benchmark npcc

1National Productivity &National Productivity &Competitiveness CouncilCompetitiveness Council

Case study: Benchmarking in the Textile and Garment

Industry (Mauritius)

Presentation to GBN

Nikhil Treebhoohun18 20 November 2004

ContentContent Overview of NPCC Achievements of NPCC in

benchmarking NPCC benchmarking tools Benchmarking in the textile and

garment industry Benchmarking in other sectors What next after benchmarking?

2Gemba KaizenContinual Improvement

Knowledge CentreBuilding Competitive Intelligence

ClusteringCollaborating for survival

InnovationThinking out-of-the box

BenchmarkingLearning from best practices

5S CertificationGood housekeeping

ICT ApplicationsUsing ICT smartly

Civic Action TeamThinking and acting together

MUDA

3The approachThe approach

Learning by doing Focus on implementation Improvement on the Gemba Team-oriented problem solving

4NPCC functionsBenchmarking Unit

Main achievements (2003-2004) 200 organisations sensitised on the benefits of

benchmarking

Benchmarking of listed companies

Benchmarking of textile and garment enterprises (since July 2003) Textile Emergency Support Team (TEST): 52

enterprises

Launching of FiT (developed by ITC for garment making enterprises)

5Main achievements (2003-2004)

Benchmarking of Insurance sector Data from 9 insurance companies

Linkage with BenchmarkIndex (DTI)

Process benchmarking on Customer Care 40 organisations (both public and private)

NPCC benchmarking tools

6Overview Productivity benchmarking based on RAPMODS

(RAmsay Productivity MODels System) Developed by Dr M. R. Ramsay

Application (no limits)

Current applications in Mauritius: Listed companies, Textile and garment industry (TEST), Insurance sector, Banking sector

Future applications: Sugar industry, Manufacturing sector, Hotel sector

Overview Self Assessment and Benchmarking

Process benchmarking based on the Malcolm Baldrigecriteria

eBenchmarking(http://www.npccmauritius.com/benchmarking/)

Applications: both public and private sector

BenchmarkIndex

FiT - developed by the International Trade Centre (ITC) for garment-making enterprises

7The RAPMODS (RAmsay Productivity MODels System) model

A performance assessment tool developed by Dr. M. R. Ramsay

A model for objective, transparent and credible performance measurement

A model for identifying muda from value-adding activities

Muda are activities or processes not adding to value, but adding to cost

A model for linking productivity and profitability

A model for assisting planning and budgeting for continuous improvement

Productivity cockpit

8What does the model help to measure?

The contribution of each external input to the

output of the company

The contribution of each internal input to the

output of the company

The contribution of productivity to profitability

The contribution of each input to value added

Areas of low productivity and where change has

to be initiated

www.npccmauritius.com

How is productivity measured?

=

INPUTSYSTEMOUTPUTSYSTEMTYPRODUCTIVI

Productivity measures are developed using data from Company Financial Statements (minimum 3 years)

9RAPMODS System Output (RSO):

MaterialsAccessoriesUtilitiesFinanceFreightServices,etc

Conversion System

Direct labourRepairsManagementDepreciation,etc

Total System Input (TSI) = BI + CSI

SalesFinished products in stockWork in progressOther Income

The value adding process

Bought In Inputs (BI):

Conversion System Input (CSI):

Assessment outcome

Total Productivity Measure (TPM) Output of the enterprise for every rupee spent

Profitability (K) Profit of the enterprise for every rupee of output

Factor Productivity Measure (FPM) Output of the enterprise for every rupee spent on an input

Capital Productivity (N) Output of the enterprise for every rupee of capital

Return on Investment (ROI) Return for every rupee invested in the enterprise

10

A Textile Enterprise

An example

Universal Productivity AtlasTextile Enterprise An Example

11

Factor Productivity MeasuresTotal Inputs = Bought-out Items + Conversion System Inputs

