Benchmarking

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This paper, published by the LMJ desrcribes the benefits on Benchmarking with comments from those who have used Lean Benchmarking sucessfully

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Benchmarking

  1. 1. How well are you A s turbulence in the economic and business environments continues, organisations Mark Knowlton is the director of across many industry sectors are faced KPS Ltd., a specialist in providing with fierce competition, shrinking operational support to companies undertaking budgets and reduced profit margins. The public improvement programmes through sector too has been tasked to deliver greater the deployment of lean principles, value for tax payers, with the governments spending review in October 2010 stating that and the founder of online business departmental budgets will be cut by an average of improvement tool LeanBenchmark™. 19 per cent over four years. In this article, in which he reports on the experience of several The pressure on leaders and their teams to find organisations, he explains the more innovative ways to improve performance importance of lean benchmarking continues - no surprises there, but how are the more enlightened organisations facing up to this and the great impact it can have on a challenge? And, more importantly, where do they company’s plan to achieve excellence. start from? Benchmarking is widely recognised as a systematic process for identifying and implementing best practice, or in simple terms it is about learning from the experiences of others. Comparing performance with organisations in either similar or dissimilar sectors enables individuals and teams to develop improvement plans and adapt specific best practices, usually with the aim of increasing some aspects of performance.www.leanmj.com 18
  2. 2. H ow w e ll ar e y ou p e rformi n g ? M ark K nowltonLean benchmark takes this tried and performance benchmarking and besttested method and applies it to a Lean practice benchmarking.Competencies framework coveringleadership, customers, empowerment, Performance benchmarking comparescommunication, processes, plant, the performance level of a specificequipment and supply chain. process to identify opportunities for improvement.Benchmarking may be a one-off event,but is often treated as a continuous Best practice benchmarking, which isprocess in which organisations considered the most powerful type ofcontinually seek to improve their benchmarking, is searching for the best waypractices. Many of us are regularly or solution by studying other organisationsbenchmarking on an informal basis that are high performers in a particularduring normal day to day life. We do this area of interest (lean, for example).unconsciously at work or at home where Benchmarking establishes the performancewe learn by comparing our behaviour and gap and opportunities for improvement.practices with colleagues, peers, andexperts within our network. Improvement teams can compare performance either by visiting anFormal benchmarking takes a more exemplar organisation or throughstructured approach. There are two online web based tools such asmain types of formal benchmarking: www.leanbenchmark.org P purpose rinciples Figure 1: Example of results compared to a specific sector and all sectors. and www.leanmj.com 19
  3. 3. Global Benchmarking Origins of benchmarking A recent study conducted by the Global Benchmarking Network highlighted It has been around for over 20 years and current and future trends for 20 popular is recognised by experts and leading business improvement tools. The organisations all over the world as a vital research covered 450 responses across ingredient for sustainable, long term 44 countries. business success. Over 60 per cent of respondents stated Xerox Corporation is credited with that the main reason for benchmarking originating the practice of benchmarking. was to improve performance. Other The chief executive, David Kerns, defined drivers included the need to address benchmarking as “the continuous specific strategic challenges, improve process of measuring products, services, financial performance or to learn how and practices against the toughest other organisations have developed competitors or those recognised as new products or gained a shift in industry leaders.” Robert Camp, the organisational culture. logistics engineer who initiated Xerox’s benchmarking programme and who is Interestingly, lean was one of the generally regarded as the guru of the improvement tools that was analysed benchmarking movement, offered an even within research study and, whilst simpler definition. “Benchmarking,” identified as “above average” for says Camp, “is the search for effectiveness, it was ranked within industry best practices that lead to the bottom five in terms of future superior performance.” adoption. Respondents considered performance benchmarking, best Camp developed a very structured practice benchmarking and informal and thorough 12-stage approach to benchmarking as the most desirable benchmarking which can be summarised improvement tools for future adoption as follows: (you can access the full report at www. globalbenchmarkingnetwork.org). 1. Select the subject of focus 2. Define the process Lean benchmarking in action 3. Identify potential partners Essentially, lean benchmarking provides 4. Identify data sources a ‘snapshot’ of current performance 5. Collect data and select partners compared to other organisations. The 6. Determine the gap resulting gap analysis clearly 7. Establish process differences highlights the future potential and 8. Target future performance the most appropriate focus for 9. Communicate improvements to increase performance 10. Adjust goal and operational productivity. 11. Implement 12. Review and recalibrate. Philipp Schuell, a lean specialist at Trumpf GmBH, used lean benchmarking at SPI lasers, a UK company the group acquired in 2008, and claimed it highlighted a number of benefits to their organisation. He says: “The benchmarking exercise gave us independent feedback on the status of our lean implementation, it also allowedwww.leanmj.com 20
