance ATM•• Presenting the Transaction Slip for Presenting the Transaction Slip for check check –– in before boarding the flight in before boarding the flight•• The simple process save time, energy The simple process save time, energy and effort and effort

BENCHMARKINGBENCHMARKINGBEST PRACTICE EXAMPLEBEST PRACTICE EXAMPLE

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QQ

UU

AA

LL

II

TT

YY

TIMETIME

Benchmarking

Gap

Superior

Performance

AA

AA

BB

BB

BENCHMARKINGBENCHMARKINGOVERTAKING THE BENCHMARKOVERTAKING THE BENCHMARK

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BENCHMARKINGBENCHMARKINGTHE TYPES: WHICH ONE ?THE TYPES: WHICH ONE ?

INTERNALINTERNAL

The comparison of similar operations and The comparison of similar operations and functions across a company, or with functions across a company, or with

associated companies, in order to associated companies, in order to identify the level of best practices and identify the level of best practices and

performance within this common settingperformance within this common setting

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FUNCTIONALFUNCTIONAL

Compares specific function with best in Compares specific function with best in industry and best in class. It is a positive industry and best in class. It is a positive approach but because it only relates to approach but because it only relates to specific functions may not be of benefit specific functions may not be of benefit to other operations in the organizationto other operations in the organization

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Compares and benchmarks against your Compares and benchmarks against your direct competitor in the industrydirect competitor in the industry

COMPETITIVECOMPETITIVE

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GENERICGENERIC

The ultimate in terms of benchmarking The ultimate in terms of benchmarking application. It applies to all areas of a application. It applies to all areas of a business operation. It encourages the business operation. It encourages the

continuous effort of comparing generic continuous effort of comparing generic multi-functional processes (multi-functional processes (e.ge.g cash to cash to casgcasg, billing, complain handling) with , billing, complain handling) with

those of best in classthose of best in class

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THE BENEFITSTHE BENEFITS•• Improves organizational qualityImproves organizational quality•• Leads to lower cost Leads to lower cost•• Creates buy-in for change Creates buy-in for change•• Exposes employee to new ideas Exposes employee to new ideas•• Broadens organization Broadens organization’’s perspectives perspective•• Open to new ideas Open to new ideas•• A catalyst for learning A catalyst for learning•• Increases employees satisfaction Increases employees satisfaction•• Test the internal operating target Test the internal operating target•• Raise the level of potential performance Raise the level of potential performance•• Sharing of best practices Sharing of best practices•• Predicting the future Predicting the future•• Know your organization Know your organization’’s weaknesses and strengths weaknesses and strength

BENCHMARKINGBENCHMARKINGTOOL FOR ACHIEVING BEST PRACTICESTOOL FOR ACHIEVING BEST PRACTICES

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BENCHMARKINGBENCHMARKINGTHE METHODOLOGYTHE METHODOLOGY

PLANPLAN COLLECTCOLLECTDATADATA

ANALYZEANALYZE IMPLEMENTIMPLEMENT

1 2 3 4 5 6 7 8 9Decide Decide what to what to benchmarkbenchmark

Organize Organize the projectthe project

Conduct Conduct background background researchresearch

Analyze Analyze current current process and process and determine determine KPIKPI

Select Select benchmarking benchmarking partnerpartner

Analyze Analyze comparative comparative performance performance and processand process

DevelopDevelopActionActionPlan andPlan andReportReport

ImplementImplementAndAndadaptadapt

SiteSiteVisit andVisit andcollectscollectsdatadata

BENCHMARKING FRAMEWORKBENCHMARKING FRAMEWORK

BENCHMARKING APPROACHBENCHMARKING APPROACH

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BENCHMARKINGBENCHMARKINGBENCHMARKING FOR PROCESS IMPROVEMENTBENCHMARKING FOR PROCESS IMPROVEMENT

IMPROVING PROCESS IMPROVING PROCESS –– ““ THE OLD VIEW THE OLD VIEW ““

RESOURCESRESOURCES RESULTSRESULTSPROCESSPROCESSMANAGEMENTMANAGEMENT

INPUTSINPUTS PRODUCESPRODUCES OUTPUTS / OUTCOMESOUTPUTS / OUTCOMES

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BENCHMARKINGBENCHMARKINGBENCHMARKING FOR PROCESS IMPROVEMENTBENCHMARKING FOR PROCESS IMPROVEMENT

IMPROVING PROCESS IMPROVING PROCESS –– ““ THE BENCHMARKING VIEW THE BENCHMARKING VIEW ““MANAGEMENT MANAGEMENT

CAPACITYCAPACITYPROGRAMPROGRAM DELIVERY DELIVERY

PERFORMANCEPERFORMANCE

MEASUREMENTMEASUREMENT(BENCHMARKS)(BENCHMARKS)

