Benchmarking

Module 03
Benchmarking
Benchmarking is the process of continually searching for the
best methods, practices and processes, and either adopting
or adapting their good features and implementing them to
become the best of the best.




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.
Importance of Benchmarking
Objective Without
Benchmarking
With Benchmarking
To become more
adaptive
Evolutionary Change Understanding of
competition ideas from
proven practices
Implement Industry best
practices
Few solutions, Frantic
catch up activity
Many options, Superior
performance
Defining customer
requirements
Based on history, Gut
feeling or Perception
Market reality, objective
evaluation
Establishing effective
goals & objectives
Lacking external focus,
Reactive
Credible unarguable,
Proactive
Developing true
measures of
productivity
Pursuing projects,
strength/weaknesses
not understood, Route
of least resistance
Solving real problems,
Understanding output
based on industry best
practices
Reasons to Benchmark
Assists businesses cultivate strong points and diminish
problem areas

Lets ambitions be set impartially, taken from outside
information

Includes emulation and revision instead of new innovation

Probable, valuable knowledge can be established and
implemented early on
How is benchmarking used?
Compare performance of an existing process against other
companies best-in-class practices
Determine how those companies achieve their performance
levels
Improve internal performance levels

Rate of customer complaint 5%
Employee satisfaction rate 95%
Customer retention rate 90%
Information retrieval time 5 secs
Customer response time 15 min.
Medical Cost per Employee RM16.89
MC Rate
0.5%

Xerox 12-Step Benchmarking Process
Phase 1: Planning
1. Identify what to benchmark;
2. Identify comparative companies;
3. Determine data collection method & collect data.

Phase 2: Analysis
4. Determine current performance gap;
5. Project future performance levels.

Phase 3: Integration
6. Communicate finding and gain acceptance;
7. Establish functional goals.
Phase 4: Action
8. Develop action plans;
9. Implement specific actions & monitor progress;
10. Recalibrate benchmarks.

Phase 5: Maturity
11. Attain leadership position ;
12. Fully integrate practices into processes
Types of Benchmarking
Benchmarking
Market related
(Competition analysis)
Internal Benchmarking External Benchmarking


Generic Processes
(Best Practice)



Branch related
(Trend research)

Plant related
Internal Benchmarking
Evaluates progressions or procedures inside the business
or company over time with recognized objectives in mind

Benefits - the simplicity of data gathering and the
designation of parts for upcoming outside inspections

Disadvantage - a decreased likelihood that it will generate
important process advancement innovations
Competitive Benchmarking
Evaluates the organization's procedures to
those of close rivals.

An expert or another outside party, rather
than the company itself, gathers and
evaluates the data because of its
proprietary quality.
Generic/Process/Functional Benchmarking
Investigates actions that are or can be used in the majority of
businesses

One inconvenience is in realizing how processes transform
across industries

Can frequently bring about an organization's radically
changing its thoughts about its working competence and in
the reengineering of industry processes

Innovations from other kinds of organizations can be applied
across industries
Designing Successful Benchmarks

MEASUREMENT FOCUS
Determine where in a work area or process that value for the customer is
created;
Determine where value is detracted through high costs, errors, rework, or
accidents; and
Target benchmarks in areas where performance diverges from designated
standards, or where variation above and below standards is greatest.

MEASUREMENT PERSPECTIVE
Leading indicators foreshadow or anticipate future system outcomes.
Leading indicators are thus proactive or preventative.
Lagging indicators such as traditional financial measures are reactive
or descriptive of the actual results of a system or process in a given time
period.
Benefits of Benchmarking

Improves organizational quality
Leads to lower cost
Creates buy-in for change
Exposes employees to new ideas
Broadens organizations perspective
A catalyst for learning
Increase employee satisfaction
Test the internal operating target
Raise the level of potential performance
Sharing of best practices
Understanding world-class performance in-depth
Encourage and stimulate innovation
If you know neither
yourself nor your
enemy, you will
succumb in every
battle.
If you know yourself
but not the enemy, for
every victory gained
you will suffer a
defeat.
If you know yourself
and your enemy, you
need not fear of a
hundred battles.
- Sun Tzu
Potential Problems with Benchmarking
Benchmarking is restricted to your individual trade

It may confine the focal point to what is currently being
done

Useless if used for procedures that do not present a great
deal of opportunity for progress

Process owners and managers may feel intimidated or
may not admit/act on results
KAIZEN
Japanese word for small continuous improvement
Encourage suggestions by operators who continually try to
incrementally improve their job or process
Ex :-Change in colour of a tool from black to white for improved
visibility
Maintain & improve the working standard through small gradual
improve
Produce a systems approach and problem soloing tools that can be
applied
Not a day should go by with out some kind of improvement being
made some where in the Company
Use it as a management tool within the TQM move ment
Financial Investment is minimal
Japanese words Kai and Zen, which translate roughly into to break
apart and investigate
CONSTITUENTS OF KAIZEN
I
M
P
R
O
V
E
M
E
N
T
S

