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Benchmarking

Week # 5

Total Quality Management

The process of learning, adapting, and measuring


outstanding practices and processes from any
organization to improve performance

A method for identifying and importing best


practices in order to improve performance

What is Benchmarking

d) Weak economy forces government to


provide more services with less resource

c) People ask for greater accountability of


government

b) Voters resent waste of tax money

a) Citizens demand effective and responsive


government

Public Sector Benchmarking

Apple vs. Samsung, Day 6: Its not copying,


its benchmarking Tue April 15, 2014
http://www.electronista.com/articles/14/04/
15/samsung.offers.google.engineers.but.sams
ung.marketers.in.day.of.witnesses/#ixzz3E1A3
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Case for the Week

This involves examining long-term strategies, for


example regarding core competencies, new product
and service development or improving capabilities for
dealing with change.
This type of benchmarking is used by successful high
performers in order to improve a businesss overall
performance.

Strategic Benchmarking

Types of Benchmarking: 1

This looks at performance characteristics in


relation to key products and services in the
same sector.
In order to protect confidentiality this type of
analysis is often undertaken through trade
associations or third parties
AKA, Competitive Benchmarking

Performance Benchmarking

Types of Benchmarking: 2

This focuses on improving critical processes and


operations through comparison with best
practice organisations performing similar work.
This often results in short term benefits.

Process Benchmarking

Types of Benchmarking: 3

Functional Benchmarking
This compares a business with partners drawn
from different sectors to find innovative ways
of improving work processes.
This can lead to dramatic improvements

Types of Benchmarking: 4

This involves benchmarking businesses or operations


from within the same organisation (e.g. business
units in different countries).
Access to sensitive and/or standardised data is
easier, usually less time and resources are needed
and ultimately practices may be relatively easier to
implement. However, real innovation may be lacking:
best in class performance is more likely to be found
through external benchmarking.

Internal Benchmarking

Types of Benchmarking: 5

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External Benchmarking
This analyses best in class outside
organisations, providing the opportunity to
learn from those at the leading edge.
This can take up significant time and resource
to ensure the credibility of the findings.

Types of Benchmarking: 6

This identifies and analyses best practitioners


elsewhere in the world, perhaps because there are
too few benchmarking partners within the same
country to produce valid results.
Globalisation and advances in information
technology are increasing opportunities for
international projects. However, these can take more
time and resources to set up and implement and the
results may need careful analysis due to national
differences.
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International Benchmarking

Types of Benchmarking: 7

Target is not critical to the core business


functions
Customers requirement is not clear
Key stakeholders are not involved
Inadequate resources to carry through
No plan for implementing findings
Fear of sharing information with other
organizations

When not to Benchmark

Improving
Practices
Analysis

Planning

Collecting
Data

Benchmarking Process

a) Determine the purpose and scope of the


project
b) Select the process to be benchmarked
c) Choose the team
d) Define the scope
e) Develop a flow chart for the process
f) Establish process measures
g) Identify benchmarking partners

1. Planning

d) Conduct interviews if more detail


information is needed

c) Conduct site visits if additional information


is needed

b) Use questionnaires to gather information


necessary for benchmarking

a) Conduct background research to gain


thorough understanding on the process and
partnering organizations

2. Collecting Data

c) Determine the performance gap

b) Analyze qualitative data of partnering


organizations and your organization

a) Analyze quantitative data of partnering


organizations and your organization

3. Analysis

e) Recalibrate the process as needed

d) Monitor performance measurements and track


progress

c) Implement process improvements

b) Develop an improvement implementation plan

a) Report findings and brief management

4. Improving Practices

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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
companys 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

Key Concepts

To Obtain an External Perspective of What Is Possible


To Assist in Setting Strategic Targets
To Promote Improvements in Performance
To Establish a Competitive Edge
To Enhance Customer Satisfaction
To Reduce Costs
To Improve Employee Morale
To Achieve Quality Awards
To Survive

Why Benchmark?

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In what other ways can a housing company


use Benchmarking?

How did Bellwether benefit from


Benchmarking?

Case Study

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Comparisons with best practice


A Strong emphasis on meeting the needs of the customer
(internal and external)
The importance of efficient, effective business processes
The need for continuous improvement
Enhances a TQM program

Benchmarking in the Context of TQM

Internal
Top performers
within company
Top facilities
within company

Industry leaders
Top performers with
similar operating
characteristics

Competitive

Top performers
regardless of industry
Aggressive innovators
utilizing new
technology

Functional

Best Practice
Overlap

Benchmarking Methodology

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Critical Success
Factors

Critical
Processes

Mission

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Benchmarking processes or activities, which do not support any of these


statements, should be disregarded, as the benefits will be limited compared to
those that could be achieved by deploying resources to other areas.

