Benchmarking

“IF YOU KNOW YOUR ENEMY AND KNOW YOURSELF, YOU NEED NOT FEAR THE RESULT OF A HUNDRED BATTLES” -Sun Tzu, a Chinese General, dated 500 B C

BENCHMARKING Objectives -Accelerate the process of Business Change -Lead to other Breakthrough and Continuous Improvement -Result in Customer Satisfaction and Competitive Advantage -Adapt Best Practices

Definition Benchmarking is the PROCESS of continuously measuring and comparing one’s BUSINESS PROCESSES against comparable processes in LEADING ORGANISATIONS to OBTAIN INFORMATION that will help the organisation identify and IMPLEMENT IMPROVEMENTS

TYPES OF BENCHMARKING

• INTERNAL • COMPETITIVE • FUNCTIONAL • GENERIC

INTERNAL BENCHMARKING Comparison of similar functions in different units within the organisation Ease in getting information Ease of implementation due to similarity of culture Low study cost May not represent the best May not provide breakthrough improvement

COMPETITIVE BENCHMARKING Comparison of similar functions against External Best of Competition - Understanding Competition - Limitation in getting Information - May not provide breakthrough Improvement

FUNCTIONAL BENCHMARKING Comparison of similar functions against external best in any industry - High openness to share information - May provide breakthrough improvement - Wide scope - Organisation buy-in may be limited

GENERIC BENCHMARKING Comparison of functions which are generic in nature in any industry - Window to unrelated but relevant aspects - Outstanding breakthrough possible - Possibility of becoming best of the breed - Organisation buy-in may be limited - Requires a lot of creativity

WHAT TO BENCHMARK * Products and Services - Finished Goods, Product and Service Features * Work Processes - How a Product or service is produced or supported * Support functions – Indirect labour – not directly associated with the process of production or support – eg: Finance, HR

WHAT TO BENCHMARK…. * Organisational Performance – Cost, Revenues, Production Indicators, Quality Indicators * Strategy - Short or long term plans, The planning process

KEY SUCCESS FACTOR CHOICE OF RIGHT BENCHMARKING PARTNER THOROUGH PROCESSS MAPPING OF ONE’S OWN PRACTICES HIGH LEVEL OF OBSERVATION WILLINGNESS TO LEARN COMMITMENT TO EXPERIMENT

REASONS FOR BENCHMARKING - ‘Why reinvent the wheel?’ - ‘ If somebody else can, why not us?’ Note of caution: - not a panacea - the best-in-class performance is a moving target.

BENCHMARKING PROCESS MODEL

Adapt

Plan

Analyse

Observe

Search

PERFORMANCE MATRIX overkill

ok

Current Performance

Unimportant

Importance

Must be improved

BENCHMARKING VOCABULARY CRITICAL SATISFACTION FACTORS The “critical few” among the customer satisfaction factors Those few customer satisfaction factors that must be managed successfully if the organisation is to remain competitive in its marketplace The Critical few elements of customer satisfaction that a successful organisation comes close to managing 100% “RIGHT” 100% of the time

Selection of Process Product: Portable PC CSF

MECH REL AVAIL./DELIVERY BATTERY LIFE PRICE HARD STORAGE CAP. RAM CAPACITY

Rank as

Rate as per

per imp.

Co’s perf.

6.7 6.6 5.8 4.6 4.3 3.7

6.9 2.9 5.1 3.4 6.5 2.7

SELECTION OF PROCESS 7

Rate Performance

.1

.5 .3

.7 3.5

.4 .6

0

Top Priority for selection of process to be benchmarked

3.5

Rank

.2

7

SCOPING THE PROCESS * DETERMINE CUSTOMER REQUIREMENTS FOR THE PRODUCTS/SERVICES YOU PROVIDE * ANALYSE THE ACTIVITIES THAT PRODUCE THE CUSTOMER OUTPUT *DETERMINE INPUT REQUIREMENTS * IDENTIFY YOUR SUPPLIERS

CREATE A HIGH LEVEL PROCESS MAP A Process Map is a macro snapshot of the entire process form beginning to end. CREATE ONE – either crossfunctional or functional to reflect the team composition and membership

THE TEAM PROJECT SPONSOR PROCESS OWNER TEAM LEADER TEAM MEMBERS PROJECT FACILITATOR

MEASURES QUALITY COST CYCLE TIME PROBLEM RESOLUTION

MUST LINK INTO: PERFORMANCE OF SUPPORTING FUNCTIONS ORGANISATIONAL STRATEGY