Description
It also explains the most common mistakes the organizations make when benchmarking. The ppt also covers what is quality circles.
Benchmarking
Benchmarking
–Is the process of identifying, understanding, and adapting outstanding practices from organizations anywhere in the world to help your organizations improve its performance.
Benchmarking
Current Best Practices Benchmarking is not about aiming to close the success of others companies or indulging in some kind of industrial spying. The real goal is to build on the success of others to improve future performance. It has to be done on a continuous bases, searching for current best practices and not outdated ideas. Benchmarking process is carried out for putting corrective actions into products, processes and systems. Significant Gains from Benchmarking •Better understanding of the customers and the competitors. •Fewer complaints resulting in more satisfied customers. •Reduction in waste, reworking and quality problems. •Awareness of important innovations and management practices and how they can be employed effectively. •A strong reputation within their markets •Increased profits, sales turnover and Image.
100 90 80 70 60 1980 COP 50 INDEX 40 30 20 10 1980 RBG NEW BUILD COP
MAJOR COST IMPROVEMENT
BENCHMARK COP
(EQUIV. JAPANESE COP)
MAJOR COST IMPROVEMENT
81
82
83
84
85
86
87
COP: COST OF PRODUCTION
RGB: REPROGRAPHICS BUISINESS GROUP
COSTS Vs. COMPETITIVE BENCHMARK AT RANK XEROX, VENRAY, HOLLAND
Planning
1. Identify what is to be benchmarked 2. Identify comparative companies 3. Determine data collection method and collect data 4. Determine current performance ‘gap’ 5. Project future performance levels 6. Communicate benchmark findings and gain acceptance 7. Establish functional goals
Analysis
Integration
Action
8. Develop action plans 9. Implement specific actions and monitor progress 10. Recalibrate benchmarks
•Leadership position attained •Practices fully integrated into processes
Maturity
Benchmarking process steps
Benchmarking Model
Strategic Benchmarking
Academic Programs & Research grants against the best institutions Establish Customer Needs and Produce a Specification to meet those Requirements
Process Benchmarking
Is there a model for this work process? What is the benchmarking? What process, method and practices lead to benchmarking
Design a measurable work process
Produce Output
Performance Benchmarking
How does Institute stand in comparison ? Can it do better ? Evaluate and Activate Improvements
Type of Benchmarking
Internal Competitor Functional
Comparison
Comparing site to site, department to department, country to country within the organisation
Comparing our own performances to that of our direct competitors
Comparing ourselves, not just against our Competitors but against the best organisation operating in similar fields or performing similar activities Comparing ourselves, against the best from all industry groups
Generic
Tool/technique
Activity network diagram Affinity diagrams AHP maturity index Brainstorming Cause-and-effect diagram (Ishikawa) Check sheet Control charts Flow charts Force field analysis Interrelationship diagraph Interview techniques Matrix diagram Multivoting Pareto diagrams Policy deployment Prioritization matrices Process documentation Project management Quality function deployment Questionnaire/survey prep’ n Quick reference guides/checklists Radar/spider chart Root cause diagrams Run charts Scatter diagram Selection matrix Tree diagram Z chart
Analyze the performance Gap steps
1
2
3
4
5
6
7
8
9
10
10-year logistics productivity trend 7.0
6.0%
Overall business plan Productivity required (33%)
6.0
Expense to revenue ratio
Historical logistics and distribution productivity (5%)
Strategic actions
5.5%
Benchmark gap
Continued operational improvements
5.0
Competitor Productivity (5-6%) 45% Competitive parity
4.0 81 82 84 86 Year 88 90
91
•Unit costs were calculated as if logistics performed similarly to competition and converted to a single summary statistic; expense to revenue ratio. •The result is an approximate 16% productivity gap compared to state-of-the-art operations or competitors studied thus far. •During the next year competitors will also be pursuing productivity, assumed to be 5-6% and equal to distribution’s historical productivity. •The results show distribution must pursue a combination of continuing, historical productivity efforts as well as undertake significant strategic changes.
Display Data for Ease of Analysis
The essentials of the gap analysis can now be applied to specific situations using The best practices matrices. At the highest level of detail, that includes a matrix consisting of the attributes and measurements documented in the rows Compared to that of the companies shown in the columns. The last column would be the team’s assessment of the best practice.
