Benchmarking BasicsAn Introduction to Benchmarking               Dr Adrian Gundy       Innovation, OD & Growth
About Us• Designed to help organisations achieve  EXCELLENCE in their business initiatives.• Through our global partnershi...
The four mechanisms we use to improve competitiveness are:• Innovation and Creativity• Productivity Improvement• Quality E...
Benchmarking?    what does the termbenchmarking mean to you?
Benchmarkingbenchmarking is about making comparisons…•   with standard(s)•   with our competitors/peers•   with our own ex...
how do we benchmarkourselves in our everyday         lives ?
Benchmarking iseverywhere
Definitions“Benchmarking is the search for those best practices that willlead to superior performance of the company ....”...
A better definition“ Benchmarking is the practice of being humble enough to  admit that someone else is better at somethin...
Benchmarking is not   Competitive analysis.   “Number crunching”.   Site briefing and industrial tourism.   Just “copy...
BENCHMARKING=Benchmarking should be focused on improving existing   performance rather than used to justify existing      ...
European Framework forBenchmarking    STARTING             ON THE WAY             MATURE                         •WINNING ...
Benchmarking types    Performance:      analysis of relative business performance by      comparing key performance indic...
Comparison ratio    examplesfinancial perspective•       net profit margin (%)•       return on capital employed (%)•     ...
Comparison ratio    exampleslearning and growth perspective•       training expenditure to turnover (%)•       new employe...
Why benchmark?    Improve profits / effectiveness.    Accelerate and manage change.    Set stretch goals.    Achieve b...
Better & Best Practice     Resource issues:      • level of improvement needed      • degree of change organisation can c...
Innovation   Fast changeover              .... Racing pit crews   Emergency room response      .... Domino’s Pizza   Pr...
SurvivalExample:    Supply Management                          Company A   World Class     Supplier lead time   150 days  ...
The process       1           2      Plan    Collect Data       4                  3    Adapt &               Analyse    I...
Practices Vs Measures                        Measures    Practices
What issues emerge       Pain at discovering gaps:        • denial        • disbelief        • dismay       Confidential...
Phase 1                            1Plan:                      Plan                                            2          ...
What to benchmark     Who are our customers and what are theirrequirements?    What is the key business process / activi...
What to benchmark     What complaints are your customers making thatindicate areas for rapid improvement?    Have your e...
Or put more simply “What’s really hurting your       organisation?”
Phase 2                           Collect Data:                 2  1 Plan            Collect Data   Develop and understand...
Key elements   Develop and understand your own activities.   Develop key measures.   Identify potential benchmark partn...
Understanding of own       activitiesC - cost.H - headcounts.A - activities.R - roles/responsibilities.T -   troubled area...
Collecting data• Develop measures                          Order Fulfilment  Total cycle time   33 working days   = 100%  ...
Why?“To ensure like for like comparison”
Collecting External Data
Who’s good practice?
Collect data     Identifying benchmarking partnersQuestions:           Information Sources:                          •Int...
Phase 3   1           2  Plan    Collect Data   4                     Analyse:Adapt &Improve          3              Analy...
Analyse phase   Normalise data - scale effects.   Compare performance data and practices.   Identify causes of performa...
Phase 4                                 1          2                                Plan   Collect DataAdapt & Improve:   ...
Adapt and improve    Assess applicability of OFI’s.    Develop Improvement Plan.    Develop Communications Plan.    Im...
Managing Change ChangeACTION PLAN   FALSE STARTSRESOURCES     FRUSTRATION  GOALS &INCENTIVES              GRADUAL CHANGE  ...
Conclusions
Success Factors    Do the right study (something important).    Be committed to implement the results.    Choose and em...
General mistakes      Leaving your own process unexamined.      Scope - Parameters too broad.      Metrics V’s Processe...
The valueBenchmarking   Challenges current thinking   Brings an external focus to strategic planning and    target setti...