TIME
we have done enough
lets stop hear
hold Performance at
this level
Improvements mode by
the Competition
Ever Increasing Pressure from
Customers and the market place
Our improvement
KAIZEN FOUNDATIONS
Employee empowerment
Listening
Self Discipline
Efforts
Recognition
Zero investments
KAIZEN TOOLS

Waste Elimination
Standardization
P-D-C-A
Poka-yoke-Failure proofing
KAIZEN REQUIREMENTS
1,Operating Practices expose new improvement opportunities Ex:- JIT
reveals water , inefficiency and poor quality
2,Total Involvement
Top management provides support & resources for all improvement
activities
Operating management suggestion systems self development programs
3,Training


At Nissan motor Co.Ltd,any suggestion that saver0.6 seconds in a
production process is considered serious by the management
Kaizen at Mercedes Benz truck factory:
- Reduction of manufacturing space by 30%
-Reduction of inventory 45%
-Reduction in lead time 70%
16 Employees have full-time responsibility for kaizen activities
Benefits of Kaizen
These continual small improvements add up to major
benefits. They result in improved productivity,
improved quality, better safety, faster delivery, lower
costs, and greater customer satisfaction.
On top of these benefits to the company, employees
working in Kaizen-based companies generally find
work to be easier and more enjoyable - resulting in
higher employee moral and job satisfaction, and lower
turn-over.
Kaizen Reduces Waste in areas such as employee
skills, waiting times, transportation, worker motion,
over production, excess inventory, quality and in
processes.

Kaizen Improves -
product quality, use of capital, production
capacity, communications, Space utilization and
employee retention.
Benefits of Kaizen.
Kaizen Provides immediate results. Instead of
focusing on large scale improvements, which
involve capital intensive, Kaizen focuses on
creative investments that continually solve large
numbers of small problems.
For example, Toyota is well-known as one of the leaders
in using Kaizen. In 1999 at one U.S. plant, 7,000 Toyota
employees submitted over 75,000 suggestions, of which
99% were implemented.
Kaizen -The three pillars*
1. Housekeeping Gemba Kaizen
5S for housekeeping
Creates cleanliness, sanitary, pleasant, and safe
working environments; it revitalizes Gemba
Greatly improves employee morale and motivation; it
eliminates various kinds of waste by
minimizing the need to search for tools, making the
operators' jobs easier, reducing physically
strenuous work, and freeing up space; it creates a
sense of belonging and love for the place of work for
the employees

*M. Imai, a guru
Kaizen -The three pillars*
2. Waste (Muda ) elimination.

Muda is any non-value-added task

Kaizen -The three pillars*
3. Standardisation
P Plan
Pick a project (Pareto Principle)
Gather data (Histogram and Control Charts)
Find cause (Process Flow Diagram and Cause/Effect Diagram
Pick likely causes (Pareto Principle and Scatter Diagrams)
Try Solution (Cause/Effect , 5W AND 1H methodology :
who, what, why, when, where, how)
D Do
Implement solution
C Check
Monitor results (Pareto, Histograms, and Control Charts)
A Act
Standardize on new process (Write standards, Train, Foolproof, Quality-At-The-Source
A successful PDCA cycle then is followed by the SDCA cycle where S stands for
standardization and maintenance of the new situation
Advantages of Standardisation
Offer the best way to preserve know-how and expertise
Provide a way to measure performance
Show the relationship between cause and effect
Provide a basis for both maintenance and improvement
Provide objectives and indicate training goals
Provide a basis for training
Create a basis for auditing or diagnosis, and
Provide a means for preventing recurrence of errors and
minimizing variability.
Case example: Std. Work at Automotive
Supplier
This client produces stampings for Ford, Chrysler, GM and others and has recently expanded
into Non-Auto Segments
BEFORE Kaizen AFTER Kaizen
Batch Operation

14 People on the line

Inspection/Rework at end of line

High levels of Work In Process

Disruptions from forklift ops.

Excessive stopping to clean scrap

Line Runs in Flow

Batching and WIP eliminated

Tooling Issues Resolved to
eliminate rework

Scrap removal Automated

10 People on the Line

Cycle Time Improved
ONE IMPROVEMENT EVENT IN January 2011
Eliminated Waste, Standardized Processes; Eliminated
WIP, Balanced Line
25.3
50
Before After
Productivity
Pieces/Labor Hour
$340K Annualized Benefit
97.6 % Productivity Improvement

Case Example: Hospital
Operating Room Changeover Event
This 281 bed medical center (acute and sub-acute care) handles more than 26,700 inpatient
cases and approximately 60,000 emergency room visits annually.
BEFORE Kaizen AFTER Kaizen
Operating Room Reported
Changeover Time = 25 minutes

Not all Changeovers Measured

Patient Delays

Dirty & Sterile Operating
Rooms not sitting idle

No defined plan for execution (ie
no Standard Work)

Operating Room Reported
Changeover Time = 12 min

Reduced Patient Delays

Fewer Operating Rooms sitting
idle

Defined Operating Room
Changeover Process

Potential for 107 additional Cases
per month
ONE IMPROVEMENT EVENT IN JUNE 2010!
Eliminated waste, Standardized processes,
Established operating room changeover
playbook
9/2011
>$11M Potential Additional Annual Revenue due to possible additional
cases