M1 M8 M2 Total customer satisfaction (ultimate goal) Best of best (benchmark) M7 M3
M6 M5
M4
Current performance (baseline)
The Z chart, first used at Xerox, is useful to display another characteristic of gap data; that is, where the gap is measured at a point in time. Remember that performance does not stand still. Benchmarks and performance data change over time. So there must be a mechanism to show progress prior to a benchmark, the results of the benchmarking exercise, and the progress over time after the benchmark was established. The Z chart shows that the benchmark data may change because the industry changes and that the current performance is chasing a moving target. It is the one-time measurement and the closing of the gap over time that leads to a full understanding of the gap.
Most Common Mistakes Organizations Make When Benchmarking Mistake#1. Confusing benchmarking with participating in a survey.
A survey of organizations in a similar industry is not really benchmarking, whatever it may be called. Such a survey will give you some interesting numbers, but benchmarking is the process of finding our what is behind the numbers. In other words, a benchmarking survey may tell you where you rank, but it won’t help you improve your position.
Mistake#2. Thinking there are pre-existing “benchmarks” to be found. Just because some survey of study says that a cost of Rs. 10,000 is the “benchmark” cost of a particular transaction, does not mean that you must perform that transaction for that price. The so-called “benchmark” may simply not be applicable to your markets, customers or resource levels. Insist on identifying your own benchmarking partners and finding our from them what is achievable, and then whether you can achieve a similar level of performance.
Mistake#3. Forgetting about service delivery and customer satisfaction.
Benchmarking stories abound of organizations that have become so fixated of the cost of providing their product of service that they have failed to take the customer into account. Paring down the costs often rebounds in lesser service delivery, so customers go elsewhere and ultimately you don’t have a business. Take a “balanced scorecard” approach when developing your benchmarking metrics.
Mistake#4. The process is too large and complex to be manageable.
A process is a group of tasks. A system is a group of processes. Avoid trying to benchmark a total system – it will be extremely costly, take ages, and be difficult to remain focused.
Better to select one or several processes that form a part of the total system, work with it initially and then move on to the next part of the system.
Mistake#5. Confusing benchmarking with research.
Benchmarking presupposes that you are working on an existing process that has been in operation ling enough to have some data about its effectiveness and its resource costs. Commencing a new process, such as developing a new employee handbook by collecting other people’s handbooks and taking ideas from them, is research, not benchmarking.
Mistake#6. Misalignment.
Choosing a benchmarking topic that is not aligned with the overall strategy and goals of the business; or worse, cuts across some other initiative the organization is already taking. A lead team at the strategic level needs to oversee the benchmarking project and make sure that it is in line with what is happening in the business as a whole.
Mistake#7. Picking a topic that is too intangible and difficult to measure. “Employee communication” is probably the most slippery concept that exists in an organization, but it is often cited as one of the worst problems, so many organizations try to benchmark it. Encourage your benchmarking team to select instead a part of the topic that can be observed and measured; for instance, the process of distributing memos around the organization.
Mistake#8. Not establishing the baseline. Going out to make benchmarking visits before you have analyzed your own process thoroughly. Benchmarking assumes that you already know your own process and its level of performance thoroughly. After all, that information is what you have to offer to our benchmarking partners in exchange for the information you are seeking from them. Make sure your benchmarking team is very clear about what it wants to learn before you approach potential benchmarking partners.
Mistake#9. Not researching benchmarking partner thoroughly.
this is essential in selecting the right benchmarking partners, so you don’t waste their tine or yours. There is a rule of benchmarking etiquette that says you should never ask a benchmarking partner a question that you should have been able to answer for yourself through researching the literature in the public domain.
Mistake#10. Not having a code of ethics and contract agreed with partners.
your partners should be clear about what you are seeking to learn from them, how that information will be treated, who will have access to it and for what purposes it will be used. Ideally, this should be formally agreed. The benchmarking code of practice must be followed.
