why benchmark? +identify opportunities +set realistic but aggressive goals +challenge internal...

Why Benchmark?

+ Identify opportunities

+ Set realistic but aggressive goals

+ Challenge internal paradigms on what is possible

+ Understand methods for improved processes

+ Uncover strengths within your organization

+ Learn from the leaders’ experiences

+ Better prioritize and allocate resources

Performance Improvement

E&S Tucson - November 1999

• Is this process important to our customers?

• Would improvements in this process support our business goals and objectives?

• Is the process owner committed to making changes in this process?

Evaluating Targets


Keys to Successful BenchmarkingWhat You Need to Make Benchmarking Effective

• Focus on the processes that are critical to your business• Willingness to admit that you’re not the best

• Openness to new ideas from potentially unexpected sources• Commitment to provide resources and to overcome resistance to

change• Recognition given to successful benchmarking teams

• Understanding of the benchmarking process• Communication to the organization about the objectives of the

benchmarking project


When You Shouldn’t Benchmark

• it isn’t critical to the business

• You don’t know what your customers require from your process• Key stakeholders aren’t involved in the benchmarking project• Inadequate resources have been committed

• You have an unreasonable fear of sharing information with benchmarking partners

• There are no up-front plans for implementing your findings• You haven’t done your “homework” before contacting benchmarking

partners

• You’re benchmarking an organization rather than a process• There is a strong resistance to change • When you are expecting results instantaneously


PLAN

ADAPT

COLLECT

ANALYZE

The Benchmarking ProcessFour-Phase Model


PLAN

Planning Phase1. Form (and train, if needed) benchmarking

team

2. Analyze and document the current processa. Identify the area of focusb. Identify the critical success factors (CSF)s

for the areac. Develop measures for the CSFs

3. Establish scope of benchmarking study

4. Develop purpose statement

5. Develop criteria for benchmarking partners

6. Identify target benchmarking partners

7. Define a data collection plan and determine how the data will be used/managed/distributed

8. Identify how implementation of improvements will be accomplished


COLLECT

Collection Phase1. Secondary research based on criteria

2. Evaluate results and identify potential partners

3. Develop data collection instruments

4. Pilot data collection instruments internally

5. Identify and contact best practice partners and enlist participation

6. Screen partners and evaluate for best “fit” with criteria

7. Develop detailed questionnaire

8. Conduct detailed investigationa. Detailed questionnaireb. Follow-up telephone interviewsc. Site visits


ANAL YZE

Analysis Phase1. Compare your current performance data to your

partners' data– Sort and compile data– Make your performance data

comparable (normalize)– Identify gaps

2. Identify operational best practices and enablers– What are participants doing that you are not doing– How do they do it (enablers)

3. Formulate strategy to close the gaps– Assess adaptability of practices and enablers– Identify opportunities for improvement

4. Develop implementation plan


ADAPT

Adapting Improvements

1. Implement the plan

2. Monitor and report progress

4 4 4 Celebrate ! ! ! 4 4 4(Acknowledge the benchmarking team)

3. Document the study- Communicate the results (internally and to

benchmarking partners)- Assist in the internal transfer of best practices

4. Plan for continuous improvement– Identify new benchmarking opportunities– Set new goals

10

Benchmarking• A control process.

– Involving employees in the process of evaluation and change.

– Philosophy one of self control rather than imposed control, where the person most closely associated with the task is involved in the cross measurement and assessment of practice.

– Places personnel in a position where their unquestioned beliefs (paradigm) may be challenged , creating opportunities for innovation and learning.

Total Quality Management - Spring 2010 - IUG 11

Benchmarking

Benchmarking is the process of continually searching for the best methods, practices and processes, and either adopting or adapting their good features and implementing them to become the “best of the best.”

Measuring your performance against that of the best-in-class companies, determining how the best-in-class achieve those performance levels, and using the information as a basis for your own company’s targets, strategies, and implementation.

• Compare performance of an existing process against other companies’ best-in-class practices

• Determine how those companies achieve their performance levels

• Improve internal performance levels


Xerox 12-Step Benchmarking

Process

Phase 1: Planning1. Identify what to benchmark;2. Identify comparative companies;3. Determine data collection method & collect

data.

Phase 2: Analysis4. Determine current performance gap;5. Project future performance levels.

Phase 3: Integration6. Communicate finding and gain acceptance;7. Establish functional goals.


The Xerox 12-Step Benchmarking Process(continued)

Phase 4: Action 8. Develop action plans; 9. Implement specific actions & monitor

progress;10. Recalibrate benchmarks.

Phase 5: Maturity11. Attain leadership position ;12. Fully integrate practices into processes.

Benchmarking Concept

Creative

Adaptation

Breakthrough Performance

What is our performance level?

How do we do it?

What are others' performance levels?

How did they get there?

Reasons to Benchmark

Promotes continuous improvement Makes companies search for the best practices,

innovative ideas, and highly effective operating procedures

Can notify a company if it has fallen behind the competition

Inspires managers to compete Allows goals to be set objectively

6 General Steps to Benchmarking

1) Decide what to benchmark

2) Understand current performance

3) Plan

4) Study others

5) Learn from the data

6) Use the findings

Questions for Discussion

Explain how an organization might benefit from benchmarking organizations in a completely different industry…

Transparency 6-18Transparency 6-18© 2001 Prentice-Hall© 2001 Prentice-Hall

Gaining Insight Through Benchmarking


• Benchmarking is the sharing of information between companies, so that both can improve.

• The first step a benchmarking firm must take is to document current performance.

• If the managers in firm are unsure that they are pursuing a useful plan of action, benchmarking can help them understand how what they are doing stacks up against the master.



