Best Practices, Processes & Products

BPR 2
Customers are increasingly demanding

BPR 3
Organization Dilemma

Performance Gap

Time
BPR 4
Performance Objectives

Benchmark: World-
class performance
p(x)
Benchmark
Z Short term
Z short-term: The Baseline
level of
performance a
business should
be able to Defects
achieve given the
Baseline: The current level of performance
investments
already made

Benchmarking sets the ultimate goal, while baselining takes current

measurements to monitor a process
BPR 5
XEROX
 Xerox was losing market share in copier business in
late 80’s
 Lower-priced, high quality Japanese competitors
were squeezing Xerox out of an industry it had
created and had always dominated
 If Xerox could not figure out something fast, Xerox
copiers would face extinction
 So Xerox Manufacturing Operations started a
process they called, "Product quality and feature
comparisons."

6
XEROX
 Xerox formed teams of engineers and challenged them
to design products that could compete with Japanese
 They bought competing products, catalogued their
features and claims, then tore them apart – Reverse
Engineering
 They failed……..

7
XEROX

 No doubt Japanese were building better copier

 Xerox suspected
 Cheap Asian labour

 Subsidy by Japanese government

 To probe Xerox sent investigative team to Fuji – Xerox

 What they found amazed them: the Japanese could afford to sell their

machines at a price equal to Xerox's cost

 The answer wasn't cheap labor, and it wasn't subsidy

 The answer lay in the details of manufacturing processes - their

Japanese rivals were defeating Xerox on the factory floor.

8
DANTOTSU

•BEST OF THE BEST

•GOING BEYOND EXPECTATIONS

9
What is benchmarking?
 A continuous formal process for comparing the business practices of
organizations that are recognized as best-in-class for the purpose of
meeting or surpassing industry best practices
 An ongoing systematic process for evaluating the functions of
companies that are acknowledged as world-class for the purpose of
establishing goals
 The continuous process of measuring products, services, and practices
against the toughest competitors or those companies recognized as
industry leaders
- David T. Kearns, CEO, Xerox Corporation
 The search for industry best practices that lead to superior
performance
Robert C. Camp

10
Benchmarking Definition
 Benchmarking is the process of continuously measuring and comparing one’s
organizational processes against comparable processes in leading organizations, to obtain
information, that will help the organization, identify & implement improvements.
(Kaiser Associates)

 A standard of excellence or achievement against which other similar things must be

measured or judged. (Sam Bookhart - DuPont)

 Benchmarking is the process of continually searching for the best methods, practices and
processes, and either adopting or adapting their good features and implementing them to
become the “best of the best.”

 The process of identifying and learning from best practices anywhere in the world is a
powerful tool in the quest for continuous improvement.

 The systematic process of searching for best practices, innovative ideas, and highly
effective operating procedures that lead to superior performance.

BPR 11
Benchmarks / Benchmarking

Metrics Processes

Benchmarks Benchmarking

Operating
Practices
Statistics

Best Practices

BPR 12
Benchmarking

BPR 13
Efficient Frontier

BPR 14
Critical Focus

Wrong focus
How high?
Right focus

How does he vault that high

Potential Best practices

Technique
Coaching
Nutrition
Selection

BPR 15
Benchmarking is
 A continuous process
 A process of investigation that provides valuable
information
 A process of learning from others; a pragmatic
search for ideas
 A time-consuming, labor-intensive process
requiring discipline
 A viable tool that provides useful information for
improving virtually any business process

BPR 16
Benchmarking
• Best Practices Benchmarking can be described as the
process of seeking out and studying the best internal and
external practices that produce superior performance.
– Don’t reinvent what others have learned to do better!
– Borrow shamelessly!
– Adopt, adapt, advance!
– Imitate creatively!
– Adapt innovatively!

