1. Chapter 8 – Benchmarking Gennifer Gilbert, Jean Holmes, Tom Olmsted & Sandy Phillips

2. What is Benchmarking? The systematic search for The systematic search for  Best practices  Innovative ideas  Highly effective operating procedures.

3. Benchmarking Concept What is our performance level? How do we do it? What are others’ performance levels? How did they get there? Creative Adaptation Breakthrough Performance Reprinted with the permission of the Institute of Industrial Engineers, 3577 Parkway Lane, Sute 200, Norcross, GA 30092, 770- 449-0461. Copyright © 1995.

4. Reasons to Benchmark Effective tool Effective tool  Are you competing?  Helps set goals Reduces the planning, testing, and prototyping effort Reduces the planning, testing, and prototyping effort Learn of new things early Learn of new things early

5. Six Step Process 1. Decide what to benchmark 2. Understand current performance 3. Plan 4. Study others 5. Learn from the data 6. Use the findings

6. Deciding What to Benchmark Mission and critical success factors? Mission and critical success factors? What processes help? What processes help? What processes hurt? What processes hurt? Competition pressures? Competition pressures? How can we stand out? How can we stand out?

7. What Type of Study do we Need? Broad and Shallow Broad and Shallow  What is done?  No detail in one area.  Develop strategies, set goals, & reorganize functions to be more effective. Narrow and Deep Narrow and Deep  How is it done?  Look at a few aspects of a process or function.  Changes how people perform their jobs.

8. Understanding Current Performance Flow diagram Flow diagram Cause and effect diagram Cause and effect diagram Understanding Understanding Units of measure Units of measure Accounting information Accounting information

9. Planning Choose a team Choose a team What type of benchmarking? What type of benchmarking?  Internal  Competitive  Process Who do we benchmark? Who do we benchmark? Timetables Timetables World Class Any Organization, USA Industry-wide Competitor Internally

10. Studying Others Look at comparable businesses Look at comparable businesses Look at more than one business Look at more than one business How are best-in-class processes practiced How are best-in-class processes practiced What are the measurable results of the practices What are the measurable results of the practices Three techniques for original searches Three techniques for original searches  Questionnaires  Site visits  Focus groups

11. Learning from the Data Is there a gap between us and the best? Is there a gap between us and the best? What is the gap and how much? What is the gap and how much?  Negative gap  Parity  Positive gap Why is there a gap? What do they do better? Why is there a gap? What do they do better? Would we improve if we did it that way? Would we improve if we did it that way?

12. Using the Findings Close the gap (if negative) Close the gap (if negative) Tell the people who can make the change Tell the people who can make the change Make new goals and objectives Make new goals and objectives Take the steps to develop and execute the plan Take the steps to develop and execute the plan Repeat the benchmarking process Repeat the benchmarking process

13. Generic Steps for Action Plan 1. Specify tasks 2. Sequence tasks 3. Determine resource needs 4. Establish task schedule 5. Assign responsibility for each task 6. Describe expected results 7. Specify methods for monitoring results

14. Pitfalls and Criticisms of Benchmarking Find the information quickly. Use the information quickly. If you don’t act on the information, you could fall behind. It is ok to copy, but try to continue to improve. If the owners/managers do not back the change, it will fail. In the end, it still comes down to the customers needs.

15. Questions for Discussion 1. 1.What are the advantages to using benchmarking as an improvement tool? 2. 2.What are the disadvantages? 3. 3.Why is it important to understand internal processes before studying those of other organizations? 4. 4.What tools are useful in examining internal processes?