Benchmarking: A systems approach to continual improvement

©Robere & Associates (Thailand) Ltd. Course: 20BDMK.01-S 1

Benchmarking: A Benchmarking: A Systems Approach for Systems Approach for

Continual ImprovementContinual Improvement

Presented by:Robere & Associates

Welcome to “Benchmarking”..Welcome to “Benchmarking”..

• Get to know each Get to know each otherother

• Get to know your Get to know your instructorinstructor

• Share with your Share with your classmatesclassmates

• Ask questionsAsk questions• Have fun!Have fun!

Forward...this course was:Forward...this course was:

• Created to provide guidelines on the art and science of Benchmarking

• Developed from 20 different approaches from government and industry

• Designed around R&A Quality Philosophy

• Designed to link to other organizational Quality programs.

Contents:Contents:

• What is Benchmarking• Why Benchmark• Types of Benchmarking• The R&A Benchmarking Model• Guidance for Conducting a

Benchmarking Study• Supporting Materials

Team Exercise: 15 Minutes

This is a course in "Benchmarking". As a team, discuss:

1. What is Benchmarking?____________________________________________

2. How could Benchmarking help my company? _____ _____________________

3. Does anyone in your "team" have any experience in Benchmarking? If so, what?

_______

4. What are the three (3) major questions I want answered from this course? Put your answers on the flip chart provided.

Definitions of Benchmarking : Definitions of Benchmarking : XeroxXerox

Benchmarking is the continuous process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders.

Definitions of Benchmarking : Definitions of Benchmarking : KodakKodak

A continuous learning process for understanding and measuring our own operations, comparing them to other organizations which are recognized as having superior practices, and implementing plans to adapt and change our operations, to meet and surpass those practices

Background.Background.

• Xerox – late 1970’s with it’s copier duplicator manufacturing division.

• Others have seen the benefits..– Ford, Alcoa, Milliken, AT&A, DuPont,

IBM, Johnson & Johnson, Kodak, Motorola, Texas Instruments and others..

Benchmarking will help us..Benchmarking will help us..

• find out what is the “best in class” process..

• assess performance over time• helps us with our objectives• increase customer satisfaction • become a better company..

Benchmarking - What it isBenchmarking - What it is

• Meeting Customer Requirements• A Goal-Setting Technique• An Ongoing Learning Process

Benchmarking is..Benchmarking is..

• an assortment of tools to help us identify areas of improvement (one of the major requirements of ISO9000:2000, QS9000, ISO14000, CIP, TQM,

• a culture of wanting to do better..by comparison to others.

Benchmarking - What it is NotBenchmarking - What it is Not

• Only suitable for large projects• The latest corporate fad• Market research• Industrial tourism - 80 to 90%• Copying or stealing

Benchmarking - What it is NotBenchmarking - What it is Not

• A magic bullet• A one shot program• A one person effort• Competitive intelligence

Why Benchmark?Why Benchmark?

• An objective evaluation of a company’s business processes against similar processes in other organizations

• Serves as a vehicle to source for improvement ideas from other organizations

• Broadens an organization's experience base by providing insights into methods that work and those that don’t

Why Benchmark?Why Benchmark?

• Identify strengths and weaknesses for improvement

• More improvement ideas to supplement those of employees

• To remain competitive and achieve total customer satisfaction

Team exercise: 20 Team exercise: 20 MinutesMinutes

Now that your team has had a discussion of Benchmarking, discuss and complete the following Questions:

• Benchmarking is important to companies because____

• My "New" definition of Benchmarking is: _____

• Some examples of successful benchmarking projects are:

• Some reasons why I would want to benchmark some processes in my company are: __

Type of BenchmarkingType of Benchmarking

• Internal Benchmarking – a comparison inside the company

• Competitive Benchmarking – competitor to competitor

• Functional Benchmarking – similar or identical practices

• Generic Benchmarking – unrelated business processes or functions

Internal BenchmarkingInternal Benchmarking

• Inside processes• Can acquire the “best internal”

practice• Many examples of success: US

Navy, DOD, DOT, retail food chain• Many advantages, but limits

options for growth.

