class 4 bench marking

8/8/2019 Class 4 Bench Marking

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ONSIDERATIONSCENCHMARKING

B



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BenchmarkingBenchmarking is the process of continually searching for the

best methods, practices and processes, and either adoptingor adapting their good features and implementing them to

become the ³best of the best.´

How is benchmarking used?

Compare performance of an existing process against othercompanies¶ best-in-class practices

Determine how those companies achieve their performance

levels

Improve internal performance levels

Use benchmarking both for comparison of performance as well as tounderstand the potential for improvement

Use benchmarking both for comparison of performance as well as tounderstand the potential for improvement



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Ty pes of BenchmarkingCompetitive BenchmarkingFunctional Benchmarking

Internal BenchmarkingProduct BenchmarkingProcess Benchmarking

Best Practices Benchmarking

Strategic BenchmarkingParameter Benchmarking



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Competitive

Industr y leaders Top performers with

similar operatingcharacteristics

Functional

Top performersregardless of industr y

Aggressive innovatorsutilizing new technolog y

Internal

Top performers within compan y Top facilities

within compan y

Best PracticeOverlap

B enchmarking M ethodology



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Benchmarking Methodology Checklist

1. Identif y Process to Benchmark

Select process and define defect and opportunities

Measure current process capability and establishgoals

Understand detailed process that needs

improvement



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Benchmarking Methodology 2. Select Organizations to Benchmark

Outline industries/functions which perform yourprocess

Formulate list of world class performers

Contact the organization and network through to

key contact



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Benchmarking Methodology

3. Prepare for the Visit

R esearch the organization and ground yourself

in their processes Develop a detailed questionnaire to obtain

desired information

Set up logistics and send preliminary documentsto organization



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Benchmarking Methodology 4. Visit the Organization

Feel comfortable with and confident about

your homework

Foster the right atmosphere to maximizeresults

Conclude in thanking organization and ensurefollow-up if necessary



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Benchmarking Methodology

5. Debrief and Develop an Action Plan

R eview team observations and compile report of

visit Compile list of best practices and match to

improvement needs

Structure action items, identify owners andmove into Improve phase



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Benchmarking Methodology 6. Retain and Communicate

R eport out to business management and 6leaders

Post findings and/or visit report

Enter information on benchmarking projectdatabase



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Benchmarking Compliance

Policy regarding benchmarking protocol should becommunicated to all employees involved, prior to

contacting external organizations.Guidelines shouldaddress the following areas:

Misrepresentation ± do not misrepresent y our identit y

in order to gather information Information requests ± a request should be made onl y

for information y our organization would be willing to share withanother compan y

Sensitive/ proprietar y information ± avoid direct

benchmarking of sensitive or proprietar y information

Confidentialit y ± treat all information as confidential



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Benchmarking

Compliance

A voiding inappropriate communication andcontacts with competitors.

Never propose, enter, or engage in a discussionrelated to any agreements with a competitor to fixprices, in terms or conditions of sale, costs, profitmargins, or other aspects of the competition.

K eep communications with competitors to aminimum ± make sure there is a legitimate

business reason for all such communications



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Benchmarking( A) The process of identifying and learning from best

practices anywhere in the world is a powerful tool in the questfor continuous improvement.

(B) The systematic process of searching for best practices,

innovative ideas, and highly effective operating procedures thatlead to superior performance.



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ProcessBenchmarking

Process benchmarking focuses on discrete work processesand operating systems, such as the customer complaint

process, the order-and-fulfillment process, or the strategicplanning process.

Process benchmarking seeks to identify the most effectiveoperating practices from many companies that performsimilar work functions.

Its power lies in its ability to produce bottom-line results. If an organization improves a core process, for instance, it canthen quickly deliver process improvement



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B enchmarking W hys & H ows

Benchmarking represents a versatile process managementtool that helps organizations identify and understand whatconstitutes best operating practices.

Benchmarks are the operating statistics or measures thatdefine the achievement level of any given practice or system.

These are not in and of themselves enough since they provide no insight into the root causes of performance

differences. A fl exibl e set o f benchmarks reflects full process or

system capabilities. Performance indicators may includedimensions such as cost, productivity, cycle time, yields,

error rates, waste and turnover.



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Designing SuccessfulBenchmarks:Effective Performance BenchmarksR eflect the Most Important

Operating Dimensions of a Business Process, S ystem, or Function.

MEASUREMENTFOCUS

² Determine where in a work area or process that value for the customer is

created;

² Determine where value is detracted through high costs, errors, rework, or

accidents; and ² Target benchmarks in areas where performance diverges from designated

standards, or where variation above and below standards is greatest.

MEASUREMENTPERSPECTIVE

± Lead ing ind icators foreshadow or anticipate future system outcomes.Leading indicators are thus ´proactiveµ or ´preventativeµ.

± Lagging ind icators such as traditional financial measures are ´reactiveµ or

´descriptiveµ of the actual results of a system or process in a given time

period.

² Traditional companies employ lagging indicators while high-pe

rforma

nce compani es embrace both types since l ead ing ind icators int ervene



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A Benchmark Design A rchitecture

The first step in designing a performance benchmark system is to creat e measures that willenabl e management to achieve the organization¶sstrategic objectives.

The second step in designing a benchmark architecture requires managers to creat e anagreed upon vocabul ary describing performance

measurement in your organization.

The third step is to develop pl ans to coll ect , process, and analyz e the performance measures.



