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1. Benchmarking
Ahmed Mohammed
Seth Shafer
Shou-Jen Steve Wang

2. Benchmarking
►Chalk and bench activity

3. Who
► Robert C. Camp 1989
► Bachelors degree in civil
engineering from Cornell
University
► MBA from Cornell University's
Johnson School of Management
► Ph.D. in logistics and operations
research from The Pennsylvania
State University

4. Benchmarking
►Is a process
►Is secrets of success

5. Four Forms
►Generic
►Functional
►Competitive
►Internal

6. Types
► Process benchmarking
► Financial benchmarking
► Benchmarking from an investor perspective
► Performance benchmarking
► Product benchmarking
► Strategic benchmarking
► Functional benchmarking
► Best-in-class benchmarking
► Operational benchmarking

7. Activity
► Connect the dots
► Rules
1. Draw in a straight line.
2. Pen does not leave the blackboard.
3. All dots have to be connected
Goal:
As few lines as possible.

9. Prerequisites
►Will and commitment
►Vision and strategic objective link
►Goals to becoming the best
►Openness to new ideas

10. Prerequisites (cont.)
►Understanding of existing processes,
products, services, practices, and customer
needs
►Documented Processes
►Process analysis
►Research, communication, and team-
building skills

11. Obstacles
►Internal Focus
►Objective too broad
►Unrealistic timetables
►Poor team composition
►OK-in-class
►Improper emphasis
►Insensitivity to partners
►Limited top-management support

12. Rationale
►Global competition
►Current standing of company
►A best-in-class model
►Customers are better informed
►Support of total quality

13. Examples
►Xerox
►Computer Hardware

14. Computer Hardware
►Comparison of performance

15. Xerox
►Started in 1908
►Big company by the 1960s
►Rapid expansion of the middle management
►Competition from Japanese companies by
1980s

16. Benchmarked Processes
►Supplier management system
►Inventory management
►Manufacturing system
►Marketing
►Quality

17. Benefits of benchmarking
►Fewer customer complaints
►Reduction of defects
►Reduction in service response time
►Reduction in defective incoming parts
►Reduction in inventory costs
►Reduction in labor costs
►Reduction in billing errors

18. Benefits of benchmarking
►Increase in customer satisfaction
►Increase in marketing productivity
►Increase in distribution productivity
►Increase in product reliability

19. Seven steps to benchmarking
1. Identify what to benchmark
2. Determine what to measure
3. Identify who to benchmark
4. Collect the data
5. Analyze the data and determine the gap
6. Set goals and develop an action plan
7. Monitor the process

20. Seven steps to benchmarking
► Step-1
► Identify what to benchmark
► Activities involved in step-1 are
► Clarifying the benchmarking objective
► Decide whom to involve
► Define the process
► Consider the scope
► Set the boundaries
► Agree on what happens in the process
► Flow chart the process

21. Step-1 continue
►Identify what to benchmark
►Two approaches of benchmarking
1) Strategic benchmarking
Financial function could benchmark it activities
(billing process)
2) Organizational benchmarking
Considerable research is done. Like soldering
process, driver motor assembly benchmarking

22. Step-1 continue
►As a starting point benchmark your
customer interfaces by not limiting
benchmarking to products. Like contract
truckers, answering phone calls, accuracy of
bills.
►Benchmarking Product, manufacturing
process, equipment, and business processes.

23. Benchmarking: A Practical Example
►ATO, INC., is a manufacturer of small to
medium air conditioners.
►Approximately 60%- home and office use
only
►The remaining 40%-trucking industry,
where ATO’s unique respected position in
supplying units for refrigerated trucks and
trailer rigs.

24. ATO, Inc.,
►ATO Inc’s production supervisor for Model 724
series (home models) manufacturing area-
Seth
►Seth’s group is a customer for an outside
supplier of external control panel.
►Responsibility of Seth’s production area
►Building the chassis and housing for the units
►Installing internal components and wiring
►Assembling the final products

25. ATO, Inc.,
►The model 724 series manufacturing group is
organized into three work areas:
►Lastly. Seth’s team processes the units
through the warehouse for packing and
shipping to final destination.
Chassis
Production
Component
Install
Final Assembly
►Build Chassis
Components
►Build Housing
►Install internally-
supplied control wire
unit
►Install vendor panels
►Affix product lables

26. ATO, Inc.,
►What is cooking in ATO’s
►Each of the work area is organized into
work teams responsible for setting and
attaining their goals and managing their
work processes.
►Seth handles most of the interaction
between the work team to ensure
coordination and planning.

27. ATO, Inc.,
►Seth’s production group members are working
towards continuously improving the process.
►Revamping of the production line and
installation of new equipment. The feel they
have reached the plateau.
►Steve, most experienced assembler, put it this
way “Look, we’ve done all we can on this
process. We’ve tried everything and our
numbers are as good as they are going to get.
Got it?”