Further Information Contact:   DR ADRIAN GUNDY   +44(0) 28 90737950 adrian.gundy@cforc.org
Intro to Benchmarking March 2013
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An introduction to benchmarking; a practical guide to helping you use benchmarking to drive improvement and growth.

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Intro to Benchmarking March 2013

  1. 1. Benchmarking BasicsAn Introduction to Benchmarking Dr Adrian Gundy Innovation, OD & Growth
  2. 2. About Us• Designed to help organisations achieve EXCELLENCE in their business initiatives.• Through our global partnerships and member networks, Centre for Competitiveness harnesses the best practices of leading organisations and turns this knowledge into practical resources.• Centre for Competitiveness is a network of organisations that share the same ambitions to drive excellence through the organisation and aspire to reach excellent results.
  3. 3. The four mechanisms we use to improve competitiveness are:• Innovation and Creativity• Productivity Improvement• Quality Excellence Through Education, Training, Facilitation, Projects and Coaching
  4. 4. Benchmarking? what does the termbenchmarking mean to you?
  5. 5. Benchmarkingbenchmarking is about making comparisons…• with standard(s)• with our competitors/peers• with our own expectations• with almost everything !
  6. 6. how do we benchmarkourselves in our everyday lives ?
  7. 7. Benchmarking iseverywhere
  8. 8. Definitions“Benchmarking is the search for those best practices that willlead to superior performance of the company ....” Robert C Camp“Benchmarking is the continuous process of measuringproducts, services and practices against the toughestcompetitors or those recognised as leaders in any field.” David Kearns“Stealing Shamelessly”.“Creative Swiping”.
  9. 9. A better definition“ 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.” APQC
  10. 10. Benchmarking is not Competitive analysis. “Number crunching”. Site briefing and industrial tourism. Just “copying” or “catch up”. Spying or espionage. Necessarily quick and easy.
  11. 11. BENCHMARKING=Benchmarking should be focused on improving existing performance rather than used to justify existing performance
  12. 12. European Framework forBenchmarking STARTING ON THE WAY MATURE •WINNING MEASURES •CAM •EFQM •PROBE •IIP •MICROSCOPE •GOLD STAR •CABINET OFFICE •IMPR3OVE •OPTIMUS •ISO EARLY HOLISTIC PROCESS DIAGNOSTIC BENCHMARKING BENCHMARKING MODELS OF BEST PRACTICE DATABASES ESTABLISHING UNDERSTANDING THE GAP WHY
  13. 13. Benchmarking types Performance: analysis of relative business performance by comparing key performance indicators. Process or Functional: analysis of key processes and functions among best practice companies. Internal: analysis of internal processes / activities across units, sites etc. to gain an understanding of internal performance standards. Informal & formal
  14. 14. Comparison ratio examplesfinancial perspective• net profit margin (%)• return on capital employed (%)• debtor days• etc…customer perspective • customer growth (%) • orders rejected during warranty period (%) • complaints per order (%) • etc…
  15. 15. Comparison ratio exampleslearning and growth perspective• training expenditure to turnover (%)• new employees per FTE employee (%)• employees with formal qualifications (%)• etc…internal processes perspective • supplies delivered on time (%) • sub-standard supplies (%) • rework (%) • etc…
  16. 16. Why benchmark? Improve profits / effectiveness. Accelerate and manage change. Set stretch goals. Achieve breakthroughs / innovations. Create sense of urgency. Overcome the “Not Invented Here” syndrome. See “outside the box”. Understand world class/best performance.
  17. 17. Better & Best Practice Resource issues: • level of improvement needed • degree of change organisation can cope with • time scales Cultural issues: • organisational • local • national • international
  18. 18. Innovation Fast changeover .... Racing pit crews Emergency room response .... Domino’s Pizza Programme management .... Yacht crew Shell casing manufacturing .... Lipstick tube manufacturing
  19. 19. SurvivalExample: Supply Management Company A World Class Supplier lead time 150 days 8 days Order input time 6 mins 0 min Late deliveries 33% 2% Shortages/Year 400 4 Suppliers/Buyer 34 5.3
  20. 20. The process 1 2 Plan Collect Data 4 3 Adapt & Analyse Improve
  21. 21. Practices Vs Measures Measures Practices
  22. 22. What issues emerge Pain at discovering gaps: • denial • disbelief • dismay Confidentiality concerns. Lack of time and resources; 8 - 10 hours per week. Inertia and resistance to change.
