Benchmarking

Benchmarking “People seldom improve when they have no other model but themselves to copy after…” -Oliver Goldsmith writer, poet, and physician 1728 –1774

Benchmarking Defined as: A process of COMPARING and MEASURING an organization’s preparations of its internal process against those of a BEST-IN-CLASS PERFORMER FROM INSIDE OR OUTSIDE ITS INDUSTRY. Objective: To have major performance improvement achieved quickly.

Industrial Espionage (Spying) Benchmarking NOT Cheating Immoral Unethical Illegal Industrial Espionage (Spying)

Benchmarking helps establish where improvement resources should be allocated. Benchmarking allows company to finds secrets of success so that they can learn from the information – and improve on it. To close the gap with the best-in-class performer without having to start all over.

Benchmarking VS Competitive Analysis Competitive Analysis – Comparing a competitor’s product against our product. Benchmarking – Beyond competitive analysis Comparing how the product is engineered, manufactured, distributed and supported. Focuses on processes and practices, not product. Done by consenting agent Is a component of total quality Intent of benchmarking is to become the best –in-class, not just simply improved.

Rationale for benchmarking It makes no sense to stay locked in an isolated laboratory trying to invent a new process that will improve the product, when that process already exist. Eg; Company A might take 4 years to have the improvement, but after have improved, they are still lagged by 2 years by their competitors

Just in Time (JIT) Defined as; Producing only what is needed , when it is needed, and in the quantity needed. (See Figure 21-3) JIT is not so much related with supplier activities, but more to manufacturing floor activities. There are 5 discrete processes, each carried out by one worker (see figure 21-1) Traditional approach: Place a bulk material in a warehouse, doing so many pieces at one time. However, JIT controls the line from the output (customers). After received an order, final assembly process is turned on. Then the assembler pulls required material to the process enough to refill the required number made by final assembly process. Similarly, the same fabrication process is pull from the preceding process

Figure 21-1

Rationale for JIT Mass production manufacturer set schedules based on a forecast of future needs based on historical data and trend. (See Figure 21-2) Weakness – NO ONE can predict the future certainty. Edsel case (page 699)- automobile produced with great fanfare but disinterested publics. Coca-Cola also suffered. IBM case This shows that it is DIFFICULT to try to determine beforehand what will sell and in what quantity.

Figure 21-2: Factory producing to forecast demand (mass production)

Figure 21-3

Eliminating these wastes, will produce better products at low cost. Taiichi Ohno, (JIT creator) saw mass production system produced waste at every step of the way. 7 types of wastes; Overproducing Waiting Transporting Processing itself Having unnecessary stock on hand Using unnecessary motion Defective goods Eliminating these wastes, will produce better products at low cost.

JIT Assume the supermarket is the preceding process in the production line. The customer goes to the supermarket to get exactly what and when they need it. What should the process do? It must reload products which has been withdrawn by the subsequent process

JIT- a pull system The production demand comes from the customer. Demand is made on the final assembly process. Figure 21-5 and 21-6 shows difference relationship between the customer and the factory.

Figure 21-5, 21-6

Mass production system (PUSH system) Manufacturer forecasts and place demands on the factory months in advance of production. Full of Inventory JIT Customer’s demand is felt through the system all the way to the factory suppliers. Zero/minimum inventory is aimed

Benefits of JIT Inventory reduction Reduce cycle time Why? (cost of inventorying raw materials, labor, cost of spoilage and government taxes can be avoided. Also, intangible cost can be eliminated) Reduce cycle time Continual improvement Can reveal hidden problems in productions. Can eliminate waste (waste of overproducing, waiting time, over-processing,transport etc)

Figure 21-8 Hidden problems You look over a lake and see the calm, flat surface on the water, however rock under the surface is not evident, until we crush on it. Rocks represents problems. Water represents the inventory, raw material and parts. IF we change to JIT, we start reducing the those water (inventories), level of water is lowered and reveal the real problems.

Traditional vs JIT (Figure 21-9) To difficult to determine how much a process is needed. Wasted motion, time Queues Process unclear JIT Warehousing area is gone Factory is divided into discrete areas dedicated to different product rather than process. Each product area is equipped with material required for that product.

Kanban Pull System kan, 看 / カン, means "visual," ban, 板 / バン, means "card" or "board" Kanban is an inventory control system for tracking the flow of in-process materials through the various operations of a just-in-time production process Used by shop floor control very efficiently. Act as a method of JIT production that uses standard containers or lot sizes with a single card attached to each. It is a Pull system in which work centers use a card to signal that they wish to withdraw parts from feeding operations or suppliers. See Figure 21-12

Figure 21-12

See video 2-bin Kanban systems