Competitive BenchmarkingCompetitive Benchmarking

• Competitor to competitor • Helps to know yourself and competitor

better• Can contrast others styles of operation

for a comparison• Difficult in Thailand because “trade

secrets• Relatively low performance

improvement

Functional BenchmarkingFunctional Benchmarking

• compares similar or identical practices

• find others to do similar practices better

• good use of international databases (i.e. www.tbe.com)

• takes more time than internal or competitive

Generic BenchmarkingGeneric Benchmarking• looks for unrelated business processes

that are practiced in the same way – transferring funds, order fulfillment– bar coding, admissions, warehousing, etc.

• a broad look at how “generic” processes compare

• high payoff - but high cost• can compare to world-class but they

have many request...(internet may help)

Team Exercise: 15 Team Exercise: 15 minutesminutes

As a team, you are to explain to Management the four type of Benchmarks that your company might use. You will:

• Select a process within your company (in any department) and select the best method to use to "benchmark" your process.

• Explain why you've selected this method; why you think that it is the best approach for your project

• What do you (your team) feel will be a problem using this approach?

R&A Benchmarking ModelR&A Benchmarking Model

• Based on more then 20 benchmarking models

• A “10-step” process using a “PDCA” (PDSA) cycle common in ISO9000:2000

• The model is in-line with TQL approach• Uses teams to identify, quantify, evaluate

and report on the benchmark initiative.• Uses the Strategic Plan as input to the

system

ActActActAct

DoDoDoDoStudyStudyStudyStudy

PlanPlanPlanPlan Progress

StartStart

• Select a process to evaluate

• Select and prepare team• Identify benchmarking

partners

• Collect and analyze the data

• Determine performance gaps and strengths

• Take a systems view• Communicate

benchmarking findings• Establish functional goals

• Develop an action plan• Recalibrate

Plan Phase: Step 1Plan Phase: Step 1Select the process to benchmarkSelect the process to benchmark

• Look at the strategic plan• Examine significant business

processes• Create a process owner team

(QMB)• Identify type of benchmarking to

use.• Identify the goals of improvement

World Class

The "Best-in-Class

A best practice

An improvement over current practices

A practice similar to the

current practices

Plan Phase: Step 1Plan Phase: Step 1What do you want to be?What do you want to be?

Plan Phase: Step 2Plan Phase: Step 2Select and prepare the BMK TeamSelect and prepare the BMK Team

• Create the team• Clarify the roles and

responsibilities• Flowchart the process to be

benchmarked

Plan Phase: Step 3Plan Phase: Step 3Identify benchmarking partner(s) from Identify benchmarking partner(s) from best-in-classbest-in-class

• Research information for best practice

• Rank the potential partners (5-15)

• Select final partners (1-5)• Know and use benchmarking

guidelines for ethical conduct

Team Exercise for phase 1: Team Exercise for phase 1:

Planning (15 Min)Planning (15 Min)

The planning process is very important to any project. In this "planning phase" of a benchmarking program, what activities would you do and why?

DODO Phase: Step 4 Phase: Step 4Collect and Analyze the DataCollect and Analyze the Data

• Determine the data collection plan

• Collect and rank the data.• Train BMK team in TQ

skills/tools as necessary

DODO Phase: Step 5 Phase: Step 5Determine performance gaps and strengthsDetermine performance gaps and strengths

• Analyze performance gaps and strengths

• Produce a benchmarking report

Team Exercise: The Team Exercise: The do do Phase: (15 Min)Phase: (15 Min)

As with the previous exercise, define what activities you would do in the "do" phase of the benchmarking process.

_____________________________________________

How does this activity relate to the planning phase of the process?

_____________________________________________

STUDYSTUDY Phase: Step 6 Phase: Step 6Take a Systems ViewTake a Systems View

• Study the BMK Teams report in a “broader context”

• Top Management (ESC) makes the final recommendations

STUDYSTUDY Phase: Step 7 Phase: Step 7Communicate benchmarking findingsCommunicate benchmarking findings

• Communicate widely and deeply through the organization.