FINANCIALFINANCIALMANAGEMENTMANAGEMENT

HUMANHUMANRESOURCERESOURCE

MANAGEMENTMANAGEMENT

CUSTOMERCUSTOMERRELATIONSHIPRELATIONSHIPMANAGEMENTMANAGEMENT

INFORMATIONINFORMATIONTECHNOLOGYTECHNOLOGYMANAGEMENTMANAGEMENT

MANAGING FOR RESULTS TMANAGING FOR RESULTS T55HROUGH BEST PRACTICESHROUGH BEST PRACTICES

SHARING OF INFORMATIONSHARING OF INFORMATION

LEADERSHIP AS DRIVERLEADERSHIP AS DRIVER

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B E S T P R AC T IC E S D IV IS IO NN AT IO N A L P R O D U C T IV IT Y C O R P O R AT IO N

B E N C H M AR K IN G O NB E N C H M AR K IN G O N --L IN E N E T W O R K IN G L IN E N E T W O R K IN G D AT AB A S ED AT AB A S E

( B O N D ) ( B O N D ) B O N D is a d a ta b a s e o f b e s t p ra c tic e s a n d p e rform a n c e B O N D is a d a ta b a s e o f b e s t p ra c tic e s a n d p e rform a n c e m e a s u re m en ts s e t up b y N P C to a s s is t org a n iz a tion s in m e a s u re m en ts s e t up b y N P C to a s s is t org a n iz a tion s in

u n d e rta k in g b en c hm a rk in g a c tiv itie s .u n d e rta k in g b en c hm a rk in g a c tiv itie s .

B O N D a ls o p rov id e s e x te rn a l onB O N D a ls o p rov id e s e x te rn a l on -- lin e b e n c hm a rk in g lin e b e n c hm a rk in g re s ou rc e s to fa c ilita te c om p a n ie s to s e a rc h for b e s t re s ou rc e s to fa c ilita te c om p a n ie s to s e a rc h for b e s t

p ra c tic e s a n d b e n ch m a rk w orldp ra c tic e s a n d b e n ch m a rk w orld --w id e . w id e . h ttp : //w w w .np c .o rg .m yhttp : //w w w .np c .o rg .m y

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Concept of Interactive e-Benchmark

6. Transmits data

7. Real time benchmark report

1.Community agrees onscope, measures and

definitions to benchmark

2. Provides content

3. Password

4. Community member collects data yearly/ periodically

5. Data entry through internet

8. Information fordecision making

e-BenchmarkReal-time

processing &report generation

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1 st Tier Community

Textiles

Cluster

Public Sector

Services1 st Tier :

HotelsIndustries

(Manufacturing)

Govt. Depts ,Local Govt &

Agencies

Spinning, Weaving5-Star, 3-Star

hotels

Community Concept

PBT–PBT NegeriSelangor

ClusterCluster

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INDIVIDUAL BENCHMARK REPORT FOR INDIVIDUAL BENCHMARK REPORT FOR SAMPLE ORGANIZATIONSAMPLE ORGANIZATION

18.722.07.626.0

30.522.00.07.056.3

35.48622.00.05.86.783.1

36.75921.40.04.46.483.2

39.55521.20.03.75.9103.1

40.44719.60.13.65.8113.8

40.94917.80.13.55.7126.7

45.63917.50.12.45.3133.4Comp.

A

53.73417.00.22.15.2142.2

57.22815.80.21.33.8168.9

60.62114.70.20.52.9169.3

64.71012.50.30.32.7176.5

65.177.91.20.01.8347.0

Added Value per Employee(RM’000)

Inventory Turnover (days

per Consignment)

Labour Cost per Employee

(RM’000)

Training Cost per Employee

(RM’000)

Wastage per Employee(RM’000)

Utility Charges per Employee

(RM’000)

Annual Sales per Employee

(RM’000)

Code

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Community & Cluster Classification

UTILITY

Power Generation (IPPs)

Transmission Distribution

Open Combined Thermal

Sector

Community

Cluster

Sub-group of Clusters

Gas

Distillate

Gas

Distillate

Coal

Gas

Mfo

Distillate

Biomass

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BENCHMARKINGBENCHMARKINGTHE CODE OF CONDUCTTHE CODE OF CONDUCT

•• Conduct yourself within legal boundsConduct yourself within legal bounds•• Participate by exchanging information Participate by exchanging information•• Respect confidentiality of information Respect confidentiality of information•• Use of information only for the intended purpose Use of information only for the intended purpose•• Initiate contacts with designated individuals Initiate contacts with designated individuals•• Obtain permission before providing contacts Obtain permission before providing contacts•• Be prepared for each benchmarking event Be prepared for each benchmarking event•• Follow through with commitments to partners Follow through with commitments to partners•• Treat information from others as they desire Treat information from others as they desire

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Thank YouThank You

““ L e t L e t ‘‘ s S h a r e a n d P r o s S h a r e a n d P r o s p e r T o g e t h e r s p e r T o g e t h e r ““

ASIAN PRODUCTIVITY ORGANIZATION ASIAN PRODUCTIVITY ORGANIZATION

asian productivity organization benchmarking...

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