consistent benchmark for competitive analysis...the xerox benchmarking stages excellence in...

6/23/2019

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Consistent Benchmarks For Competitive Analysis

June 22, 2019ALM Clean ShowNew Orleans, LA

Kevin MartlageSenior Consultant, .orgSource

• Introduction

• What is Benchmarking?

• Why is Benchmarking Important?

• Case Study Example of Benchmarking

• How to Use Benchmarking

• What Makes Benchmarking Successful and Relevant

• Benefits of Benchmarking for Competitive Analysis

Consistent Benchmarks For Competitive Analysis

• Joined .orgSource in January 2019 • Senior Consultant

• 4 years with the International Society of Arboriculture• Director of Credentialing

• 11 Years working for FedexOffice • Various Levels – District Manager, Senior Manager, Center Manager

• 3 Years with Bowne Business Solutions• National Account Manager

• 3 Years with Xerox Business Services • Client Account Manager

• 2 Years with Galyan’s Trading Company• Department Manager

Kevin Martlage - Introduction

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What is Benchmarking?

Webster’s Dictionary Defines Benchmarking as:

benchmark nounbench·mark | \ ˈbench-ˌmarka: something that serves as a standard by which other may be measured or judged

b: a point of reference from which measurements may be made

c: a standardized problem or test that serves as a basis for evaluation or comparison

Some common false impressions of benchmarking:

• Benchmarking is all about numbers

• Benchmarking is copying

• Benchmarking is spying or espionage

• Benchmarking is a one-time event

The biggest point of confusion typically arises from the classification and in the understanding of the different types. This would include

deciding what type is best for your situation or project.


Benchmarking Handbook, Step by Step Instructions


The key objectives of benchmarking is performance improvement and understanding.

• Identification of opportunities• Assistance in setting goals• Discovery• Prioritization

Ultimately you are trying to identify a target you wish to compare to and set targets against to achieve a goal

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Benchmarking can be a very powerful tool for numerous reasons:• Business Development• Process Improvement• Industry Comparisons• Competitive Advantage• Marketing Plan Development• Hundreds of others….

Why Is Benchmarking Important?

It is an established tool for process and performance improvement

Classification Type Definition

Comparison Target Internal Benchmarking Comparing within one organization

Competitor Benchmarking Comparing with competitors

Industry Benchmarking Comparing with firms in the same industry

Generic Benchmarking Comparing with companies regardless of industry

Content for Comparison Process Benchmarking Focus on work processes

Functional Benchmarking Compare specific business functions

Strategic benchmarking Focus on strategic and not operational choices


The Benchmarking Book, published by the American Management Association

ALM

ALM

Some Industry Examples?

Estimated 70% of Large US

Corporations were using

benchmarking in 1990

Fedex

Motorola

Internal Revenue Service

Xerox

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Most Scholars agree that Xerox was the pioneer that started benchmarking in the 1970’s, to compare themselves to competitors in relation to manufacturing costs and product features.

Xerox was falling behind their Japanese competitors in several different areas and were losing market share.• They failed to react to this in a timely manner• Xerox created a strategy known as “Leadership Through Quality”

to recapture its position in the market

Industry Best Practice - Xerox

“Leadership Through Quality” was Xerox’s approach to benchmarking and is what many believe to be the leading example of the successful implementation of benchmarking”.

Through the “Leadership Through Quality” program, Xerox was able to:• Reduce cost while emphasizing quality• Recover lost market share• Develop a benchmarking model that helped them understand

what was going onXerox: The Benchmarking Story


The Xerox Leadership Through Quality program identified the following areas that caused the Xerox Executive Team to address by developing their benchmarking model.• It took Xerox twice as long as their competitors to bring a

product to market• Five times the number of engineers• Four times the number of design changes• Three times the design costs• This resulted in Xerox needing to increase production by 18%

annually to keep pace with their competitors. Reported by the IBS Center for Management Research


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Not only focused on internal process improvement and competitive advantage, Xerox also utilized generic benchmarking to assist in other areas.

“In total, Xerox benchmarked over 200 performance areas during the 1980s.”