• Collect and analyze any input/feedback

STUDYSTUDY Phase: Step 8 Phase: Step 8Establish functional goalsEstablish functional goals

• Write functional goals based on best practices

• Have performance standards and budget allocations reflect new organizational goals

Team exercise for the "study" Team exercise for the "study"

phase (15 min)phase (15 min)

• Phase three (3) of our benchmarking process deals with "Study". What are we studying?

• Why are we studying these fact and data?___

• What will be the result of our "study"? How will it help us to improve our company?_____

ACTACT Phase: Step 9 Phase: Step 9Develop an action plan, implement Develop an action plan, implement procedures and monitor progressprocedures and monitor progress

• Develop suggestions on how to implement, measure and monitor results

• Get top-level approval of the plan

• Celebrate successes

ACTACT Phase: Step 10 Phase: Step 10RecalibrateRecalibrate

• Monitor the benchmark process

• Repeat the cycle...(1-10)

Team Exercise for "act" Team Exercise for "act" phase (15 Min)phase (15 Min)

What "action" have we taken?

_____________________________

How does this phase relate to the "study" phase and to the future of the benchmarking program? ____________________________________________________________________________________________

Examples of Benchmark ProjectsExamples of Benchmark Projects

• “On-the-Job” Training

• Hospital• Hotel

On-The-Job On-The-Job TrainingTraining

What to Benchmark?What to Benchmark?The OJT ProcessThe OJT Process

Job Identification

Preparation for OJT

Conduct of Task Analysis

Identification of Trainee Needs

Schedule of OJT

Trainee Coaching

Review of OJT Program

What to Benchmark?What to Benchmark?• Performance measures

– Cost of OJT per worker– % trained on OJT– % moved up the skills ladder– Cost of wastage as % of sales

revenue– Cost of rework as % of sales revenue– Changes in output per worker– Changes in cycle time

Whom to BenchmarkWhom to Benchmark• Criteria for Selection

– not more than 1,000 employees with a turnover of $100 million or less

– Production, customer service, maintenance, and security functions should be included

– Structured OJT program– Recommended by PSB or ITE

Whom to BenchmarkWhom to Benchmark• Best Practice Companies

– Delifrance Singapore Pte Ltd– Scotts Holding Ltd– TIBS Motors Pte Ltd– YCH Distripark Pte Ltd

• Sent questionnaire

Key Findings on OJT PracticesKey Findings on OJT Practices

• OJT System• Trainer

Preparation• Trainee

Coaching

Xerox Practices Changed Best Practices FoundComputerized system for L.L. Beanpicking warehouse ordersSeamless cylinder for copier photoreceptor CanonProduct Marketing Procter & GambleService training practices IBM “Just-In-Time” methods Hewlett-PackardTotal Quality Management Toyota, Fuji XeroxBilling & Collection American ExpressEmployee Suggestion Milliken

BenchmarkingBenchmarking

• Hospital program “Learning from the Best”

• Learnt from the best practices of leading organizations such as 5-star hotels and airlines– Accident and emergency cases– Hot food

BenchmarkingBenchmarking

• Leading hotel• Benchmarked a guest’s first 10

mins contact, the check-in process• Benchmarked against leading U.S.

hotel chain

Keys to SuccessKeys to Success

• Well-defined scope• Stay within the scope• Gain leadership concurrence• Rigorous research to identify best

practices• Know your performance• Focus on improvements that will

pay and are visible

The Guidance Documents:The Guidance Documents:

• The step

• The input..

• Guidance Information

• The Output

• QA Checklist

Team Exercise and PresentationTeam Exercise and Presentation• On the worksheet forms provided you are

to create a fictitious (make believe) benchmark study.

• The steps of this study will include the steps taken, the input-output of each step, the results and the anticipated benefits.

• The Documented study will be presented to management (the rest of the class) as you would your own management... be prepared to answer any questions.

Conclusion...Conclusion...

• Benchmarking is only a “tool” that we use to continually improve our company...it is not the “end-result”

• To improve...we must measure ourselves against a “benchmark”

• Benchmarking leads us to other quality improvement tools...they all must work together.

Questions?Questions?

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