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Benchmarking is

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					Operations and Quality
    Management
        Session 6

  Process Benchmarking
%            Xerox Return of Assets (ROA)

26


17


          Business
          Success
                          Crisis of
                          Survival
                                           Operations
3                                          Deployment



     73              79               84                Years
                   Benchmarking is. . .

A surveyor's mark…of previously determined position…and used as
     a reference point…A standard by which something can be
                       measured or judged.

                      Webster’s Dictionary

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

         David T. Kearns, former CEO, Xerox Corporation

 The process of searching for, discovering and applying the best
possible practices by learning from top performing organizations.

               VHA Center for Comparative Data
                 Benchmarking is...
“... the practice of being humble enough to admit that someone
  else is better at something and wise enough to learn how to
                match and even surpass them at it.”

  (Carla O’Dell, International Benchmarking Clearinghouse)

  “..is a systematic and continuous measurement process; a
     process of continuously measuring and comparing an
   organization’s business process against business leaders
anywhere in the world to gain information which will help the
     organization take action to improve its performance.”

                           (AQPC)
              Benchmarking

   Is the process of identifying,
    understanding, and adapting outstanding
    practices from organizations anywhere in
    the world to help your organizations
    improve its performance.

   Innovation….Innovation
                     Benchmarking is….

A systematic and disciplined approach to examining your own processes

             Finding who does it best / has a better way

                Learning how & why others do it well

          Adapting information learned to your organization

                  Implementing change as a result

                   Doing it continuously to improve
                         Benchmarking
                            What it is…
                        Continuous Process
                    Learning/Discovery Process
                             Adaptive
                        A Planning Process
                           Collaborative
     Others’ costs are 20% lower, what do they do differently?

                        What it is not…

                      One Time Program

                      Cookbook Process

                        Copying Others

                   Cost Reduction Program

                             Spying

Others’ costs are 20% lower, my costs should be 20% lower.
                  Types of Benchmarking
Strategic Benchmarking
   –   Focuses on potential changes in a business
   –   SWOT
   –   Examines overall strategies
Performance Benchmarking
   –   Study of competitors
                                             
   –   Measures performance of company’s processes against others
   –   Analysis of industry trends through database interrogations and
       surveys
                Types of Benchmarking
Process
                  of target process regardless of type of
    –“Face to face” observation
    company
    –Seeks best practice for conducting a particular business process
    –Purpose is to improve a particular process
          e.g. Process – Change management
                BP – “Project Change Management”
                             Types of Benchmarking
Types of Benchmarking                           Definition                             Resource Requirements



      Strategic         The analysis of world-class companies in noncompetitive        Medium-Low – Usually
                        industries to determine opportunities for strategic change      performed by trained
                        initiatives in core business processes.                        benchmarking analysts

    Performance         The analysis of relative business performance among            Low – Can use trained
                        competitors. Uses open-literature analysis or conducted        company personnel or
                        as “blind” studies with 3rd party assistance.                       consultants

       Process          The analysis of performance in key business processes        High – Conducted by teams
                        among identified best-practice companies selected                from process areas
                        without regard to industry affiliation.
          Types of Benchmarking

 Internal - Look at self, comparisons within the
                  organizations

  Industrial (Competitive) - A comparison with
   similar functions within the same industry

 Transnational (Functional) - The comparison of
specific processes that are the same regardless of
                     industry

 Outside the Box (Generic) – The comparison of
specific processes that are different regardless of
                     industry
What to Benchmark?

Core Competencies

Key business processes

Significant problem areas - efficiency

Significant problem areas - effectiveness

Areas of customer dissatisfaction

Areas of employee dissatisfaction

Areas of financial significance
    Four Categories of Measures

 Hard Financial Measures
 Employee Perceptions

 Customer Perceptions

 Key Process Indicators
       Benchmarking Process
        ID Core Process to Study

    Determine Critical Success Factors

        Study the Current Process

          Measure and Compare

ID Practices leading to Better Performance

Study, Measure and Compare – Set Target

               ID Enablers

  Develop Protocol for Process Change

      Adapt, Measures and Compare
        Benchmarking Process

   Plan
   Search
   Observe
   Analyze
   Adapt
                      Plan
   Select the process to be benchmarked.
   Form benchmarking team.
   Understand and document the process to be
    benchmarked.
   Establish performance measures for the
    selected process.
                         Search
   design a list of criteria an ideal benchmarking partner
    should satisfy.
   Search for potential benchmarking partners, ie., who
    perform the process in question better than oneself.
   Compare the candidates and select benchmarking
    partner(s).
   Establish contact with the selected benchmarking
    partner(s) and gain acceptance for participation in the
    benchmarking study.
                    Observe
   Assess information needs and sources
   Select method and tool for information and
    data collection
   Carry out information collection and
    debrief
           Data Collection Plan
  Secondary        •Determine What information is needed
  Research         •Synthesize and analyze findings


Develop             •Detailed Questionnaire
Screening Survey    •Identify Contact Within Organization

                   •Talk to the practitioners doing the
    Site Visit     process
                   •Observe the process/work flow


                    •Further Verify Data
   Interviews
                     Analyze
   Sorting the collected information and data
   Quality controlling the information and data
   Identifying gaps in performance levels
   Identifying the causes for the gaps
                   Adapt

   Improvement opportunities
   Targets
   Implementation
   Final report
                    Benchmarking Observations
1.   Benchmarking is far more than copying – it requires deep self-assessment and the
     ability to adapt what others are doing to the context of your organization. Key is
     to “Adapt not adopt” – W.Edward Deming
2.   Benchmarking is easier for large firms with sufficient staff and resources.
3.   Benchmarking is easier for firms with good level of performance. Medium and low
     performers could benefit more from simpler, faster and less costly improvement
     efforts, such as developing better knowledge and relationships with their customers
     and employees.
4.   Benchmarking does not come as a natural process –
     competitiveness does, but not benchmarking.
Benchmarking and the twenty-first-century
             organization
   Innovate, innovate, innovate….
   Change, change, change….
   Benchmark, benchmark, benchmark….
   Adopt, adopt, adopt….
   Build, build, build….
   Exchange, exchange, exchange…
                     Benchmarking Thoughts
         “Fools you are… to say you learn by your experiences…

    I prefer to profit by others’ mistakes and avoid the price of my own.”
                                         - Otto Von Bismarck



“Benchmarking is the practice of being humble enough to admit that
someone else is better at something and wise enough to try and learn how
to match and even surpass them at it.”
                                    - APQC, 1998
               Benchmarking Thoughts
“From kindergarten onward, we have been punished for working together
and rewarded for individual achievement”
                                           - Watson 95

“Teamwork in the classroom is called cheating.”
                                       - Scherkenback 1982



“When you're average, you're just as close to the
bottom as you are the top.”

                                          - Unknown

				
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