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Business Process Performance Measures

A

simple process analysis model can help identify yourorganization¶s most important workflows. This modelreveals that all work can be viewed in

four sequential stages:

1. I

nputs(including those from both employees & suppliers);2. Processes (including internal operations & support services);

3. Outputs ( your organization¶s products, services, anddocumentation); and

4. Customer Satis f action.

In the following graphic (the input-output process model ) we begin withinputs that can be t angi bl e (such as supplies, raw materials, and

component products) or int angi bl e (such as information) which aredelivered to the work process, which transforms them into some finaloutput which might be a product or service. The goal of the output is to

create satisfied and lo y al customers.



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Input-Output Process Model

Products

S

ervices

Documentation

R esults

Design of Products/Services

Production of

Products

Performanceof Services

Delivery of Products/Services

People

R aw Materials

Components

CustomerR equirements

Capital

CustomerNeeds

Satisfied

CustomerProblems

Solved

CustomerRequirements

Met

Inputs Processing Outputs Customers



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Examples of K ey Business Processes

IBM Xerox British Telecom

Marketing InformationCapture;

MarketingSelection;

R equirements;

Hardware/SoftwareDevelopment;

ServiceDevelopment;

Production;

Customer Fulfillment/ R elationship;

Service

Customer Feedback;

Marketing;

Solution Integration;

Financial A nalysis;

Plan Integration;

A ccounting;

HumanR esources

IT Infrastructure

CustomerEngagement;

Inventory Mgt. & Logistics;

ProductDesign / Engineering;

ProductMaintenance;

Technology Maintenance;

Production &OperationsMgt.

MarketingManagement;

SupplierManagement;InformationManagement;

BusinessManagement;

HumanR esourcesManagement;

Leased & Capital A ssetMgt.

Legal;

FinancialManagement.

DirectBusiness;

Plan Business;

Develop Processes;

Manage ProcessOperations;

Provide Personnel Support;

Market Products & Services;

ProvideCustomer Service;

Manage Products &

Services;

ProvideConsultancy Services;

Plan theNetwork;

Operate the Network;

ProvideSupport Services;

Manage InformationR esource;

Manage Finance;

ProvideTechnicalR &D



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Support Processes / Services

Performance Measures

Support services are activities and operations thatenable your organization¶s core production and

delivery processes.

They include functions such as finance, softwareservices, marketing, public relations, information

services, purchasing, legal services, and facilitiesmanagement.

Examples for various areas follow.



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PerformanceMeasureExamples

AccountingPercentage of Late Payments

Time to Respond to

Customer Requests

Number of Billing Errors

Number of Payroll Errors

PurchasingPurchase Order Errors

Downtime Due to Shortages

Excess Inventory

Cycle Time (from start of

purchase to receipt in-house)

Information Services Number of Errors / Code Line

Percent of Reports Received

on Schedule

Number of Rewrites

Number of Errors Found After

System Accepted by Customer

Product EngineeringProject Completion Cycle Times

Engineering Changes/ Document

Number of Errors Found During

Design Review

Number of Errors Found in

Design Evaluation

Quality ControlPercentage of Lots Rejected

in Error

Number of Engineering Changes

Detected After Design Review

Errors in Reports

Cycle Time for Corrective Action

MarketingAccuracy of Forecast

Assumptions

Number of Incorrect

Order Entries

Overstocked Field Supplies

Contact Errors



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Emplo y ee Performance Measures

Emplo y ee Performance Benchmarks Cover a WideRange of Emplo y ee Activities that Ma y Include:

Employee Development; Employee Education;

Employee Empowerment; Employee Recognition;

Employee Recruitment; Employee Absenteeism;

Employee Turnover; Employee Grievances;

Employee Safety/Accidents; Employee Involvement;

Employee Morale; Employee Performance Appraisal;Employee Promotion;

Employee Succession Planning.



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BenchmarkingCritical Success Factors

Ad opt, Ad apt, and Advance: A well-designedperformance measurement and benchmark system is

essential, but there are other critical success factors:

Senior management support;

Benchmarking training for the project team;

Useful information technology systems; Cultural practices that encourage learning;

R esource dedication - especially in the form of time, funding, and useful equipment.



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A G eneric B enchmarking P rocess:The Simple, Consensus Model

From the Strategic Planning Institute¶s (SPI)Council on Benchmarking has developed thefollowing model:

1. Launch

2. Organize

3. R each Out

4. A ssimilate

5. A ct



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Xerox 12-StepBenchmarking ProcessPhase 1: Planning

1. Identify what to benchmark;

2. Identify comparative companies;

3.Determine data collection method & collect

data.Phase 2: Anal y sis

4. Determine current performance gap;

5. Project future performance levels.

Phase 3: Integration

6. Communicate finding and gain acceptance;

7. Establish functional goals.



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The Xerox 12-Step Benchmarking Process(continued)

Phase 4: Action

8. Develop action plans;

9. Implement specific actions & monitor progress;10. R ecalibrate benchmarks.

Phase 5: Maturit y

11. A ttain leadership position ;12. Fully integrate practices into processes.



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A ttributes of Benchmarking Studies:

Success vs. Failure Success Failure

ProcessO wner Involvement

Customer

Driven

O bjectives

Linked to Strategic Plan

Best Practices & Enablers

Consider Cultural A ttributes

DisciplinedMethodology

Quantum Change

Clear Project Life C ycle

Integrated with ExistingQuality Efforts

Sponsorship Uncertain

A morphous

O bjectives

No Strategic Integration

PerformanceMetricsOnly

³Hard´ Data Only

A rbitrary / Casual A pproach

Incremental / No Change

K eepGoing and Going and «..

A la carte Program

class 4 bench marking

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