Benchmarking

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Benchmarking

  1. 1. BENCHMARKING
  2. 2. What is benchmarking? • Benchmarking is the process of comparing one's business processes and performance metrics to industry bests or best practices from other industries. • Benchmarking is a systematic method by which an organization can continuously measure themselves against the best industry practices or world class and improve accordingly.
  3. 3. The Evolution of Benchmarking • The method may have evolved in the early 1950s, when W. Edward Deming taught the Japanese the idea of quality control. • The best example is Toyota Motor Corporation’s following the footsteps of Ford Motor Corporation albeit with the adaptation of the Ford’s Just-in-case system into Toyota’s Just-in-time system.However the word “BENCHMARKING” was not coined at that time.
  4. 4. TYPES OF BENCHMARKING • Internal benchmarking : Benchmarking against its own unit or branches. • External Benchmarking : Comparison of the same product or service produced by direct market competitors. • International Benchmarking : Involves benchmarking against companies outside the country.
  5. 5. Benefits of Benchmarking • Promotes a thorough understanding of company’s own process • Saves time and money • Identify non value added activities • Focuses on performance measures and processes and not on products • It provides a basis for training human resource
  6. 6. The Xerox Case • The company invented the photocopier in 1959 and maintained a virtual monopoly for many years thereafter. • By 1981, however ,the companies market shrunk to 35% as IBM and Kodak developed high-end machines and Canon, Richo and Savin dominated the low-end segment of market. • Xerox’s products had over 30,000 defective parts per million—about 30 times more than its competitors.
  7. 7. Benchmarking Model at Xerox • Planning: Determining the subject to be benchmarked, identify the relevant best practice and develop most appropriate data collection technique. • Analysis: Assess the strengths of competitors and compare Xerox’s performance with competitors. • Integration: Establish necessary goals and integrate these goals into the companys formal planning processes. • Action: Implement action plans established and assess them periodically to determine whether the company is achieving its objective. • Maturity: Determine whether the company has attained a superior performance level.
  8. 8. Supplier management system Japanese Companies • It has 1000 suppliers • They trained Vendor’s Employee in Quality Control , manufacturing automation. • Just-in-time i.e. Delivery in small quantities, as per customer’s production Xerox • Reduced the vendors from 5000 to 400. • Created a Vendor Certification Process in which suppliers were offered training & told their areas of improvement. • Vendors were consulted for better Designs & Improved Customer service.
  9. 9. Inventory Management Inventory holding Time reduction • Xerox asked Branch managers to match the Stocking Policy with Customer’s installation Orders . • Minimize Inventory Carrying Cost was to delay the assembly of product into the final Configuration.
  10. 10. Marketing • Company sent 55,000 questionnaires to monthly to customers to measure customer Satisfaction & record Competitor’s performance. • Those Competitors who have scored higher, Xerox benchmark itself against it.
  11. 11. Quality • As a part of “Leadership Through Quality” program, Xerox started providing its customers( External & Internal) innovative products & services. Total Quality Management • Team consists of Senior managers & Consultants from McKinsey help to make TQM • Under which New three SBUs were introduced: Enterprise Service Business Office Copiers Home Copiers • All these have autonomy in Engineering, marketing & pricing.
  12. 12. Reaping The Benefits • Number of defects reduced by 78 per 100 machines. • Service response time reduced by 27%. • Defects in incoming parts reduced to 150ppm. • Inventory costs reduced by two-thirds. • Distribution productivity increased by 8-10%. • Increased product reliability on account of 40% reduction in unscheduled maintenance.
  13. 13. •Increased product reliability on account of 40% reduction in unscheduled maintenance. • Became the leader in the high-volume copier-duplicator market segment. •Xerox went to be only company to win three prestigious quality awards- Malcolm Baldridge National award, Deming award ,and European quality award. •During 1990s, Xerox, along with companies like Ford, AT&T, IBM, Motorola created the International Benchmarking Clearinghouse (IBC) to promote Benchmarking and guide companies across the world in benchmarking efforts. .

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