Benchmarking for Best Practices: Winning Through Innovative Adaptation, Christopher Bogan and Michael English


Planning• ID what is being benchmarked• ID best performers for comparison• Determine Data Collection method and collect data

Analysis• Determine current performance gap• Project future performance levels

Integration• Communicate findings and gain acceptance• Establish functional goals

Action • Develop action plans• Implement actions and monitor• Recalibrate benchmarks

Maturity• Practices integrated into processes?• Leadership position attained?

The Xerox Benchmarking

Stages

Excellence in Benchmarking, Ou and Kliener, “Industrial Management” pp 22-23

Industry Best Practice – Xerox Approach

Using Benchmarking To Improve a Process







Stages


• What metrics are important to focus on?

• Who in the industry is good at what is being reviewed?

• How will data be collected?

• Who will collect the data?

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Stages


• Complete a GAP Analysis on the metrics involved

• Forecast where we could be

• Determined where we want to be

• Identify timelines








Stages


• Review with the Internal Team

• Determine goals to meet the new levels trying to be obtained








Stages


• Create internal action plans

• Implement the action plans

• Develop a way to monitor performance

• Weekly and monthly calibration sessions need to be a part of standard departmental meetings

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Stages


• Policies and procedures are updated as we continue to monitor and adjust

• Identify if results were successful and met

• Communicate the improvements and changes to performance to appropriate stakeholders

Benchmarking is only as good as the information being reviewed?• A specific area or best practice must be identified• You have to determine what you are comparing

• Internal• External

• What are the outcomes that you are looking for?• How are you going to achieve those outcomes?• What KPIs or monitoring will be completed to determine

success?

How do you ensure the information being collected is accurate?


What Makes Benchmarking Successful and Relevant?

Ensure diversity

Commitment to the process

Identify critical success factors

Use only credible information and research

Data CollectionKey Attribute

Builds Trust and

Transparency

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Benefits Of Benchmarking For Competitive Analysis

Linen Industry Specific Benchmark Examples

Volume Based Metrics• Lost Workdays• Recordable Injuries• Pounds per Operator Hour• Direct Labor Cost per CWT• Overtime Percentage• Linen Inventory Costs per CWT• Garment Utilization• Washroom Chemical Cost per CWY• Water Usage per Pound• BTUs per Pound• kWh per Pound

Revenue Based Metrics• Revenue per Pound• Labor Cost as Percentage of Sales• Garment Inventory Costs as Percent

of Sales• Linen Inventory Cost as Percent of

Sales• Washroom Chemical Costs as Percent

of Sales


How To Use Industry Metrics to Improve Performance

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PPOH (2016) PPOH (2017) PPOH (2018) PPOH (2019)

Corporation A – Pound Per Operator Hour (PPOH) Trend

Location 1 Location 2 Location 3



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Corporation A – PPOH Trend


• Metric has been identified – PPOH

• Location 1 is the best performer

• How is the data collected and verified?


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• What is causing the performance gap identified?

• What is the acceptable performance level that needs to be obtained?




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• Communicate the findings with the executive team and necessary personnel

• Determine the functional goal necessary to reach the desired goal

Integration• Communicate findings and gain acceptance• Establish functional goals 2020 Goal – 130 PPOH



• Work with Executive Team to develop necessary action plans

• Implement and communicate those action plans to the necessary departments

• Recalibrate as necessary



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2020 Goal – 130 PPOH

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PPOH (2016) PPOH (2017) PPOH (2018) PPOH (2019) PPOH (2020)



• Integrate necessary changes into documented processes

• Review and calibrate to ensure that performance is sustainable and continues

Maturity• Practices integrated into processes?• Leadership position attained? 2020 Goal – 130 PPOH


• Help to form industry alliances and promote information sharing

• Provide appropriate transparency into an industry or company

• Help to determine strategic direction and next steps

• Could be used to develop industry standards

• Improve green initiatives and help the environment



The key objectives of benchmarking is performance improvement and understanding.

• Identification of opportunities• Determine and set goals• Use it as a method of discovery• Great way to help prioritize

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Remember there are a lot of variables to consider when comparing yourself to others

• Market size• Plant layout • Manual processes vs automated processes• Product offerings• Process implementation and compliance


Benchmarking for competitive analysis is only successful if the data being collected and analyzed is credible, diverse, and relevant to

the overall goals of the organization or industry

For more information about .orgSource and our services, clients, and consultants, please go to www.orgSource.com

Kevin MartlageSenior Consultant [email protected]

http://www.orgsource.com/

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