  4. 4. H ow w e ll ar e y ou p e rformi n g ? M ark K nowltonus to compare and highlight strengths andweaknesses with others in the lean communityand analyse our current status.” Schuell wenton to describe what was learned from the leanbenchmark report: “The gap analysis offereduseful suggestions for improvement projects.The assessment also focused on cultural andorganisational transformation rather than justthe individual uses of lean tools.”Ailsa Kaye, managing director at OnsiteInsights, which has been delivering bestpractice visit programmes for over 10years, says: “Benchmarking and sharing bestpractices between companies has provenhighly successful in improving productivityand performance. An independent surveyundertaken by the DTI on Inside UK Enterpriseshowed that each year the visit programmedelivered £135m in improved productivity.”Genzyme, one of the world’s leadingbiotechnology companies, used leanbenchmarking at its UK facility as part ofits lean transformation programme. LesleyCoombes, lean transformation manager,explains: “The benchmarking process hasenabled us to consider how well we are doingand where we need to focus next. It wasn’t justabout seeing how well our score compared Lean benchmarking P provides a ‘snapshot’ of current performance compared to other organisations purpose rinciples and www.leanmj.com 21
  5. 5. to others (although obviously this was very interesting). The recommendations within the report meant we could identify what we needed to do next. We have now started to build our lean road map with lean objectives linked directly to the business’ goals.” Whilst lean has its origins within the manufacturing industry, it is now being applied successfully across many service- based sectors including healthcare. Progressive NHS hospital trusts have lean transformation programmes covering clinical activity, support functions and back office administration. Dr. John Coleman, director of Alturos Ltd, a specialist in providing support to companies going through transformational change, has used lean benchmarking as part of the framework with which the company develops lean projects with clients. Dr. Coleman notes that there are two, immediate benefits of lean benchmarking: the first is the strategic view of ‘where to start in lean’ (in this sense a benchmark helps the senior management team assess the organisation’s readiness and highlights key areas for development, particularly the vital areas such as leadership and organisational culture for lean 5), the second is represented by operational and tactical views. A lean benchmark will help operational staff create specific measures for Plan-Do-Study-Act cycles, and so gauge the degree of success of improvement projects. In particular, Alturos often applies benchmarking during its initial Change Agent training programme with clients. Dr. Coleman concludes: “It is important to understand the different perspectives people have as to where the organisation is on its lean journey. This helps us adapt our approach accordingly. We encourage teams to develop their views until they have reached conclusions, based on data such as benchmark results and havingwww.leanmj.com 22
  6. 6. H ow w e ll ar e y ou p e rformi n g ? M ark K nowltonunderstood how well lean principles are recognise that every organisation has itsembedded across the organisation.” own unique set of cultural and operational challenges. Whilst lean benchmarking isSusan Whitaker, who heads up a lean not the panacea for achieving world classimprovement programme for the Bedford performance it can be an effective approachHospital NHS trust, describes how lean to kick-start a new lean programme,benchmarking has contributed to their lean reinvigorate a stalled lean journey or inspiretransformation programme: “When starting well motivated improvement teams to striveon a lean journey it is difficult to know for even greater performance.how far you have come as an organisation,especially in terms of measuring the impactof lean on the organisational culture, themind-set and empowerment of staff. A A FREE Advancedfew successful projects do not necessarily LeanBenchmark™ accountmean that lean is embedded throughout and personalised benchmarkthe organisation - it may be that we are report valued at £99 is beingsuccessfully delivering results on projectsbut in reality we are only tinkering around offered to the first five LMJthe edges with a selected few. Lean readers to apply.benchmarking provides a useful tool formonitoring how far you have travelled on Email info@leanbenchmark.orgyour lean journey. It provides a snapshotat a given moment in time and helps to for a unique onlineidentify gaps, open up dialogue and refocus voucher code.on your organisation’s lean or changemanagement strategy and priorities. It isalso useful to compare your organisationwith others - not that it’s a competition!” For further information about either individual company of multi siteThose of us who have been involved in benchmarking contactlean transformation for a number of years mark@knowlton.org.uk E N D P References for further reading Robert C. Camp, Benchmarking: The Search for Industry Best Practice that Lead to Superior Performance (Milwaukee, WI; Quality Press, 1989). Various authors, Global Survey on Business Improvement and Benchmarking (Global purpose Benchmarking Network, www.globalbenchmarkingnetwork.org). rinciples Mark Knowlton, J. R. Coleman, T.W. Franklin and others, A Mountain Top View of Lean (Conference Paper presented at the 5th Annual International Benchmarking Conference in December 2010 in Kuwait). and www.leanmj.com 23

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