28. ATO, Inc.,
►Ahmed: “Steve’s feelings are
understandable, you got to do something
Seth…wake up.”
►They have been working hard and their
recent most improvement produced smaller
gains.
►Seth wakes up…
►Let us do benchmarking study for the entire
assembly process.

29. Step-1
►The first step identify what to benchmark has
following sub steps
►Clarify the benchmarking objectives
►Decide whom to involve
►Define the process
►Consider the scope
►Set the boundaries
►Agree on the process
►Flow chart the process

30. Clarify The Benchmarking Objective
►We have already discussed why we have
decided to benchmark-setting priorities for
improvement, addressing a specific problem
which needs attention and not meeting goals.
►Why Seth has decided to do benchmark 
► They have upgraded equipment, everyone had
needed skills, and taken steps to improve
quality but they are still searching for way to
improve. Their objective was to have best in
class final assembly process. 

31. Seth is deciding whom to involve in
benchmarking team
►Management support to the team
►Include employees who are close to the
process. Include employees who have interest
and knowledge about what goes on outside the
boundaries of process.
►“Let us also consider internal suppliers and
customers of the process. Who supply products,
information, or other key inputs. Customers
receive our service, products or output.”

32. Benchmarking team
► Seth-Production supervisor for the Model 724 series.
Given decision making authority.
► Steve- A senior assembler, member of the quality
improvement team.
► Bill- An assembler a new employee at ATO
► Maria-An inspector got promoted from the shipping
department and just completed training for final
assembly area. She installs the labels and information
plates at the end of the process (is some sense she is a
final customer for the process)
► Simon-A former assembler who now works in
component installation area, but occasionally done
assembly when team requires backup (brings internal
supplier perspective)

33. Sub steps of step-1
►Define the process
►One need to clearly define process. A
process is a series of interrelated task that
are organized to produce an output.
►Consider the scope
►Not to be too broad or too narrow.

34. ATO, Inc.’s final assembly
benchmarking team
►The decide to benchmark control panel
installation because they had recently
experienced troubled with connections
coming loose.
►Steve-”That’s a good place to focus, and it is
broad enough to achieve something and
narrow enough that we can wrap our arms
around it”

35. ATO, Inc.’s final assembly
benchmarking team
►Simon-” Sure. Let us define the starting and
ending point of the process so that we all know
exactly what we are working on?”….
►Set the boundaries
►After a few minutes of discussion the team
reached an agreement.
►Starting point-receive the panel from the
inventory clerk
►Ending boundary-place the unit back to the
conveyor belt.

36. ATO, Inc.’s final assembly
benchmarking team
►Agree on the process
1. Receive the panel from the inventory clerk
2. Unpack the panel as needed and visually check
for completeness (no broken wires etc)
3. Place the control panel on unit and attach
fasteners
4. Solder the connections
5. Test the circuitry and secure the cover
6. Place the unit back on the conveyor belt

37. Step-2 of seven step model
►Determine what to measure has three major
sub steps to consider
1. Examine the flow chart
2. Establish the process measures
3. Verify that measures match objectives

38. Flow chart
►Review the flow chart. Some of the measurable
items we are looking for might be
1. Overall time to complete the process
2. Completion time for each individual task
3. Time spent at each decision point
4. Number of loops or repeats
5. Variation of task time
6. Number of defects showing up
7. Costs
8. Scrap

39. Place unit
on belt
Secure
Cover
Test
circuitry
Solder
connections
Attach
fasteners
Place
panels in
position
Unpack
panels
Receive
panels
Verify
panels
OK
Position
of
mounting
holes OK
Circuits
OK
Start
End
1 min. 1 min.
2 min.
1.5 min.
.5 min.
9-13 min.
15-18 min.
10 min.
5 min.
4 min. .5 min.
Yes
No
Yes
Yes
No
No
Total time = 45 - 52 min.

40. Step-2
►Bill-” Since we know where our inputs and
outputs are coming from, shouldn’t we
consider measuring that are important to our
internal suppliers and customers too?”..
2)Establish process measures
►Consider measures outside the process
►Measures of your external customers should
influence the choice of process measures to
benchmark (even though it is distant from
customers contact)

41. Step-2
►Measures of your internal suppliers and
customers requirement. Since their
performance is linked to yours, your
measures should be linked as well
►ATO, Inc internal customers are the
shipping and warehouse department and
their internal suppliers are component
installation area and inventory department.

42. Step-2
►Link supplier and customer measures with
in-process measures.(fig)
►Seth’s benchmarking team took the
interview of both internal suppliers and
customers.
►As the team looked back they concluded
based on the flow chart, internal suppliers
and customer measures.
►They concluded that the total time for the
process varied due to several reasons.

43. Step-2
►Seth’s decided to benchmark three measures
►Time for completion.
►Downtime
►Number of reworks
►Verify that measures match objectives
►For example, if a group’s goal was to increase
productivity, they would need to look at
measures such as time quantities of output,
cost per unit

44. Step-3 Identify who to
benchmark
►Conduct general research
►Choose the level to benchmark
►Internal
►Competitive and noncompetitive
►World class
►Seth’s team considered their ATO’s plant in
northwest region and best in class Bestco,
Inc.