  23. 23. Phase 1 1Plan: Plan 2 Collect DataIdentifying what tobenchmark, selecting theteam, developing a 4 3 Adapt &project plan. Improve Analyse
  24. 24. What to benchmark Who are our customers and what are theirrequirements? What is the key business process / activity that ismost in need of improvement? How are you performing on the critical successfactors in your business? Where are your competitors gaining ground on your company?
  25. 25. What to benchmark What complaints are your customers making thatindicate areas for rapid improvement? Have your employees made any suggestions for improvements that have not been pursued but have a promise of performance breakthroughs? Where is improvement required to supportorganisational goals?
  26. 26. Or put more simply “What’s really hurting your organisation?”
  27. 27. Phase 2 Collect Data: 2 1 Plan Collect Data Develop and understand your own activities, develop key measures, identify benchmark partners 4Adapt & 3Improve Analyse
  28. 28. Key elements Develop and understand your own activities. Develop key measures. Identify potential benchmark partners. Determine appropriate collection methods. Collect data. Review of the collect phase.
  29. 29. Understanding of own activitiesC - cost.H - headcounts.A - activities.R - roles/responsibilities.T - troubled areas/issues.S - structure. It may be useful to MAP the process / activity to be benchmarked.
  30. 30. Collecting data• Develop measures Order Fulfilment Total cycle time 33 working days = 100% Operation time 48 hours = 18%
  31. 31. Why?“To ensure like for like comparison”
  32. 32. Collecting External Data
  33. 33. Who’s good practice?
  34. 34. Collect data  Identifying benchmarking partnersQuestions: Information Sources: •Internal experts Checks: •Literature •Reputation•Which companies? •Associations •Awards (EQA,•Which industries? •Consultancies MBNQA)•Who can help find •Universities •Companies with •Databases continuous excellentpartners? •Self Assessment results  Collect data by questionnaire telephone survey site visit
  35. 35. Phase 3 1 2 Plan Collect Data 4 Analyse:Adapt &Improve 3 Analyse Identify causes of performance gaps, identify Best Practices, Methods and Enablers.
  36. 36. Analyse phase Normalise data - scale effects. Compare performance data and practices. Identify causes of performances gap. Project future performance levels. Identify potential Opportunities for Improvement (OFIs). Key points.
  37. 37. Phase 4 1 2 Plan Collect DataAdapt & Improve: 3 4 Analyse Adapt &Publish findings, create Improvean improvement plan,execute the plan.
  38. 38. Adapt and improve Assess applicability of OFI’s. Develop Improvement Plan. Develop Communications Plan. Implement Plans, monitor and review. Recalibrate. Review of adapt and improve phase.
  39. 39. Managing Change ChangeACTION PLAN FALSE STARTSRESOURCES FRUSTRATION GOALS &INCENTIVES GRADUAL CHANGE SKILLS ANXIETY VISION CONFUSION
  40. 40. Conclusions
  41. 41. Success Factors Do the right study (something important). Be committed to implement the results. Choose and empower the right teams. Know your own process first. Choose the right partner. Verify the results of implementation.
  42. 42. General mistakes Leaving your own process unexamined. Scope - Parameters too broad. Metrics V’s Processes / Activities. Lack of management or team commitment. Insufficient homework - wrong benchmarking partners. Ignoring comparison outside your industry. Failure to follow-up and implement findings.
  43. 43. The valueBenchmarking  Challenges current thinking  Brings an external focus to strategic planning and target setting  Emphasises the need to adopt a process focus
  44. 44. Further Information Contact: DR ADRIAN GUNDY +44(0) 28 90737950 adrian.gundy@cforc.org

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