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Benchmarking
refers to finding the best-in-class product or
process, measuring the performance of your
product or process against it, and making
recommendations for improvement based
on the results.
Four Forms
Generic
Functional
Competitive
Internal
Four Forms
Generic
compares processes or operations across non-related
industries. (For example, a generic benchmarking
study might compare the billing process of a hospital
with the billing process of a telecommunications
company.)
Functional
is the comparison of processes or operations against
like processes or operations in similar industries (e.g.,
comparing the application process for a loan at a bank
and insurance application at a life insurer).
Four Forms
Competitive
benchmarking
Internal
benchmarking
Types
Process
benchmarking
Financial benchmarking
Benchmarking from an investor perspective
Performance benchmarking
Product benchmarking
Strategic benchmarking
Functional benchmarking
Best-in-class benchmarking
Operational benchmarking
Prerequisites
Will
and commitment
Vision and strategic objective link
Goals to becoming the best
Openness to new ideas
Prerequisites (cont.)
Understanding
of existing processes,
products, services, practices, and customer
needs
Documented Processes
Process analysis
Research, communication, and teambuilding skills
Obstacles
Internal
Focus
Objective too broad
Unrealistic timetables
Poor team composition
OK-in-class
Improper emphasis
Insensitivity to partners
Limited top-management support
Rationale
Global
competition
Current standing of company
A best-in-class model
Customers are better informed
Support of total quality
3.
4.
5.
6.
7.
benchmark
Activities involved in step-1 are
Clarifying the benchmarking objective
Decide whom to involve
Define the process
Consider the scope
Set the boundaries
Agree on what happens in the process
Flow chart the process
Step-1 continue
Identify
what to benchmark
Two approaches of benchmarking
1) Strategic benchmarking
Financial function could benchmark it activities
(billing process)
2) Organizational benchmarking
Considerable research is done. Like soldering
process, driver motor assembly benchmarking
Step-1 continue
As
ATO, Inc.,
ATO
ATO, Inc.,
The
Chassis
Production
Component
Install
Final Assembly
Build
Install
Install
Chassis
Components
Build Housing
Affix
vendor panels
product lables
Lastly.
ATO, Inc.,
What
is cooking in ATOs
Each of the work area is organized into
work teams responsible for setting and
attaining their goals and managing their
work processes.
Seth handles most of the interaction
between the work team to ensure
coordination and planning.
ATO, Inc.,
Seths
ATO, Inc.,
Ahmed:
Step-1
The
Benchmarking team
Seth-Production supervisor for the Model 724 series.
Given decision making authority.
Steve- A senior assembler, member of the quality
improvement team.
Bill- An assembler a new employee at ATO
Maria-An inspector got promoted from the shipping
department and just completed training for final
assembly area. She installs the labels and information
plates at the end of the process (is some sense she is a
final customer for the process)
Simon-A former assembler who now works in
component installation area, but occasionally done
assembly when team requires backup (brings internal
supplier perspective)
the process
One need to clearly define process. A
process is a series of interrelated task that
are organized to produce an output.
Consider the scope
Not to be too broad or too narrow.
on the process
1. Receive the panel from the inventory clerk
2. Unpack the panel as needed and visually check
for completeness (no broken wires etc)
3. Place the control panel on unit and attach
fasteners
4. Solder the connections
5. Test the circuitry and secure the cover
6. Place the unit back on the conveyor belt
Flow chart
Review
Start
No
Verify
panels
OK
Unpack
panels
1 min.
Receive
panels
1 min.
Yes
1.5 min.
2 min.
Test
circuitry
Solder
connections
10 min.
Attach
fasteners
15-18 min.
9-13 min.
Place
panels in
position
Yes
No
Position
of
mounting
holes OK
.5 min.
No
Circuits
OK
Yes
Secure
Cover
4 min.
Place unit
on belt
End
.5 min.
5 min.
Total time = 45 - 52 min.
Step-2
Bill-
Step-2
Measures
Step-2
Link
Step-2
Seths
general research
Choose the level to benchmark
Internal
Competitive and noncompetitive
World class
Seths team considered their ATOs plant in
northwest region and best in class Bestco,
Inc.
Step-4
The
Step-4
Including
Step-4
Focus
Step-4
Conducting
a benchmarking visit:
Prepare for the visit
Organizational climate
How many and who will be going
How will the visit be conducted
Who will take notes and how
Document the visit
Process
Product or services that is
produced (output)
Key characteristics of
output
Measures that will be
compared
Measurement data
(findings, comparisons)
Your Process
Organization #1
Step-4
Seths
Total time
ATO, Inc.
Model 724
ATO, Inc.
Bestco, Inc.
Northwest
Region
Plant
45 52 min. 44- 46 min. 22.5 min.
Downtime
(per unit)
3 5 min.
3 5 min.
1 2 min.
Percentage
of reworks
4%
3.5%
0.25%
60
40
20
0
1
Our
Organizati
on
Our Organization
Orginazation A
Organization B
Step-5
Seths
performance goal
Goal should be achievable in
increment( 3*5=15 hrs)
Goals should realistic (time, res, abilities, skills
and budget)
Goal should be measurable ( reducing three
hours)
Goal should be finite (starting and ending pt)
Goal should be supported
Step-6
Seths
Step-6
Developing
action plan
Step One-determine tasks, timelines, and
responsibilities
Points to consider-who will be affected and
responsible for implementation?
What resources will the person responsible
for task need. How the information will be
shared
Step Two-develop contingency plan
Action Plan
Action Step
Responsible
Person or
Group
Begin End
Date
Estimated
Duration
1. Feasibility
study to install
new technology
in final
processing area
Benchmark
Team
10/1 10/30
Estimated
Cost
Action Plan
Action Step
Responsible
Person or
Group
Begin End
Date
Estimated
Duration
Estimated
Cost
2. Vendor
selection for
new technology
Final
assembly
10/1 10/7
35 hours
$600
3. Design
project plan for
installation
Senior
management
10/7 10/14
28 hours
$1,200
Action Plan
Action Step
Responsible
Person or
Group
Begin End
Date
Estimated
Duration
Estimated
Cost
4. Purchase and
install new
equipment
Vendors plus
three staff
members
11/1 3/2
1,280
hours
$44,800
5. Test
40 hours
#1,200
the change
Make benchmarking a habit
Benchmarking progress report
Regular progress meeting
Monitor customers (internal and external)
Monitor suppliers (internal and customer)