Slide 3 of 5


Slide 3 of 5

Types of Benchmarking ( Table 6.1)

The goal of financial benchmarking is to perform

financial analysis andcompare the results in an

effort to assess your overallcompetitiveness.

Financial Benchmarking

In process benchmarking,the initiator firm focusestheir observations and

investigation on businessprocesses.

Process Benchmarking



Slide 4 of 5


Slide 4 of 5


Many firms perform productbenchmarking when

designing new productsor upgrades to current

products.

Product Benchmarking

Allows initiator firms toassess their competitiveposition by comparing

products and services withtarget firms.

Performance Benchmarking



Slide 5 of 5


Slide 5 of 5


Involves a company focusing its benchmarkingefforts on a single functionto improve the operations

of that function.

Functional Benchmarking

Involves observing howothers compete.

Strategic Benchmarking


Problems With BenchmarkingSlide 1 of 2


• 1. There is an enormous difficulty obtaining cooperation from other firms in your own industry.




• 2. Your efforts will be wasted unless you fully understand your own processes before you benchmark against someone else.

• 3. Benchmarking is time consuming and costly.

Analyze the Information

Measure the gap between you and your competitor.

Be objective; do not place blame for performance difficulties.

Plot the key performance factors. Gain buy-in from employees. Know the outcome you want to achieve.

Self Notes!Benchmark - against the best & try to beat them!.

Competitive benchmarking – study from distance – no contact

Cooperative benchmarking

It is not cheating, illegal, immoral, unethical.

In bm, two companies agree to cooperate. And the companies need not be competitor!

Best in class not willing to partner. Far away (geography).

Continued!Evaluating where you are – determining where you are going

How much water you use – how much coffee. Benchmark it

No need of spending time in lab for what you can learn from others.

In area where you lag far behind, world do not have time to give you for ci.

Look far and wide – thief @ warehouse – look how casinos stop theft.

Prerequisite to benchmarking: Before getting involved in BM

Will & commitment: Top management – process owner.

BM objective linked with strategic objective:

Goal is to become the best – not simply improved. It is not about incremental improvement, unless you are far below from world class.

Openness to new ideas: essence of bm to capitalize on the ideas of others! Thorough understanding of own processes, products, services, practices, customer requirements so we can know what needs to be benchmarked.

Processes must be completely documented too. So everyone working have similar understanding of the process.

Process analysis skills – self and partner.

Research (identify best in class process owners), communication and team-building skills (to carry out bm activity).

Obstacles to successful BM – why it can fail

Internally focused – not looking outside. Just improving from past.

BM objective too broad. Narrow it for example, invoicing issue.

Unrealistic timetable. It can take some time. 6-8 months. Evaluate if time is a year.

Poor team composition. Process users must be involved. They can pick subtle difference in our vs “their” process. Engineers and supervisors yes but process owners who use it are important.

Settling for “ok in class”: benchmarking best in class.

Insensitivity to partner: you are disrupting their routine. Taking valuable time from their key people. Observe common courtesy + protocol.

Limited support from top leadership.

Role of management in benchmarking:

Commitment to change – improve – becoming world class – learning from others – money & time can get wasted.

Funding – authorized by management. E.g you might have to travel to best in class.

HR available to benchmark.

How much process info to disclose.

Involvement. Which process to benchmark & who is target.

Benchmarking sequence – number of variations are possible but

Obtain management commitment – money available – key people available – they will need information in exchange which can be only authorized by management. You are looking for major changes. No management approval, stop!

Baseline your own processes – understand process – capability. Cant have lcl and ucl without understanding process.

Identify your strong (your partner will need info) and weak processes and document them. Working on weakest link.

Select processes to be benchmarked. – don’t benchmark what you don’t wish to change! It is not about satisfying curiosity.

Form benchmarking teams. Management representation – radical changes.

Research the best in class – who is willing. Process is account receivable – look for credit card company.

Select candidate best in class benchmarking partners. Competitor? U will share info?

Form agreements with benchmarking partners. Visit arrangements. Point of contact. Limits of disclosure.

Benchmarking sequence (continued)Collect data. Observe, collect, document everything about target process. Try to

understand underlying factors. They apply TPM, statistics, employee involvement. You are in different plant culture. Be open to why they do better. When you leave you should know how to adopt/adapt/implement that process, if not, more work required.

Analyse data and establish the gap. Cost of applying. Can we afford. Your plan is to be best in class, not just replicate the process.

Plan action to close the gap or surpass.

Implement change.

Monitor. SPC invaluable tool here.

Update benchmarks: continue cycle.

… … …

Competition and u on same level – no – surpass it! Bm is not about zero gap.

Added information you observed while observing the process.

Study atmosphere & environment play a big role on productivity. Try to bring good elements in your culture.

Never ending process. Knowledge you gain through bm (the process itself).

Stealing shamelessly – BM

No with permission – adapting, adopting ideas

BM Expensive – would it be relevant in the future

BM + Understanding what is the future!

How old is BM Concept – first time someone thought, learn from each other

Cheaper (cost), faster (time), better (quality)

Industry safeguard their secrets

BM – Neither quick nor easy

Best in class is a moving target! Productivity/quality race has no end point.

What makes BM Success!

Is organization ready? Process manager ready? KPI!

Attributes for theairline service

qualityProper baggage handling

Competitive airfare

On-time arrival/departure

Alterative flight arrangement for a missing flight

Smooth connecting flight

Airplane cleanliness

Availability of non-stop flights

Short wait at the ticket counter

Complimentary drinks/snacks

Complimentary pillows/blankets

Frequent flier program

why benchmark? +identify opportunities +set realistic but aggressive goals +challenge internal...

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benchmarking effectivefocus

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