Quality circles: QC Dr. K. Ishikawa in 1962
A small group 7-10 •To perform quality, cost, productivity related activities. •Voluntarily •Within the same workshop/area •Continuously •As a part of CWQC •For self development and mutual development •Within the workshop •For control and improvement •Utilizing Q.C. techniques. •With all members participating
QC
•Leader, Dy. Leader, Members •Facilitator and steering council (headed by CEO) Theory = 1. TM sup.3. 2.MM 4.workers (William Ouchi)
Structure for effective quality circles
Corporate coordination
Top Mgmr. Facilitator Ldr./Dy.ldr Members Potential Members.
Unit level coordinator
Steering committee:- Chief Executive (chairman) functional heads as members Facilitator:- Sr. Executive below steering committee; initially now inserted Ldr./Dy.Leader:- Eventually to be chosen by the QC groups • Initially can be supervisor • Rotated after one year. Coordinator:- links steering from, facilitator, Ldr./Dy.Ldr
Quality Circles
Advantages and Disadvantages
Advantages
Training Opportunities Employee Involvement
Disadvantages
Not Self Sustaining
Self Initiated Change
People Close to Problems Synergy
Work Center teams
Lack Of Focus Training Requirements Lack of Technical Expertise
Working Inconsequential Issues
1. PROJECT SELECTION
2. TEAM FORMATION
Objective:
To select a specific problem or process which needs improvement.
Objective:
To designate initial members of the improvement team and clarify roles and responsibilities.
Possible Activities:
Select a significant issue possible sources of information about a significant issue may come from 1. customers 2. management direction or 3. the work group.
Possible Activities:
1. Determine whether a team approach is appropriate. 2. Identify initial team members and define responsibilities of members. 3. Select a team leader and define responsibilities of the leader. 4. Clarify roles of team members and leader.
3. PURPOSE STATEMENT
Objective:
To clarify the purpose of the project To determine performance measures To develop a tentative timetable.
In selecting performance measures:
1. Consider what the effects will be if the project is completely successful. 2. Determine a performance measure to track based on the expected effects.
Possible Activities:
In clarifying project purpose: 1. Identify stakeholders from whom you want to learn about needs and purposes. 2. Ask questions that expand purposes for example: what are we really trying to do when we perform this activity? what are the purposes and needs of the customer? is this problem part of a larger function?
In developing a timetable:
1. Estimate the time required to complete the project. 2. It appropriate review projected timetable with the team sponsor
4. CURRENT SITUATION
Objective:
Understand and explain the problem of process being studied
Possible Activities:
1. Find out about the problem go to the site of the problem. Talk to people familiar with it. Clarify and expand your understanding of the problem. 2. Check the recent results of the performance measure and graph them. 3. Determine an improvement target as gauged by the process measurement. 4. Do not be concerned with possible solutions at this stage. Try to expand your understanding of the current situation.
5. ANALYSIS
Objective:
Identify and verify the root causes of the problem.
Possible Activities:
1. Study the process flow 2. Study cause and effect relationships ask who what where when why and how questions to pursue the root cause. 3. Determine whether standard methods are in place if so are the people doing the work familiar with them? do they follow them? If not why? 4. Collect and analyze the necessary data 5. Use the pareto principle to set priorities (tackle the major causes first) 6. Run experiments to verify possible causes of problems.
6. IMPROVEMENT PLAN
Objective:
To propose improvements (countermeasures) To select and test the most promising countermeasures
Possible Activities:
1. Develop potential improvement actions or countermeasures based on the team’s analysis. 2. Select the countermeasures to be tested 3. Implement the countermeasures on a trial basis
7. RESULTS
Objective:
To measure the effect of the countermeasure and compare the result to the improvement target
Possible Activities:
1. Gauge the effects of the improvement actions by studying the performance measure has the target been met? If not is there significant movement in the right direction? 2. If the resuls are not completely satisfactory it may be necessary to initiate other countermeasures. 3. Consider the effects good and bad elsewhere in the system.
8. STANDARDIZATION
Objective:
To assure that the effective improvement actions become a part of the regular routine of the process.
Possible Activities:
1. Identify what must be done to change the system permanently and make these changes 2. Develop ways to ensure that new associates will be trained in the new method. 3. Consider checking and control mechanisms to assure maintenance of improvement.
9. REMAINING ISSUES
Objective:
To Evaluate What The Group Has Learned About The Problem Solving Process Itself.
Possible Activities:
1. list problem or opportunities which remain. 2. Determine which other business units might be able to benefit from your work share results with them
doc_397545012.pptx
It also explains the most common mistakes the organizations make when benchmarking. The ppt also covers what is quality circles.