BPR 17
Why Benchmark
 Identify opportunities to improve performance
 Learn from others’ experiences
 Set realistic but ambitious targets
 Uncover strengths in one’s own organization
 Better prioritize and allocate resources

BPR 18
Why Benchmark
 The arrival of the world economy has presented
tougher challenges for most organizations
 Intense competition
 Shorter product life cycles
 Accelerating technology changes

 Business as usual in such a market climate could be

fatal….Even for market leaders
 To stay competitive, organizations must continually
reinvent how they do things… in every
department, at every level… and maybe look at
what world-class organizations are doing to find
innovative ideas and adopt best work practices

BPR 19
Why Benchmark
 The usual methods of improving performance –
downsizing and cost cutting – do not solve systematic
performance problems
 To become more productive requires
 redesigning old work methods
 scrapping internally-protected agendas
 tossing out obsolete work practices
 looking outside for innovative work methods…wherever
they are

BPR 20
Applications & Benefits
 Setting & Refining Strategy;
 Reengineering Work Processes & Business Systems;
 Continuous Improvement of Work Processes & Business
Systems;
 Strategic Planning & Goal Setting;
 Problem Solving;
 Education and Idea Enrichment;
 Market Performance Comparisons & Evaluations;
 Catalyst for Change.

BPR 21
Benefits of Benchmarking
 Improves organizational quality;
 Leads to lower cost positions;
 Creates buy-in for change;
 Exposes people to new ideas;
 Broadens the organization’s operating perspective;
 Creates a culture open to new ideas;
 Serves as a catalyst for learning;
 Tests the rigor of internal operating targets;
 Creates an external business view;
 Raises the organization’s level of maximum potential
performance.
BPR 22
Types of Benchmarking

 Three different types of benchmarking

 Strategic benchmarking

 Performance benchmarking

 Process benchmarking

 Four different ways to do benchmarking

 Internal benchmarking

 External or competitive benchmarking

 Functional benchmarking

 Generic benchmarking

BPR 23
Process Benchmarking
• Process benchmarking focuses on discrete work
processes and operating systems, such as the
customer complaint process, the order-and-
fulfillment process, or the strategic planning
process.
• Process benchmarking seeks to identify the most
effective operating practices from many
companies that perform similar work functions.
• Its power lies in its ability to produce bottom-line
results. If an organization improves a core process,
for instance, it can then quickly deliver process
improvement

BPR 24
Performance Benchmarking
• Performance benchmarking enables managers to
assess their competitive positions through product
and service comparisons.
• Performance benchmarking usually focuses on
elements of price, technical quality, ancillary
product or service features, speed, reliability, and
other performance characteristics.
• Reverse engineering, direct product or service
comparisons, and analysis of operating statistics
are the primary techniques applied during
performance benchmarking.

BPR 25
Strategic Benchmarking
• Strategic benchmarking examines how companies
compete and is seldom industry-focused. It roves
across industries seeking to identify the winning
strategies that have enable high-performing
companies to be successful in their marketplaces.

• Strategic benchmarking influences the longer-term

competitive patterns of a company. Consequently,
the benefits may accrue slowly.

BPR 26
What to Benchmark
Business Goals Performance benchmarks

• Material cost per product

• Labor cost per product
Low Cost Producer
• Overheads per product
• Cost of distribution channels

• Product differentiators
• Product / service functionality
Increase Market share
• Product development time
• Customer service

• Innovation process
Innovative Producer • Time to market
• No of patents, R&D Cost

BPR 27
When not to benchmark
 Target is not critical to the core business functions
 Customer’s requirement is not clear
 Key stakeholders are not involved
 Inadequate resources to carry through
 No plan for implementing findings
 Fear of sharing information with other
organizations

BPR 28
Limitations of Benchmarking
 Focusing on numbers
 Sometimes companies focus on data and not on the
processes used to produce the data
 Losing focus on customers
 Because of limited resources for the benchmarking it
often involves a high degree of self-evaluation
 This may cause some organizations to lose focus on
customers
 Losing focus on employees
 Companies that try to produce better benchmarking
results can quickly cause employee burnout and errors

BPR 29
Limitations of Benchmarking
 Over-reliance on quantitative data (data
benchmarking)
 Consequently, misunderstanding of the underlying
reasons for the performance measures (strategic
competencies and key processes).
 Difficult to obtain useful information about
competitors
 Competitors may be uncooperative
 Gathering competitive intelligence requires considerable
time, effort, and money
 There can be ethical and legal questions about some
intelligence activities, such as paying a competitor's
employees for information, recording conversations, etc.

