BENCHMARKING

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BENCHMARKING

• CUSTOMER SUPPLY CHAIN

2
PARAMETERS FOR SUCCESS

• Focus On A Process
• Permeate The Entire Company
• Roles Responsibilities
• Performance Measurement Reward
• Organisational Design
• Organisational Culture
• Information Technology

3
BENCHMARKING DEFINED

• A Method For Continuous Improvement That
  Involves An Ongoing And Systematic Evaluation And
  Incorporation Of External Products, Services And
  Processes Recognized As Best Practice
• Macneil Et Al. (1994)

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BENCHMARKING DEFINED

• Strategic Benchmarking Provides Strategic Data
  And Information That Can Be Compared To Similar
  Information From Other Global Manufacturing
  CompaniesStrategic Benchmarking Is Just One Of
  Several Ways To Benchmark - An Activity That
  Varies Depending On Whether A Product, A Process,
  Customer Needs Or Global Strategies Are Being
  Compared
• Miller Et Al. (1992)

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TYPES OF BENCHMARKING

• Product Benchmarking
• Functional Benchmarking
• Best Practices Benchmarking
• Strategic Benchmarking

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BENCHMARKING PROCEDURES

• Identify the Function to Benchmark
• Identify the Best-in-class Company
• Identify the Key Performance Variables to Measure
  and Collect the Data
• Analyse and Compare the Data to What Happens in
  Your Own Company

• Project Future Performance Levels of the
  Benchmark Company
• Establish Functional Goals
• Communicate Benchmark Findings
• Develop Action Plans
• Implement Specific Actions and Monitor Progress
• Recalibrate Benchmarks

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BENEFITS OF BENCHMARKING

• It Enables the Best Practices From Any Industry
  to Be Creatively Incorporated Into the Processes
  of the Benchmarked Function
• It Can Provide Stimulation and Motivation to
  Professionals Whose Creativity Is Required to
  Perform and Implement Benchmark Findings
• Benchmarking Breaks Down Ingrained Reluctance of
  Operations to Change

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SERVICE BENCHMARKING
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TRADE-OFF MATRICES
1
9
6
1
10
Completed Trade-off Matrices
1
5
3
9
8
6
6
4
2
7
5
3
1
4
2
4
2
3
5
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Weights From Trade off Analysis
Importance Weight Delivery Reliability /-
3 Days - 0.480 /- 1 Day
0 On-Time 0.480 Delivery Time 2 Days
0.456 3 Days 0 4
Days -0.456 Credit Terms 40 Days
0.239 30 Days - 0.239
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Benefits of Trade off Analysis

• Objective Measure of the Utility That a
  Customer or Potential Customer Places on Each
  Aspect of Service
• By Assigning Weights Preferred Service
  Combinations Can Be Assigned
• Facilitates Distinction Between Different Types
  of Customers

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Company Position Vs The Competition
How Would You Rate ABC On The Following (Score
From 1 to 5 1 Very Poor, 5
Excellent) Please Circle Order Cycle
Time 1 2 3 4 5 Stock Availability
1 2 3 4 5 Order Size Constraints
1 2 3 4 5 Frequency of Delivery
1 2 3 4 5 Delivery Reliability
1 2 3 4 5 Quality of Documentation
1 2 3 4 5 Claims Procedure 1 2 3 4 5 Order
Completeness 1 2 3 4 5 Technical Support
1 2 3 4 5 Order Status Information 1 2 3 4 5
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Customer Service Benchmarking
Importance to Customer Elements Performance Low
Medium High Poor Satisfactory Good
Order Cycle Time Delivery Reliability
Frequency of Delivery Stock
Availability Document Quality
Order Completeness Technical
Support Benchmark Competitor Company
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Service Performance Matrix
1 ORDER CYCLE TIME 2 ORDER COMPLETENESS 3
DOCUMENTATION QUALITY 4 DELIVERY RELIABILITY 5
TECHNICAL SUPPORT 6 SALES SUPPORT
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Management Indicators
IMPORTANCE TO CUSTOMERS LOW HIGH
UNDER- PERFORMANCE
PERCEIVED PERFORMANCE LOW HIGH
TARGET AREA
OVER- KILL
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Competitive Position Matrix
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Pipeline From Supplier to Customer
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CUSTOMER ORDER PATH
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Process Control Service Quality
Customer Specific Service Levels
On-Time Delivery
Consumer Availability
Supplier Material Production Finished
Delivery Stock Plan Goods Performance
Availability Vs Actual Availability
SUPPLIER FACTORY CUSTOMER END USER
Finished Goods Inventory Level
Materials Inventory Level
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Supplier Distributor Benchmarking

• Willingness to Work As a Partner
• Commitment to Continuous Improvement
• Acceptance of Innovation Change
• Focus on Throughput Time Reduction
• Utilisation of Quality Management Procedures
• Use Regular and Formal Benchmarking Processes
  Themselves
• Flexibility Is Seen As the Prime Goal
• Employees Share Common Core Values of Customer
  Concern
• Actively Seek to Improve Communication
• Leadership Emphasize the Primacy of Total Quality
  Management

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TYPICAL MEASURES
SUPPLIER
INTERNAL
DISTRIBUTOR
Quality Throughput Times Value
Added Services On-Time Performance On-Time
Performance Customer Concern Stock
Availability Stock Availability
Delivery Performance
Communications Communications Schedule
Integration Requirements Planning Co-Makership P
artnership
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SETTING PRIORITIES

• Are of Strategic Performance?
• Have a High Relative Impact on the Business
• Where There Is a Choice Between Make or Buy
• Where There Is Internal Readiness To Change

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Benchmarking Performance
Strategic Performance Processes That Are Likely
to Play a Major Role in the Future Success of the
Company
Relative Impact on Business Economies Processes
That Have a Disproportionate Impact on Total
Cost Revenue Generation Fixed Asset
Productivity Human Productivity
Organisational Readiness Processes Executed By
Personnel Who Are Ready To Improve
Benchmark Properties
Strategic Performance Processes Determined to
Have a High Impact on Product Performance /
Profitability and Which Are Hard to Source From
Quality Suppliers
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STRATEGIC GOALS
High
RELATIVE DIFFERENTIATION (EFFECTIVENESS)
Low
Low
High
RELATIVE DELIVER)ED COST (EFFECTIVENESS
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TYPES OF BENCHMARKING
APPROPRIATE AND
INAPPROPRIATE AND EFFECTIVE BENCHMARKING INEFFECT
IVE BENCHMARKING
EXTERNAL Understanding Why What Others Do Is
Appropriate for the Circumstances
INTERNAL Measuring How Close We Are to
Achieving What Is Our Ideal Goal
Unthinking and Direct Copying of What Others Do
Leads to Fads Which Often Fail Due To
Not Understanding What Is Appropriate For the
Given Circumstances
Copying the Appropriate Way of Thinking
and Adapting to Our Specific Problems
Providing a Basis for Internal Continuous Improve
ment
Generalising From Subjective Experience