Benchmarking
Benchmarking
–Is the process of identifying, understanding, and adapting outstanding practices from organizations anywhere in the world to help your organizations improve its performance.
Benchmarking
Current Best Practices Benchmarking is not about aiming to close the success of others companies or indulging in some kind of industrial spying. The real goal is to build on the success of others to improve future performance. It has to be done on a continuous bases, searching for current best practices and not outdated ideas. Benchmarking process is carried out for putting corrective actions into products, processes and systems. Significant Gains from Benchmarking •Better understanding of the customers and the competitors. •Fewer complaints resulting in more satisfied customers. •Reduction in waste, reworking and quality problems. •Awareness of important innovations and management practices and how they can be employed effectively. •A strong reputation within their markets •Increased profits, sales turnover and Image.
100 90 80 70 60 1980 COP 50 INDEX 40 30 20 10 1980 RBG NEW BUILD COP
MAJOR COST IMPROVEMENT
BENCHMARK COP
(EQUIV. JAPANESE COP)
MAJOR COST IMPROVEMENT
81
82
83
84
85
86
87
COP: COST OF PRODUCTION
RGB: REPROGRAPHICS BUISINESS GROUP
COSTS Vs. COMPETITIVE BENCHMARK AT RANK XEROX, VENRAY, HOLLAND
Planning
1. Identify what is to be benchmarked 2. Identify comparative companies 3. Determine data collection method and collect data 4. Determine current performance ‘gap’ 5. Project future performance levels 6. Communicate benchmark findings and gain acceptance 7. Establish functional goals
Analysis
Integration
Action
8. Develop action plans 9. Implement specific actions and monitor progress 10. Recalibrate benchmarks
•Leadership position attained •Practices fully integrated into processes
Maturity
Benchmarking process steps
Benchmarking Model
Strategic Benchmarking
Academic Programs & Research grants against the best institutions Establish Customer Needs and Produce a Specification to meet those Requirements
Process Benchmarking
Is there a model for this work process? What is the benchmarking? What process, method and practices lead to benchmarking
Design a measurable work process
Produce Output
Performance Benchmarking
How does Institute stand in comparison ? Can it do better ? Evaluate and Activate Improvements
Type of Benchmarking
Internal Competitor Functional
Comparison
Comparing site to site, department to department, country to country within the organisation
Comparing our own performances to that of our direct competitors
Comparing ourselves, not just against our Competitors but against the best organisation operating in similar fields or performing similar activities Comparing ourselves, against the best from all industry groups
Generic
Tool/technique
Activity network diagram Affinity diagrams AHP maturity index Brainstorming Cause-and-effect diagram (Ishikawa) Check sheet Control charts Flow charts Force field analysis Interrelationship diagraph Interview techniques Matrix diagram Multivoting Pareto diagrams Policy deployment Prioritization matrices Process documentation Project management Quality function deployment Questionnaire/survey prep’ n Quick reference guides/checklists Radar/spider chart Root cause diagrams Run charts Scatter diagram Selection matrix Tree diagram Z chart
Analyze the performance Gap steps
1
2
3
4
5
6
7
8
9
10
10-year logistics productivity trend 7.0
6.0%
Overall business plan Productivity required (33%)
6.0
Expense to revenue ratio
Historical logistics and distribution productivity (5%)
Strategic actions
5.5%
Benchmark gap
Continued operational improvements
5.0
Competitor Productivity (5-6%) 45% Competitive parity
4.0 81 82 84 86 Year 88 90
91
•Unit costs were calculated as if logistics performed similarly to competition and converted to a single summary statistic; expense to revenue ratio. •The result is an approximate 16% productivity gap compared to state-of-the-art operations or competitors studied thus far. •During the next year competitors will also be pursuing productivity, assumed to be 5-6% and equal to distribution’s historical productivity. •The results show distribution must pursue a combination of continuing, historical productivity efforts as well as undertake significant strategic changes.
Display Data for Ease of Analysis
The essentials of the gap analysis can now be applied to specific situations using The best practices matrices. At the highest level of detail, that includes a matrix consisting of the attributes and measurements documented in the rows Compared to that of the companies shown in the columns. The last column would be the team’s assessment of the best practice.