45. Step-4 :collect the data
►It’s time to gather information on the
performance level of your benchmarking
target and how they mange their processes.
►Three main sources
►Internal
►Public information
►Other companies: this is the most exciting
part, we actually go out and discover new
ideas and make careful observation.

46. Step-4
►The techniques for gathering benchmarking
information.
►Using a questionnaire
►Conducting a benchmarking site visit
►Using a questionnaire: things to remember
►Include a detail information of the process
►List task included
►List problem or concerns relating to it

47. Step-4
►Including information and questions on the
how the process is measures and
performance criteria
1. Quality
2. Time
3. Cost, etc.

48. Step-4
►Focus on process improvement the benchmark
target has developed
1. What kind
2. How
3. Cost versus the best result
4. Technical difficulties
5. Determine the area of support for the process
like training, methods, technology,
6. Staff background and documentation methods

49. Step-4
►Conducting a benchmarking visit:
►Prepare for the visit
►Organizational climate
►How many and who will be going
►How will the visit be conducted
►Who will take notes and how
►Document the visit

50. Process Your Process Organization #1
Product or services that is
produced (output)
Key characteristics of
output
Measures that will be
compared
Measurement data
(findings, comparisons)
Gaps between our
process and another
organizations’
(positive or negative)

51. Step-4
►Seth’s team have the results

52. Measurement data – (findings, comparison)
Key
measures
ATO, Inc.
Model 724
ATO, Inc.
Northwest
Region
Plant
Bestco, Inc.
Total time 45 – 52 min. 44- 46 min. 22.5 min.
Downtime
(per unit)
3 – 5 min. 3 – 5 min. 1 – 2 min.
Percentage
of reworks
4% 3.5% 0.25%

53. Step-5: Analyze data and
determining gap
1 2 3 4
Our
Organizati
on
0
20
40
60
Our Organization
Orginazation A
Organization B

54. Average Process Time
0
5
10
15
20
25
30
35
40
45
50
ATO, Inc.
Model 724
control panel
installation
ATO, Inc.
Northwest
Region Plant
Bestco, Inc.

55. Average Downtime Per Unit
0
0.5
1
1.5
2
2.5
3
3.5
4
ATO, Inc.
Model 724
control panel
installation
ATO, Inc.
Northwest
Region Plant
Bestco, Inc.

56. Average Percent of Reworks
0
1
2
3
4
5
ATO, Inc.
Model 724
control panel
installation
ATO, Inc.
Northwest
Region Plant
Bestco, Inc.

57. Step-5
►Seth’s team was surprised after looking at
the gap between their processes and that of
Bestco, Inc.
►Steve added “ You know, if someone have
told me a month ago that you could get
these kind of numbers, I wouldn’t have
believed it,”
►Seth” we thought we have improved our
process as much as we could.”

58. Step-6: Set goals and develop and
action plan
►Set performance goal
►Goal should be achievable in
increment( 3*5=15 hrs)
►Goals should realistic (time, res, abilities, skills
and budget)
►Goal should be measurable ( reducing three
hours)
►Goal should be finite (starting and ending pt)
►Goal should be supported

59. Step-6
►Seth’s team benchmarking goals
►Reduce total task time to 30 minutes (5m
per Q)
►Reduce downtime from three to one minute
per unit (end goals to be reached in 9 m)
►Reduce reworks from 4 percent to 2.5
percent (6m)

60. Step-6
►Developing action plan
►Step One-determine tasks, timelines, and
responsibilities
►Points to consider-who will be affected and
responsible for implementation?
►What resources will the person responsible
for task need. How the information will be
shared
►Step Two-develop contingency plan

61. Action Plan
Action Step Responsible
Person or
Group
Begin – End
Date
Estimated
Duration
Estimated
Cost
1. Feasibility
study to install
new technology
in final
processing area
Benchmark
Team
10/1 – 10/30 One Month $5,000

62. Action Plan
Action Step Responsible
Person or
Group
Begin – End
Date
Estimated
Duration
Estimated
Cost
2. Vendor
selection for
new technology
Final
assembly
10/1 – 10/7 35 hours $600
3. Design
project plan for
installation
Senior
management
10/7 – 10/14 28 hours $1,200

63. Action Plan
Action Step Responsible
Person or
Group
Begin – End
Date
Estimated
Duration
Estimated
Cost
4. Purchase and
install new
equipment
Vendors plus
three staff
members
11/1 – 3/2 1,280
hours
$44,800
5. Test Vendor plus 2
staff
members
1/30 – 2/15 40 hours #1,200

64. Step-7: Monitor the process
►Track the change
►Make benchmarking a habit
►Benchmarking progress report
►Regular progress meeting
►Monitor customers (internal and external)
►Monitor suppliers (internal and customer)

65. Discussion

66. Conclusion
►VS continuous improvement
►VS reengineering
►7 Step benchmarking model

67. Thank you for your time.