Benchmarking for World-class Performance by Allan Ung

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Training presentation: Benchmarking methodology based on the four-phase, ten-step Xerox benchmarking model. To download this complete presentation, please visit: http://www.oeconsulting.com.sg

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© Operational Excellence Consulting. All rights reserved. Benchmarking for World-Class Performance Allan Ung Managing Consultant Operational Excellence Consulting

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Understand what Benchmarking is Carry out Benchmarking projects systematically based on a four-phase, ten-step Fuji-Xerox Benchmarking model Program Objective

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Introduction to Benchmarking The Benchmarking Process Step-by-step: Fuji-Xerox Benchmarking Process Critical Success Factors Program Outline

Introduction to Benchmarking:

Introduction to Benchmarking

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INTRODUCTION Why Benchmark? Definition of Benchmarking Introduction to Benchmarking

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Time Performance Expectations Continuous Improvement Performance Gap Customer Expectation Dilemma

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WHY BENCHMARK? Productivity improvement Meeting customer requirements A goal-setting technique An on-going learning process Introduction to Benchmarking

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DEFINITION - BENCHMARKING Xerox, who pioneered the art of benchmarking in 1979, defined it as: “ the continuous process of measuring our products, services and business practices against the toughest competitors or those companies recognized as industry leaders ”. Introduction to Benchmarking

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Xerox has also adopted a working definition easily understood by operational staff : “ . . . finding and implementing best practices”. It should be stressed that the focus of benchmarking is on the practices , not the measures DEFINITION - BENCHMARKING Introduction to Benchmarking

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Benchmarking at Work – Improving Procurement COST FACTORS Agents per $100 million of purchases 5.4 2.2 Purchasing costs as a % of purchase made 3.3% 0.8% TIME FACTORS Supplier evaluation (weeks) 3.0 0.4 Supplier lead times (weeks) 15.0 8.0 QUALITY ON TIME DELIVERIES Late 33% 2% Material shortages (# of instances per year) 400 4 Purchased parts and materials are usually 50% of overall production costs. That is why world-class companies try to manage procurement efficiently. Typical Company World-Class Company Introduction to Benchmarking

Benchmarking Process:

Benchmarking Process

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BENCHMARKING PROCESS STEPS 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 PEROFMANCE LEVELS 6. COMMUNICATE BENCHMARK FINDINGS AND GAIN ACCEPTANCE 7. ESTABLISH FUNCTIONAL GOALS 8. DEVELOP ACTION PLANS 9. IMPLEMENT SPECIFIC ACTIONS AND MONITOR PROGRESS 10. RECALIBRATE BENCHMARKS LEADERSHIP POSITION ATTAINED PRACTICES FULLY INTEGRATED INTO PROCESSES Phase 1: PLANNING Phase 2: ANALYSIS Phase 3: INTEGRATION Phase 4: ACTION MATURITY Benchmarking Process

FOUR PHASES OF BENCHMARKING:

FOUR PHASES OF BENCHMARKING Benchmarking Process

BENCHMARKING PROCESS - 10 steps (Xerox) :

Identify what is to be benchmarked Identify comparative companies Determine data collection method and collect data Determine current performance “ gap” Project future performance levels Benchmarking Process Phase 1: Planning Phase 2: Analysis BENCHMARKING PROCESS - 10 steps (Xerox)

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Communicate benchmark findings and gain acceptance Establish functional goals Develop action plans Implement specific actions and monitor progress Recalibrate benchmarks * Leadership position attained * Practices fully integrated into processes Benchmarking Process Phase 3: Integration Phase 4: Action Maturity BENCHMARKING PROCESS - 10 steps (Xerox)

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Getting Started : Step Zero of Benchmarking Process Form benchmarking teams Provide training in the benchmarking process Get management “buy-in” or commitment for the benchmarking investigations Define the needs of benchmarking customers Meet the customers in order to get a clear understanding of customer requirements. Document the agreements (parameters). Benchmarking Process

Step 1: What to Benchmark?:

Step 1: What to Benchmark?

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SUBJECT (products, services, practices, process) CRITICAL SUCCESS FACTOR (3 levels) PREPARATION (Questionnaires) SUMMARISE PURPOSE OF STUDY FOUR STAGES Step 1: What to Benchmark?

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Basic Question : Determine the significant area/activities that will improve performance and enable the business units to achieve operation vision and objectives IDENTIFYING THE SUBJECT FOR BENCHMARKING Step 1: What to Benchmark?

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Subject identified through … Operational Review Business Priorities Vital Business Measure Common to All Functions Vital Functionality tailored measures Method : Use brainstorming to develop a list of possible benchmarking subjects Step 1: What to Benchmark?

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CRITICAL SUCCESS FACTORS Guide : measurables defined as specifically as possible (SMART) Level 1 Level 2 Level 3 Broad area or subject of investigation Business process or functional activity Specific process description or measures of specific activities e.g. department or function – too broad to involve any type of measurement e.g. number of customer complaints, no. of billing errors e.g. process for reducing scrap rate by product line Step 1: What to Benchmark?

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Customer-service performance Product / service performance Core business process performance Support processes and services performance Employee performance Supplier performance Technology performance New product/service development and innovation performance Cost performance Financial performance 10 Generic Benchmarking Categories Step 1: What to Benchmark?

Step 2: Whom to Benchmark?:

Step 2: Whom to Benchmark?

TYPES OF BENCHMARKING:

TYPES OF BENCHMARKING Internal benchmarking Competitive benchmarking Functional benchmarking Generic benchmarking Step 2: Whom to Benchmark?

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Within the same company No problem with data and information confidentiality TYPES OF BENCHMARKING 1. Internal Benchmarking Step 2: Whom to Benchmark?

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TYPES OF BENCHMARKING 2. Competitive Benchmarking Difficult to obtain data and information - competitive advantage Through third party to exchange information - consultant guarantee confidentiality Focus on best practices - methods and processes Further improvement Step 2: Whom to Benchmark?

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TYPES OF BENCHMARKING Best industry leader - e.g. Order fulfillment Key to success: same customer requirements and comparable operations Ease to share information interest in understanding practices 3. Functional Benchmarking Step 2: Whom to Benchmark?

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TYPES OF BENCHMARKING 4. Generic Benchmarking Best of best practices - technology already proven and used Most difficult to share information Step 2: Whom to Benchmark?

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DETERMINE THE BEST FIRMS Focus on firms with some level of comparability - company structure, size, automation Performance driver - customer satisfaction, product characteristics Step 2: Whom to Benchmark?

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Select key data and developing common business effectiveness ratio e.g . percentage of revenue, return of assets Sources - Public domain - Professional Associations: Other sources Contacts , vendors, functional professionals Step 2: Whom to Benchmark? IDENTIFY THE BEST FIRM

Step 3: Data Collection:

Step 3: Data Collection

Step 4: Determine Current Performance Gap:

Step 4: Determine Current Performance Gap

Step 5: Project Future Performance:

Step 5: Project Future Performance

Step 6: Communicate Findings & Gain Acceptance:

Step 6: Communicate Findings & Gain Acceptance

Step 7: Define Functional Goals:

Step 7: Define Functional Goals

Step 8: Develop Action Plan:

Step 8: Develop Action Plan

Step 9: Implementing Action & Monitoring Progress:

Step 9: Implementing Action & Monitoring Progress

Step 10: Re-Calibration:

Step 10: Re-Calibration

Critical Success Factors:

Critical Success Factors

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