M1 M8 M2 Total customer satisfaction (ultimate goal) Best of best (benchmark) M7 M3
M6 M5
M4
Current performance (baseline)
The Z chart, first used at Xerox, is useful to display another characteristic of gap data; that is, where the gap is measured at a point in time. Remember that performance does not stand still. Benchmarks and performance data change over time. So there must be a mechanism to show progress prior to a benchmark, the results of the benchmarking exercise, and the progress over time after the benchmark was established. The Z chart shows that the benchmark data may change because the industry changes and that the current performance is chasing a moving target. It is the one-time measurement and the closing of the gap over time that leads to a full understanding of the gap.
Most Common Mistakes Organizations Make When Benchmarking Mistake#1. Confusing benchmarking with participating in a survey.
A survey of organizations in a similar industry is not really benchmarking, whatever it may be called. Such a survey will give you some interesting numbers, but benchmarking is the process of finding our what is behind the numbers. In other words, a benchmarking survey may tell you where you rank, but it won’t help you improve your position.
Mistake#2. Thinking there are pre-existing “benchmarks” to be found. Just because some survey of study says that a cost of Rs. 10,000 is the “benchmark” cost of a particular transaction, does not mean that you must perform that transaction for that price. The so-called “benchmark” may simply not be applicable to your markets, customers or resource levels. Insist on identifying your own benchmarking partners and finding our from them what is achievable, and then whether you can achieve a similar level of performance.
Mistake#3. Forgetting about service delivery and customer satisfaction.
Benchmarking stories abound of organizations that have become so fixated of the cost of providing their product of service that they have failed to take the customer into account. Paring down the costs often rebounds in lesser service delivery, so customers go elsewhere and ultimately you don’t have a business. Take a “balanced scorecard” approach when developing your benchmarking metrics.
Mistake#4. The process is too large and complex to be manageable.
A process is a group of tasks. A system is a group of processes. Avoid trying to benchmark a total system – it will be extremely costly, take ages, and be difficult to remain focused.
Better to select one or several processes that form a part of the total system, work with it initially and then move on to the next part of the system.
Mistake#5. Confusing benchmarking with research.
Benchmarking presupposes that you are working on an existing process that has been in operation ling enough to have some data about its effectiveness and its resource costs. Commencing a new process, such as developing a new employee handbook by collecting other people’s handbooks and taking ideas from them, is research, not benchmarking.
Mistake#6. Misalignment.
Choosing a benchmarking topic that is not aligned with the overall strategy and goals of the business; or worse, cuts across some other initiative the organization is already taking. A lead team at the strategic level needs to oversee the benchmarking project and make sure that it is in line with what is happening in the business as a whole.
Mistake#7. Picking a topic that is too intangible and difficult to measure. “Employee communication” is probably the most slippery concept that exists in an organization, but it is often cited as one of the worst problems, so many organizations try to benchmark it. Encourage your benchmarking team to select instead a part of the topic that can be observed and measured; for instance, the process of distributing memos around the organization.
Mistake#8. Not establishing the baseline. Going out to make benchmarking visits before you have analyzed your own process thoroughly. Benchmarking assumes that you already know your own process and its level of performance thoroughly. After all, that information is what you have to offer to our benchmarking partners in exchange for the information you are seeking from them. Make sure your benchmarking team is very clear about what it wants to learn before you approach potential benchmarking partners.
Mistake#9. Not researching benchmarking partner thoroughly.
this is essential in selecting the right benchmarking partners, so you don’t waste their tine or yours. There is a rule of benchmarking etiquette that says you should never ask a benchmarking partner a question that you should have been able to answer for yourself through researching the literature in the public domain.
Mistake#10. Not having a code of ethics and contract agreed with partners.
your partners should be clear about what you are seeking to learn from them, how that information will be treated, who will have access to it and for what purposes it will be used. Ideally, this should be formally agreed. The benchmarking code of practice must be followed.