Textile Enterprise An example

Factor Productivity Measure (MI)

1.3929

1.3571

1.5135

1.25

1.30

1.35

1.40

1.45

1.50

1.55

Yr 2000 Yr 2001 Yr 2002

Factor Productivity Measure (CSI)

3.3161

3.8662

2.8708

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Yr 2000 Yr 2001 Yr 2002

Total Productivity Measure

0.9809

1.0045

0.9910

0.97

0.97

0.98

0.98

0.99

0.99

1.00

1.00

1.01

1.01

Yr 2000 Yr 2001 Yr 2002

Factor Productivity MeasuresProductivity of Conversion System Inputs

Textile Enterprise Case Study

Factor Productivity Measure (CSI)

3.3161

3.8662

2.8708

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Yr 2000 Yr 2001 Yr 2002

Direct wages and salaries & allowances

4.3393

5.0920

4.2835

3.80

4.00

4.20

4.40

4.60

4.80

5.00

5.20

Yr 2000 Yr 2001 Yr 2002

Depreciation (production)

50.9238

66.0612

32.8083

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Yr 2000 Yr 2001 Yr 2002

Depreciation (production)

50.9238

66.0612

32.8083

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Yr 2000 Yr 2001 Yr 2002

12

Factor Productivity MeasuresProductivity of Bought-In Items


Factor Productivity Measure (MI)

1.3929

1.3571

1.5135

1.25

1.30

1.35

1.40

1.45

1.50

1.55

Yr 2000 Yr 2001 Yr 2002

Raw materials and accessories consumed

2.2687

1.6238

2.1875

-

0.50

1.00

1.50

2.00

2.50

Yr 2000 Yr 2001 Yr 2002

Finance costs

19.2665

17.2200

19.0467

16.00

16.50

17.00

17.50

18.00

18.50

19.00

19.50

Yr 2000 Yr 2001 Yr 2002

Sub-contracting costs

43.9753

107.0851

66.1973

-

20.00

40.00

60.00

80.00

100.00

120.00

Yr 2000 Yr 2001 Yr 2002

Capital Productivity MeasuresRupees of output generated

for every rupee invested in Fixed Assets

Rupees of output generatedfor every rupee invested in Current Assets

Capital Productivity

0.4744 0.4779

0.4310

0.40

0.42

0.44

0.46

0.48

0.50

Year 1999 Year 2000 Year 2001

Capital Productivityof Fixed Assets

0.4337

0.4237

0.4402

0.42

0.42

0.43

0.43

0.44

0.44

0.45


Capital Productivityof Current Assets

69.34

-3.96 -5.59

-20.00

-

20.00

40.00

60.00

80.00

100.00



13

Return on InvestmentReturn on Investment

9.19%

9.86%10.04%

8.50%

9.00%

9.50%

10.00%

10.50%

Year 1999Year 2000Year 20011.2000

1.2500

1.3000

1.3500

ROI TPM

Capital Productivity

0.4744 0.4779

0.4310

0.40

0.42

0.44

0.46

0.48

0.50


Total Productivity Measure

1.24031.2600

1.3035

1.2000

1.2500

1.3000

1.3500



Other possible applications

Productivity monitoring Evolution of enterprise productivity

Benchmarking economic productivity

Monitoring of expenditures and budgets

Scenario building Target pricing, Target ROI

Productivity targeting

14

Benchmarking in the Textile and Garment Sector

Benchmarking of textile and garment enterprises

Crisis in the textile and garment industry

National effort to restructure the industry

Textile Emergency Support Team (TEST) since July 2003

15

Guiding principles for TEST

Focus on re-engineering

Re-engineering through rightsizing

For rightsizing, you have to measure the contribution of each unit and then each input to cost and profit

Need for a commonly accepted measurement of contribution of each input to total costs