Benchmarking

Within the same industry sector

Same function across all industry fields

All industry fields

Internal

Competitor

Functional

Generic

Potential Benchmarking Partners

Comparable sites, branches, sections, departments


within the business

Comparison
Type

Selecting Benchmarking Partners

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In the following graphic (the input-output process model) we begin with inputs
that can be tangible (such as supplies, raw materials, and component products)
or intangible (such as information) which are delivered to the work process,
which transforms them into some final output which might be a product or
service. The goal of the output is to create satisfied and loyal customers.

1. Inputs (including those from both employees & suppliers);


2. Processes (including internal operations & support services);
3. Outputs (your organizations products, services, and documentation); and
4. Customer Satisfaction.

A simple process analysis model can help identify organizations most


important workflows. This model reveals that all work can be viewed in
four sequential stages:

Business Process Performance Measures

Delivery of
Products/
Services

Performance
of Services

Production of
Products

Design of
Products/
Services

Processing

Results

Documentation

Services

Products

Outputs

Customer
Requirements
Met

Customer
Problems
Solved

Customer
Needs
Satisfied

Customers

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Input-Output Process Model

Capital

Customer
Requirements

Components

Raw Materials

People

Inputs

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Public safety and / or legal responsibilities, sometimes observed in accident


rates, employee absentee rates, regulatory citations, or litigation rates.

Productivity & resource utilization, often reflected in transactions per person,


inventory turn rates, or projects operating within budget;

Defect, error, waste, problem, or failure rates, often formatted as defects per
1000 or million output units;

Responsiveness and/or process cycle time;

Production costs, frequently described as cost per hundred, thousand, or


million;

Enhanced customer value - often observed through added product features or


reduced costs;

Common Performance Measures of the


Input-Output Process Analysis Model

How will success feel?

CSFs are a feature of all levels of business activity; from the company as a
whole down to the activities of individuals in it

Critical Success Factors (CSFs) are the Key Indicators that inform us that a
particular task, activity, process, event, function, service or endeavour is
successful

Critical Success Factors

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Senior management support;


Benchmarking training for the project team;
Useful information technology systems;
Cultural practices that encourage learning;
Resource dedication - especially in the form of time,
funding, and useful equipment.

Adopt, Adapt, and Advance: A well-designed


performance measurement and benchmark system is
essential, but there are other critical success factors:

Benchmarking Critical Success Factors

3.
4.
5.

1.
2.

strong commitment from senior management


willingness to act on any major opportunities for improvement
revealed by benchmarking
resources
staff capable of running a benchmarking project
time for employees to spend on benchmarking activities

Principal Requirements for Success

Planning a Benchmarking Exercise

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This tends to overcome the not invented here


syndrome and the were different justication for
the status quo.

Benchmarking allows organizations to set realistic,


rigorous new performance targets, and this process
helps convince people of the credibility of these
targets.

Cultural Change

THE BENEFITS OF BENCHMARKING

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Performance Improvement
Benchmarking allows the organization to dene specic gaps in
performance and to select the processes to improve.
It provides a vehicle whereby products and services are
redesigned to achieve outcomes that meet or exceed customer
expectations.
The gaps in performance that are discovered can provide
objectives and action plans for improvement at all levels of the
organization and promote improved performance for individual
and group participants.

THE BENEFITS OF BENCHMARKING

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Moreover, the synergy between organization activities is


improved through cross-functional coop-eration.

Closing the gap points out the need for personnel to be involved
in techniques of problem solving and process improvement.

Human Resources
Benchmarking provides a basis for training. Employees begin to
see the gap between what they are doing and what best-in-class
are doing.

THE BENEFITS OF BENCHMARKING

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

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

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

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Xerox 12-Step Benchmarking Process

11. Attain leadership position ;


12. Fully integrate practices into processes.

Phase 5: Maturity

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8. Develop action plans;


9. Implement specific actions & monitor progress;
10. Recalibrate benchmarks.

Phase 4: Action

(continued)

The Xerox 12-Step Benchmarking Process

Sponsorship Uncertain
Amorphous Objectives
No Strategic Integration
Performance Metrics Only
Hard Data Only
Arbitrary / Casual Approach
Incremental / No Change
Keep Going and Going and ..
A la carte Program

Customer Driven Objectives

Linked to Strategic Plan

Best Practices & Enablers

Consider Cultural Attributes

Disciplined Methodology

Quantum Change

Clear Project Life Cycle

Integrated with Existing


Quality Efforts

Failure

Process Owner Involvement

Success

Attributes of Benchmarking Studies:


Success vs. Failure

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Recognize benchmarking team efforts.

Create visibility of the benchmarking process;

Proactively manage the direction and momentum of


benchmarking within the organization;

Provide focused training / facilitation to project


participants;

Commit required resources to key projects;

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Managements Benchmarking Challenge