Bpr 04 Benchmarking


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Business process reengineering

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Bpr 04 Benchmarking

  1. 1. Business Process Re-engineering 04 – Process Re-design & Process Improvement: Benchmarking & Best Practices
  2. 2. Benchmarking <ul><li>&quot;... Benchmarking ...[is] ...'the process of identifying, understanding, and adapting outstanding practices and processes from organizations anywhere in the world to help your organization improve its performance.&quot; </li></ul><ul><li>- American Productivity & Quality Center </li></ul>
  3. 3. Benchmarking <ul><li>Benchmarking is: </li></ul><ul><li>A measure of best practice performance. </li></ul><ul><li>Seeking out and studying the best internal practices that produce superior performance. </li></ul><ul><li>The search for the best practices that yields the benchmark performance, with emphasis on how you can apply the process to achieve superior results. </li></ul>
  4. 4. Benchmarking <ul><ul><li>Industry Practice Objectives: </li></ul></ul><ul><li>Establish what is achievable from an improvement perspective </li></ul><ul><li>Understand how other companies have designed their processes </li></ul><ul><li>Determine what not to do (i.e. learn from mistakes of others) </li></ul>
  5. 5. Types of Benchmarking <ul><li>Strategic benchmarking </li></ul><ul><ul><li>To improve performance by examining long-term strategies </li></ul></ul><ul><li>Performance or Competitive benchmarking </li></ul><ul><ul><li>To compare performance with other companies </li></ul></ul><ul><li>Process benchmarking </li></ul><ul><ul><li>Focus is on improving specific processes and operations. Comparison is with organisations that perform similar work and deliver similar services </li></ul></ul><ul><li>Functional benchmarking or Generic benchmarking </li></ul><ul><ul><li>Benchmarking with partners from different business sectors or areas with the objective of improving similar functions or work processes </li></ul></ul>
  6. 6. Types of Benchmarking <ul><li>Internal benchmarking </li></ul><ul><ul><li>Benchmarking within the same organisation, for example, from business units located in different areas </li></ul></ul><ul><li>External benchmarking </li></ul><ul><ul><li>Seeking outside organisations that are best in class. </li></ul></ul><ul><li>International benchmarking </li></ul><ul><ul><li>Benchmarking with companies located elsewhere in the world. </li></ul></ul><ul><ul><li>Source: www.benchmarking.gov.uk/about_bench </li></ul></ul>
  7. 7. Benchmarking comparisons <ul><li>Areas of comparison : </li></ul><ul><li>Financial performance (key financial ratios) </li></ul><ul><li>Customer service delivery systems (response time/delivery time) </li></ul><ul><li>Productivity measures ( KPI’s key performance indicators) </li></ul><ul><li>Use of technology (dramatic improvements as a result of technology) </li></ul><ul><li>Planning and project management practices (on-time completion of projects) </li></ul><ul><li>Human resources management (labor productivity) </li></ul><ul><li>Financial control systems </li></ul>
  8. 8. Benchmarking Framework / Model <ul><li>Identify the process </li></ul><ul><li>Scope process and team </li></ul><ul><li>Map, understand and analyze process </li></ul><ul><li>Refine process ; change the obvious </li></ul><ul><li>Design benchmarking study </li></ul><ul><li>Collect information </li></ul><ul><li>Analyse study results </li></ul><ul><li>Design and implement improved processes </li></ul>
  9. 9. Sources of Information <ul><li>Reports and studies by industry experts </li></ul><ul><li>Targeted companies </li></ul><ul><li>Site visits to companies </li></ul><ul><li>Conferences </li></ul><ul><li>Trade publications </li></ul><ul><li>Consulting firms </li></ul><ul><li>Professional associations </li></ul><ul><li>Third party research firms </li></ul><ul><li>Benchmarking databases </li></ul>
  10. 10. Benchmarking Outcomes <ul><ul><li>Examples: </li></ul></ul><ul><li>Customer lead time less than 20 days </li></ul><ul><li>Cycle time less than 25 hours </li></ul><ul><li>Productivity levels of $150,000 per employee </li></ul><ul><li>Scrap / rework less than 1% of sales </li></ul>
  11. 11. Benchmarking outcomes <ul><ul><li>Examples: </li></ul></ul><ul><li>Xerox benchmarked their best practices of all its subsidiaries in other parts of the world. Sales improved from 152% to 328% </li></ul><ul><li>Xerox (a document company) improved its warehousing order-picking process by benchmarking with LL Bean (a catalog company) </li></ul><ul><li>Marriott Hotels improved guest check-in service process by 500% by benchmarking with patient admission process in hospital emergency rooms </li></ul>
  12. 12. <ul><li>Industry practices report </li></ul><ul><li>Understanding of comparative process measurement and where “best practice” may lie </li></ul><ul><li>Comparison of where the organisation fits as compared to others (on a scale of 1-10) </li></ul><ul><li>Basis for aggressive targets </li></ul><ul><li>Inputs for visioning </li></ul>Benchmarking Deliverables
  13. 13. <ul><li>Benchmarking helps the organisation : </li></ul><ul><li>Understand where it stands at present </li></ul><ul><li>Understand where it could be </li></ul>Benchmarking Analysis
  14. 14. Best Practices <ul><li>“ Best practices are documented strategies and tactics employed by highly admired companies. They may not be the “best-in-class” in every area. However due to the nature of competition and their drive for excellence, their practices have made them the most admired, the most profitable and the keenest competitors in business ” </li></ul><ul><li>- Best Practices, LLC </li></ul>
  15. 15. <ul><li>Example: </li></ul><ul><li>Lucent Technologies identified best individual engineer practices which boasted their productivity levels by more than 10% in eight months. </li></ul>Best Practices