BPR 30
Limitations of benchmarking
 Emulating competitors
 May result in only short-lived competitive advantage.
 Difficult to benchmark services
 It is more difficult to benchmark service operations than
to benchmark products
 Services often involve skills and other "tacit" factors that
are difficult to quantify
 Lacking proper implementation
 For example, if employees are not involved in the
process, this could cause some employees to resist
necessary changes
 The employees need information in order to improve the
process.

BPR 31
Limitations of Benchmarking
 Ongoing process, not a one-time project
 Some organizations may have difficulties in treating
benchmarking as an ongoing process
 It should not be viewed as a one-time project
 Exposure of weaknesses
 Some companies do not benchmark because their
weaknesses are exposed
 Narrow scope of companies studied
 A common problem in benchmarking is the failure to
expand the scope of companies studied
 It may be relevant to benchmark against companies
outside the user company's industry (process
benchmarking)

BPR 32
Limitations of Benchmarking
 Cultural difficulties in transferring "best practices" in
multinational firms
 The biggest problem associated with transferring "best
practices" across cultures are due to differences in
behavioral and cultural background of the organizational
members in the foreign subsidiaries of the firm

BPR 33
Benchmarks & Performance Measurements
 Revolutions begin long before they are officially
declared.
 For several years, senior executives in a broad
range of industries have been rethinking how to
measure the performance of their businesses.
 At the heart of this revolution lies a radical
decision: to shift from treating financial figures as
the foundation for performance measurement to
treating them as one among a broader set of
measures.
Professor Robert Eccles, Harvard Business School

BPR 34
Benchmarking – How’s & Why’s
• Benchmarking represents a versatile process management
tool that helps organizations identify and understand what
constitutes best operating practices.
• Benchmarks are the operating statistics or measures that
define the achievement level of any given practice or
system.
• These are not in and of themselves enough since they
provide no insight into the root causes of performance
differences.
• A flexible set of benchmarks reflects full process or system
capabilities. Performance indicators may include
dimensions such as cost, productivity, cycle time, yields,
error rates, waste and t
Client, Enterprise & Competitive Intelligence for Product, Process &
Systems Innovation - Dr. Rick L. Edgeman, University of Idaho urnover

BPR 35
Lessons from Active Benchmarkers
• Do not strive to benchmark everything at best-in-country or
best-in- world levels: No company can be best in every function --
focus on processes and practices of strategic importance.
• Seek best-in-class benchmarks for core processes and functions
of the highest strategic importance: the Pareto Principle wins again.
Other benchmarks can come from levels 2 through 5. World and country
leadership benchmarks require greater time, resources and effort to
develop.
• Seek internal, regional, or industry benchmarks for secondary
and support processes: for some processes and business activities
that are not critical to the organization’s strategic advantage, internal,
regional or competitive benchmarks may be most appropriate. Such
benchmarks produce incremental improvements that are substantial --
even if not radical or ‘breakthrough’ in terms of the size of the expected
improvement benefits.

BPR 36
Designing successful benchmarks
• MEASUREMENT FOCUS
– Determine where in a work area or process that value for the customer is created;
– Determine where value is detracted through high costs, errors, rework, or
accidents; and
– Target benchmarks in areas where performance diverges from designated standards,
or where variation above and below standards is greatest.

• MEASUREMENT PERSPECTIVE
– Leading indicators foreshadow or anticipate future system outcomes. Leading
indicators are thus “proactive” or “preventative”.
– Lagging indicators such as traditional financial measures are “reactive” or
“descriptive” of the actual results of a system or process in a given time period.
– Traditional companies employ lagging indicators while high-performance companies
embrace both types since leading indicators intervene upstream.

Designing Successful Benchmarks:

Effective Performance Benchmarks Reflect the Most Important Operating
Dimensions of a Business Process, System, or Function.

BPR 37
Designing successful benchmarks
• MEASUREMENT CONTROL
– People are always the principal factor affecting the degree of measurement control.
Managers fail at performance improvement when they evaluate individual or system
performance using benchmark measures that are uncontrollable by the people
overseeing the process.
– Therefore benchmarks that are designed for performance improvement must be
crafted to reflect the individual level of authority, responsibility, and skills of those
people expected to work with the benchmarks.