Focus on fact-based analysis at enterprise level

Level I Assessment

Macroeconomic Country, industry Monetary, fiscal, exchange rate, legal and

regulatory framework Numerous reports

Microeconomic Enterprise, management, production process

16

Level I Assessment

Using the RAPMODS (RAmsay Productivity MODels System) benchmarking tool

52 enterprises assessed (size: 7 to 5000 employees)

One industry report based on indicators (Year 2000-2002) of 35 enterprises (report posted on NPCC website: http://www.npccmauritius.com/test/ )

Database of indicators of 52 enterprises

28 clinics (October 2004)

Purpose of measurement

Healthcheck of enterprises:

1.1. SickSick2.2. VulnerableVulnerable3.3. PromisingPromising4.4. HealthyHealthy

17

Groups of Firms According to Technological Capability

Source: World Bank 2003

Level I Assessment - process

Generating Indicators

Analysis

Confidential report sent to

enterprise

Enterprise contacts TEST

for support

Enterprise registers for level 1 performance assessment

Enterprise accepts that report be made available to

TEST, banks

Data Collection

18


Confidentiality Agreement

Individual enterprise data and results are confidential

Data and reports are not be circulated without prior enterprise approval

Data collection mechanism

Data Collection through

NPCC facilitation Enterprise visit NPCC meeting (one-to-one) Group data gathering on regional basis

Enterprise collecting data Download form from NPCC Website:

www.npccmauritius.com , fills and emails completed form to NPCC ([email protected])

19

Findings

Health check

Healthy

Promising

Vulnerable

At Risk

TPM >1, for last 2 yrs

TPM >1, for last yr

TPM

20

Areas of difficulties

Materials utilisation and procurement

Productivity planning and budgeting

Human resource management

Financial management

Inventory management

Technology enhancement

International marketing

Competitive pricing


Areas for action

Productivity improvement at plant level Productivity planning and budgeting Financial management, including costing International marketing Technical skills upgrading at all levels (from

operators to CEOs)

21

Enterprise Productivity and LiquidityYear 2002

-1.00

-0.50

-

0.50

1.00

1.50

2.00

2.50

3.00

0.5 0.6 0.7 0.8 0.9 1 1.1 1.2 1.3 1.4 1.5

TPMAci

d Te

st R

atio

21% (9)Productive and Liquid

36% (15)Productive and illiquid43% (18)

Unproductive and illiquid

HEALTHY

VULNERABLEAT RISK

Data based on 44 enterprises

Data based on data of 21 enterprises, October 04

Enterprise Productivity and liquidityYear 2003

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

0.6000 0.7000 0.8000 0.9000 1.0000 1.1000 1.2000

Productivity (TPM)

Liqu

idity

(Aci

d Te

st R

atio

)

At Risk Vulnerable

Healthy

22

ROI Performance, 2000-2003

2003200220012000ROI

10

11

17

459+ve, 5%

101713+ve,

23


0

1

2

3

4

5

6

7

8

9

10

11-0

.455

-0.3

95

-0.3

35

-0.2

75

-0.2

25

-0.1

50

-0.0

95

-0.0

45

0.00

0

0.02

5

0.06

5

0.11

5

0.17

5

0.23

5

0.29

5

0.35

5

0.41

5

0.47

5

0.53

5

0.59

5

0.65

5

0.71

5

0.77

5

0.83

5

0.89

5

K: Profit/ (Surplus) per unit of Revenue

TPM

: Tot

al P

rodu

ctiv

ity M

easu

re

Position of textile and garment enterprises on Productivity Atlas in 2003 (Sample = 22 enterprises)


Performance of the Textile and Garment Sector (Sample data = 22 enterprises in 2003)

Performance of the Textile Sector (Year 2003)(Sample data = 22 enterprises)

-1.0000

0.0000

1.0000

2.0000

3.0000

4.0000

5.0000

TPM K N ROI OPM2RAPMODS Indicators

scor

e

Worst case2003 averageBest Case

0.0000

1.0000

2.0000

3.0000

4.0000

5.0000

6.0000

OPM1 FPMmi FPMcsi

24


FiT international marketing

Target: garment-making enterprises

International benchmarking based on criteria from international customers (USA, Europe and Japan)

Approached by International Trade Centre (ITC) in April 2003 for a pilot project.

