intro to benchmarking march 2013
DESCRIPTION
An introduction to benchmarking; a practical guide to helping you use benchmarking to drive improvement and growth.TRANSCRIPT
Benchmarking BasicsAn Introduction to Benchmarking
Dr Adrian GundyInnovation, OD & Growth
About Us
• Designed to help organisations achieve EXCELLENCE in their business initiatives.
• Through our global partnerships and member networks, Centre for Competitiveness harnesses the best practices of leading organisations and turns this knowledge into practical resources.
• Centre for Competitiveness is a network of organisations that share the same ambitions to drive excellence through the organisation and aspire to reach excellent results.
The four mechanisms we use to improve competitiveness are:
• Innovation and Creativity • Productivity Improvement • Quality Excellence
Through Education, Training, Facilitation, Projects and Coaching
Benchmarking?
what does the term benchmarking mean to you?
Benchmarking
• with standard(s)
• with our competitors/peers
• with our own expectations
• with almost everything !
benchmarking is about making comparisons…
how do we benchmark ourselves in our everyday
lives ?
Benchmarking is everywhere
Definitions
“Benchmarking is the search for those best practices that will lead to superior performance of the company ....”
Robert C Camp
“Benchmarking is the continuous process of measuring products, services and practices against the toughest competitors or those recognised as leaders in any field.”
David Kearns
“Stealing Shamelessly”.
“Creative Swiping”.
A better definition
“ Benchmarking is the practice of being humble enough to admit that someone else is better at something, and being wise enough to learn how to match and even surpass them at it.”
APQC
Benchmarking is not
Competitive analysis.
“Number crunching”.
Site briefing and industrial tourism.
Just “copying” or “catch up”.
Spying or espionage.
Necessarily quick and easy.
BENCHMARKING=
Benchmarking should be focused on improving existing performance rather than used to justify existing
performance
European Framework for Benchmarking
STARTING ON THE WAY MATURE
EARLYDIAGNOSTIC
HOLISTICBENCHMARKING
PROCESSBENCHMARKING
•EFQM
•IIP
•GOLD STAR
•IMPR3OVE
•ISO
MODELS OFBEST PRACTICE
•WINNING MEASURES
•CAM
•PROBE
•MICROSCOPE
•CABINET OFFICE
•OPTIMUS
DATABASES
ESTABLISHINGTHE GAP
UNDERSTANDINGWHY
Benchmarking types
Performance:
analysis of relative business performance by comparing key performance indicators.
Process or Functional:
analysis of key processes and functions among best practice companies.
Internal:
analysis of internal processes / activities across units, sites etc. to gain an understanding of internal performance standards.
Informal & formal
Comparison ratio examples
• net profit margin (%)• return on capital employed (%)• debtor days • etc…
financial perspective
customer perspective• customer growth (%)• orders rejected during warranty period (%)• complaints per order (%)• etc…
• training expenditure to turnover (%)• new employees per FTE employee (%)• employees with formal qualifications (%) • etc…
learning and growth perspective
internal processes perspective• supplies delivered on time (%)• sub-standard supplies (%)• rework (%)• etc…
Comparison ratio examples
Why benchmark?
Improve profits / effectiveness.
Accelerate and manage change.
Set stretch goals.
Achieve breakthroughs / innovations.
Create sense of urgency.
Overcome the “Not Invented Here” syndrome.
See “outside the box”.
Understand world class/best performance.
Better & Best Practice
Resource issues:
• level of improvement needed
• degree of change organisation can cope with
• time scales
Cultural issues:
• organisational
• local
• national
• international
Innovation
Fast changeover .... Racing pit crews
Emergency room response .... Domino’s Pizza
Programme management .... Yacht crew
Shell casing manufacturing.... Lipstick tube manufacturing
Survival
Example: Supply Management
Company AWorld Class
Supplier lead time 150 days 8 days
Order input time 6 mins 0 min
Late deliveries 33% 2%
Shortages/Year 400 4
Suppliers/Buyer 34 5.3
The process
1Plan
3Analyse
2Collect Data
4Adapt &Improve
Practices Vs Measures
Practices
Measures
What issues emerge
Pain at discovering gaps:
• denial
• disbelief
• dismay
Confidentiality concerns.
Lack of time and resources; 8 - 10 hours per week.
Inertia and resistance to change.
1Plan
3Analyse
2Collect Data
4Adapt &Improve
Phase 1
Plan:
Identifying what to benchmark, selecting theteam, developing a project plan.
What to benchmark
Who are our customers and what are their requirements?
What is the key business process / activity that is most in need of improvement?
How are you performing on the critical success factors in your business?
Where are your competitors gaining ground on your company?
What complaints are your customers making that indicate areas for rapid improvement?
Have your employees made any suggestions for improvements that have not been pursued but have a promise of performance breakthroughs?
Where is improvement required to support organisational goals?
What to benchmark
Or put more simply
“What’s really hurting your organisation?”
1Plan
3Analyse
2Collect Data
4Adapt &Improve
Phase 2
Collect Data:
Develop and understand yourown activities, develop keymeasures, identify benchmarkpartners
Key elements
Develop and understand your own activities.
Develop key measures.
Identify potential benchmark partners.
Determine appropriate collection methods.
Collect data.
Review of the collect phase.
Understanding of own activities
C - cost.
H - headcounts.
A - activities.
R - roles/responsibilities.
T - troubled areas/issues.
S - structure.
It may be useful to MAP the process / activity
to be benchmarked.
Collecting data
• Develop measures
Order Fulfilment
Total cycle time 33 working days = 100%
Operation time 48 hours = 18%
Why?
“To ensure like for like comparison”
Collecting External Data
Who’s good practice?
Collect data
Identifying benchmarking partners
Checks:•Reputation•Awards (EQA, MBNQA)•Companies with continuous excellent results
Questions:
•Which companies?
•Which industries?
•Who can help find
partners?
Information Sources:•Internal experts•Literature•Associations•Consultancies•Universities•Databases•Self Assessment
Collect data byquestionnairetelephone surveysite visit
1Plan
3Analyse
2Collect Data
4Adapt &Improve
Phase 3
Analyse:
Identify causes ofperformance gaps,identify Best Practices,Methods and Enablers.
Analyse phase
Normalise data - scale effects.
Compare performance data and practices.
Identify causes of performances gap.
Project future performance levels.
Identify potential Opportunities for Improvement (OFIs).
Key points.
1Plan
3Analyse
2Collect Data
4Adapt &Improve
Phase 4
Adapt & Improve:
Publish findings, createan improvement plan,execute the plan.
Adapt and improve
Assess applicability of OFI’s.
Develop Improvement Plan.
Develop Communications Plan.
Implement Plans, monitor and review.
Recalibrate.
Review of adapt and improve phase.
Managing Change
Change
VISION
SKILLS
RESOURCES
GOALS & INCENTIVES
ACTION PLAN
CONFUSION
ANXIETY
GRADUAL CHANGE
FRUSTRATION
FALSE STARTS
Conclusions
Success Factors
Do the right study (something important).
Be committed to implement the results.
Choose and empower the right teams.
Know your own process first.
Choose the right partner.
Verify the results of implementation.
General mistakes
Leaving your own process unexamined.
Scope - Parameters too broad.
Metrics V’s Processes / Activities.
Lack of management or team commitment.
Insufficient homework - wrong benchmarking partners.
Ignoring comparison outside your industry.
Failure to follow-up and implement findings.
The value
Benchmarking
Challenges current thinking
Brings an external focus to strategic planning and target setting
Emphasises the need to adopt a process focus