• DATA COLLECTION
– After defining performance measures, managers must be able to readily collect the
data from which performance benchmarks are constructed.
– Many organizations develop interesting performance measures only to discover that
they currently do not collect the required information and do not have the resources
to do so.
– The best performance benchmarks can be collected without excessive investment
of time, systems, staff, or capital.

BPR 38
A design benchmark architecture
• The first step in designing a performance
benchmark system is to create measures that will
enable management to achieve the organization’s
strategic objectives.

• The second step in designing a benchmark

architecture requires managers to create an
agreed upon vocabulary describing performance
measurement in your organization.

• The third step is to develop plans to collect,

process, and analyze the performance measures.
BPR 39
Top ten benchmark categories
• Customer-service performance;
• Product / service performance;
• Core business process performance;
• Support processes and services performance;
• Employee performance;
• Supplier performance;
• Technology performance;
• New product / service development and
innovation performance;
• Cost performance;
• Financial performance.
BPR 40
Practices uncovered by Xerox – Non competitive
benchmarking

Type of company Practice

Drug wholesalers
Appliance components
Electrical components
manufacturer
Photographic film
manufacturer
Catalogue fulfillment service
bureau
Electronic ordering between store and
distribution center
Forklift handling of up to six appliances at
once
Automatic in-line weighing, bar code labeling,
and scanning of packages
Self-directed warehouse work teams
Recording of item dimensions and weight to
permit order-filling quality assurance based on
calculated compared with actual weight

BPR 41
Benchmarking Steps
 Identify what is to be benchmarked
 Identify competitive companies
 Determine data collection method and collect data
 Determine current performance levels
 Project future performance levels
 Communicate benchmark findings and gain
acceptance
 Establish functional goals
 Develop action plans
 Implement specific actions and monitor progress
 Recalibrate benchmarks
BPR 42
Process Benchmarking
Identify key process

Document / Map Sub Processes

Identify Critical Success Factors (CsFs)

Measure CsFs

Analyze Results Identify Gaps in Performance

Select Benchmarking Identify Best

Partners/Arranged Visits Practice
BPR 43
Benchmarking Road map
Identify What is to be
Benchmarked

Planning Identify World class

Companies for BM

Determine Data
collection
Method &
collect data

Establish “GAP” &

analyse Recalibration
Analysis of BM
Set targets to bridge the
GAP

Communicate to all level

Integration Analyse Analyse driving

resisting forces forces

Establish Action plan

Action Implementation &

monitoring
BPR 44
AT&T vs Xerox process of benchmarking

BPR 45
BPR 46
Baldrige Award
 The Malcolm Baldrige National Quality Award (MBNQA) is presented
annually by the President of the United States to organizations that
demonstrate quality and performance excellence. Three awards may be
given annually in each of six categories:
 Manufacturing
 Service company
 Small business
 Education
 Healthcare
 Nonprofit

BPR 47
Criteria for Baldrige Award
 Organizations that apply for the Baldrige Award are judged by an independent
board of examiners. Recipients are selected based on achievement and
improvement in seven areas, known as the Baldrige Criteria for Performance
Excellence:
 Leadership: How upper management leads the organization, and how the
organization leads within the community.
 Strategic planning: How the organization establishes and plans to implement
strategic directions.
 Customer and market focus: How the organization builds and maintains strong,
lasting relationships with customers.
 Measurement, analysis, and knowledge management: How the organization
uses data to support key processes and manage performance.
 Human resource focus: How the organization empowers and involves its
workforce.
 Process management: How the organization designs, manages and improves key
processes.
 Business/organizational performance results: How the organization performs
in terms of customer satisfaction, finances, human resources, supplier and
partner performance, operations, governance and social responsibility, and how
the organization compares to its competitors.

BPR 48
Checklist for Baldrige

BPR 49
Checklist for Baldrige

BPR 50
Checklist for Baldrige

BPR 51
Checklist for Baldrige

BPR 52
Comparing Baldrige & Deming Award

BPR 53
What is ISO
 The International Organization for Standardization
(IOS) is a worldwide federation of national standards
bodies.