Quality circles: QC Dr. K. Ishikawa in 1962
A small group 7-10 •To perform quality, cost, productivity related activities. •Voluntarily •Within the same workshop/area •Continuously •As a part of CWQC •For self development and mutual development •Within the workshop •For control and improvement •Utilizing Q.C. techniques. •With all members participating
QC
•Leader, Dy. Leader, Members •Facilitator and steering council (headed by CEO) Theory = 1. TM sup.3. 2.MM 4.workers (William Ouchi)
Structure for effective quality circles
Corporate coordination
Top Mgmr. Facilitator Ldr./Dy.ldr Members Potential Members.
Unit level coordinator
Steering committee:- Chief Executive (chairman) functional heads as members Facilitator:- Sr. Executive below steering committee; initially now inserted Ldr./Dy.Leader:- Eventually to be chosen by the QC groups • Initially can be supervisor • Rotated after one year. Coordinator:- links steering from, facilitator, Ldr./Dy.Ldr
Quality Circles
Advantages and Disadvantages
Advantages
Training Opportunities Employee Involvement
Disadvantages
Not Self Sustaining
Self Initiated Change
People Close to Problems Synergy
Work Center teams
Lack Of Focus Training Requirements Lack of Technical Expertise
Working Inconsequential Issues
1. PROJECT SELECTION
2. TEAM FORMATION
Objective:
To select a specific problem or process which needs improvement.
Objective:
To designate initial members of the improvement team and clarify roles and responsibilities.
Possible Activities:
Select a significant issue possible sources of information about a significant issue may come from 1. customers 2. management direction or 3. the work group.
Possible Activities:
1. Determine whether a team approach is appropriate. 2. Identify initial team members and define responsibilities of members. 3. Select a team leader and define responsibilities of the leader. 4. Clarify roles of team members and leader.
3. PURPOSE STATEMENT
Objective:
To clarify the purpose of the project To determine performance measures To develop a tentative timetable.
In selecting performance measures:
1. Consider what the effects will be if the project is completely successful. 2. Determine a performance measure to track based on the expected effects.
Possible Activities:
In clarifying project purpose: 1. Identify stakeholders from whom you want to learn about needs and purposes. 2. Ask questions that expand purposes for example: what are we really trying to do when we perform this activity? what are the purposes and needs of the customer? is this problem part of a larger function?
In developing a timetable:
1. Estimate the time required to complete the project. 2. It appropriate review projected timetable with the team sponsor
4. CURRENT SITUATION
Objective:
Understand and explain the problem of process being studied
Possible Activities:
1. Find out about the problem go to the site of the problem. Talk to people familiar with it. Clarify and expand your understanding of the problem. 2. Check the recent results of the performance measure and graph them. 3. Determine an improvement target as gauged by the process measurement. 4. Do not be concerned with possible solutions at this stage. Try to expand your understanding of the current situation.
5. ANALYSIS
Objective:
Identify and verify the root causes of the problem.
Possible Activities:
1. Study the process flow 2. Study cause and effect relationships ask who what where when why and how questions to pursue the root cause. 3. Determine whether standard methods are in place if so are the people doing the work familiar with them? do they follow them? If not why? 4. Collect and analyze the necessary data 5. Use the pareto principle to set priorities (tackle the major causes first) 6. Run experiments to verify possible causes of problems.
6. IMPROVEMENT PLAN
Objective:
To propose improvements (countermeasures) To select and test the most promising countermeasures
Possible Activities:
1. Develop potential improvement actions or countermeasures based on the team’s analysis. 2. Select the countermeasures to be tested 3. Implement the countermeasures on a trial basis
7. RESULTS
Objective:
To measure the effect of the countermeasure and compare the result to the improvement target
Possible Activities:
1. Gauge the effects of the improvement actions by studying the performance measure has the target been met? If not is there significant movement in the right direction? 2. If the resuls are not completely satisfactory it may be necessary to initiate other countermeasures. 3. Consider the effects good and bad elsewhere in the system.
8. STANDARDIZATION
Objective:
To assure that the effective improvement actions become a part of the regular routine of the process.
Possible Activities:
1. Identify what must be done to change the system permanently and make these changes 2. Develop ways to ensure that new associates will be trained in the new method. 3. Consider checking and control mechanisms to assure maintenance of improvement.
9. REMAINING ISSUES
Objective:
To Evaluate What The Group Has Learned About The Problem Solving Process Itself.
Possible Activities:
1. list problem or opportunities which remain. 2. Determine which other business units might be able to benefit from your work share results with them
doc_397545012.pptx