A survey was launched, but no enterprise responded

In October 2003, a workshop and in-plant interventions were organised with an ITC expert Only 3 enterprises responded

Benchmarking in other sectors

25


0.0120 1.0122 Air Mauritius Transport

0.0469 1.0492 MCFI Industry

0.1474 1.1729 United Basalt Products Industry

0.0293 1.0302 Automatic Systems Ltd Leisure & Hotels

0.2073 1.2615 Sun Resorts Leisure & Hotels

0.2489 1.3314 New Mtius Hotels Leisure & Hotels

0.0564 1.0598 Rogers Commerce

0.0580 1.0616 IBL Commerce

0.0994 1.1104 Harel Mallac Commerce

0.0629 1.0671 Swan Insurance Banks & Insurance

0.1686 1.2028 MCB Banks & Insurance

0.2612 1.3535 State Bank of Mtius Banks & Insurance

KYr 2000

TPMYr 2000 LISTED COMPANY INDUSTRY GROUP


26

Benchmarking in the insurance sector

0

1

2

3

4

5

6

7

8

9

10

11-0

.500

-0.4

40

-0.3

80

-0.3

20

-0.2

60

-0.2

00

-0.1

20

-0.0

60

0.00

0

0.06

0

0.11

5

0.15

0

0.20

5

0.26

5

0.31

5

0.36

5

0.42

0

0.47

5

0.53

5

0.59

5

0.65

5

0.71

5

0.77

5

0.83

5

0.89

5

K: Profit/ (Surplus) per unit of Revenue

TPM

: Tot

al P

rodu

ctiv

ity M

easu

re

TPM

Anglo-Life

Mtius Union-Life

SICOM-Life

Albatross-Life

Mtian Eagle-Life

BAI-Life

Mtian Eagle-General

Albatross-General

Swan-General

Process benchmarking on Customer Care

Self Assessment and Benchmarking

Selected process for benchmarking: customer care (criterion 3.2: customer relationship and satisfaction)

40 organizations (both public and private)

2 benchmarking visits where 6 organizations participated (both in the public sector)

27


What next after What next after benchmarkingbenchmarking??

InIn--plant productivity improvement plant productivity improvement interventions interventions ((TEST LEVEL IITEST LEVEL II))

ProductivityProductivity--based budgeting, based budgeting, monitoring and control (based on monitoring and control (based on RAPMODS) RAPMODS)


In-plant interventions

MOU with Kaizen Institute 57 Gemba Kaizen workshops

26 in the public sector 31 in the private sector 14 in the textile industry 13 under TEST Level II

Workshop duration = 5 days

28


Main results of GKWs

Quality improvement Cost savings Delivery (On time, In full & Error-free)

Throughput time Production capacity

Space release


Areas of intervention

Improvement process flow at the shop floor and administration levels

Improvement of physical environment Improvement of machine utilisation

through Total Productive Maintenance Stores and inventory management Improvement of production changeover

29


Space recovered

3M6

9M

Cell Spare m/c area

7M

5M

25M

9M


spot

QCiron

officeiron

iron

iron pack

Ratio pack

fold

tag

QC

QC

QC

FG BEFORE

SITUATION BEFORE

30


spot

QCiron

officeiron

Tag,fold& Pack

QCFG

BOX

QCironiron

Tag,fold& Pack

QC

About17 % Space Saved

& gained,same

Used forFG &

Sup. Table

BOX

In

In

AFTER

SITUATION AFTER


SITUATION BEFORE

31


SITUATION AFTER


SITUATION BEFORE

32


SITUATION AFTER


Thank youThank you

benchmark npcc

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