 Working through Technical Committees, it has

developed and published over 18,000 different ISO
standards that are used internationally for subjects
ranging from film speeds to wine glasses to quality
management systems.

 The official purpose for the issuance of ISO Standards

is to facilitate world trade through standardization.

BPR 54
ISO systems

ISO 27001-2005
ISO 20000-1:2011 Information
Service Management Security
Management
System

Management
Systems
ISO 9001:
2008 ISO 31000
Quality Risk
Management Management
System
ISO 22301
Business Continuity
Management

BPR 55
Understanding Documents
Most standards have at least two supporting documents;
 Requirements – these are the “Shalls” and are
required to be implemented unless exclusions can be
taken. The auditor can only audit against the “Shalls”.
 Code of Practice – these are the “Shoulds” and are
guidance to assist you in implementation.
 Guidance – a fully implementable standard that does
not have a “certification scheme”. You can be
compliant, but not certified.

BPR 56
 Plan

Act Do

Check

BPR 57
Registration
 Determine your Scope of Registration
 How many people within your organization support this
Management System?
 How many processes are included?
 How many locations?
 Stages of Regidtration
 Submit application to registrar
 Stage 1: Assessment of readiness
 Stage 2: Assessment for registration audit
 Registration/certification awarded for 3 years
 Surveillance audits (at least annually)
 Recertification audit at the end of 3rd year

BPR 58
Registration
 Usually takes 1 or possibly 2 auditors 1 to 3 days
 depending on scope, size, locations and personnel
 You will be told whether or not you will be
recommended for registration at the completion of
the Stage 2 audit
 Certificate usually arrives a 2 – 6 weeks later
 Maintaining your ISO Certification(s) is the first
step in continuous improvement

BPR 59
Benefits of ISO System
 There are obvious internal benefits
 Competitive Advantage
 Commitment to detail for the scope; ie: quality, security,
services, etc
 Better employee engagement through training,
communication and accountability
 Formalized & repeatable processes
 Accountability at all levels
 Ongoing internal and external audits ensure weaknesses are
identified and improvements are completed
 Better governance and management of suppliers and
outsourced processes
 More efficient ability to change
 Reduction in duplicate effort

BPR 60
Motorola (1998)
1. In the past five years, Motorola has reduced its defect rate in
manufacturing 99.5%, generating cost savings estimated at about
$900 million this year, and $3.1 billion cumulatively.

2. Motorola’s prices fall an average of 8-12 percent a year; it’s cellular

phone prices 25% a year.

3. “Minority report program”. Employees can file a report if they feel

that their ideas are not being supported. An example is the concept
behind the microprocessor 68000 series which later became the
brains of Apple’s Macintosh line.

4. In 1987, Motorola announced two productivity goals: to reduce

manufacturing defects by 90% every two years, and reduce cycle
(new product development) time by 90% every five years.

BPR 61
Eastman Chemical
1. Eastman is well accepted by its surrounding communities and has a strong
environmental record. Safety serves as a driving force. The company earned inclusion in
OSHA’s voluntary Star Program.
2. Eastman averaged 22 % of sales from new products commercialized within the last five
years, compared to an average of 11% for 13 leading chemical companies, twice the
average in a recent study.
3. Eastman has adopted a no-fault return policy on its plastic products and states a
customer may return any product for any reason. This policy is believed to be the only
one of its kind in the chemical industry.
4. Over the past four years, more than 70% of Eastman’s worldwide customers rated
Eastman their number one supplier. For the last seven years, Eastman has been rated
outstanding in five important customer factors-product quality, product uniformity,
supplier integrity, correct delivery, and reliability. Shipping reliability consistently has
been near 100% for the last four years.
5. Eastman’s new product development practices are ranked second among a group of 13
leading chemical companies.
6. Eastman uses multiple approaches to drive continuous process improvement through
an “interlocking team” structure that involves virtually every employee in the
teaming and quality improvement process.
7. Data use is deployed widely, with virtually all employees using data to track their
individual and/or their team’s performance.
8. Eastman has a fully integrated planning process that systematically deploys the key
business priorities to all employees and all work groups throughout Eastman’s innovative
four-dimensional organizational structure.

BPR 62