Benchmarking Introduction and Application

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Benchmarking Introduction and Application

• T.K.Magazine
• Director, Traam Services Pvt. Ltd.
• rose_at_traambiz.com

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Highlights

• What is bench mark ?
• Bench marking background
• Why bench mark?
• DANTOTSU
• Bench marking evolution
• Bench mark a birds eye view
• Bench marking - where to apply
• How to bench mark?
• Bench mark information sources
• Bench marking who practice?
• Bench mark live experience on inventory

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What is bench mark?
A bench mark is a standard of excellence, or
achievement, against which performance must be
measured or judged. Bench marking is the
continuous process of measuring products,
services and practices against the companys
toughest competitors or those companies renowned
as industry leaders Robert camp
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What is bench mark?
Bench marking is learning from the best. Bench
marking is the process of continuous comparing
and measuring own business processes, against
business leaders anywhere in the world, to gain
information, pick up best practices, set your own
standards, which will help the organization, take
action, to improve its performance, on a
continuous basis, to become world class. Bench
marking is external orientation, instead of only
extrapolating from internal practices and past
trends.
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Bench marking-background
After world war II , imitation was regarded as
a prominent corporate trait of the Japanese, who
were known for copying anything produced in the
world, from a pin to a ship, and vastly improving
upon the copied model. In modern management
parlance, imitation has grown into a major
business survival tool world wide, used to
improve business competitiveness, except that it
is now termed as bench marking.
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Why bench mark?
The arrival of the world economy has presented
tougher challenges for most organizations- more
and better competitors, shorter product life
cycles and 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.
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Why bench mark?
The usual methods of improving performance
downsizing and cost cutting do not solve
systematic performance problems. To become more
productivity requires redesigning old work
methods, scrapping internally-protected agendas,
tossing out obsolete work practices and looking
outside for innovative work methodswherever they
are. This practice of emulating world class
practices, called bench marking simply means
finding and implementing best practices that
lead to superior performance. Robert camp
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BENCH MARKING IS CARVED OUT OF JAPANESE
WORD DANTOTSU STRIVING TO BE THE BEST OF
THE BEST
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Bench marking-Evolution
Taiicho Ohno, Japanese management expert, the
founder of just in time (JIT) and bench marking
concepts, highlights this technique in his book
about the Toyota production system. On a visit to
us in 1956, he had called on various American car
manufactures, for ideas and information. But ,
he got break through idea from a large
supermarket, displaying thousands of items, which
were tracked and replaced individually, the
moment customers bought these. Ohno noticed that
the customers pulled the items on their trolleys,
through the store.
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Bench marking-Evolution
Initiating the practice, Toyota started pulling
auto parts, through its production system at the
precise moment of usage, in exact quantities
needed. American companies, who were condemning
Japanese imitation policies, since world war
ii , adopted bench marking in 1979, when Xerox
corporation found that a popular model of
photocopier manufactured and sold by them was at
double the price compared to an identical product
manufactured by cannon of Japan.
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Bench marking-Evolution
While utilizing bench marking techniques, Xerox
discovered that their manufacturing process was
grossly inefficient and cost ineffective. Xerox
did massive business re-engineering during 1980
-85 and slashed its production cost by half and
pruned its inventory cost by two third. The man
responsible was Robert camp, who is regarded as
modern international guru in bench marking.
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Benchmarking-a birds eye view -Where we want to
be
WORLD CLASS
CUSTOMER REQUIREMENTS
GOAL 3
GOAL 2
INDUSTRY BEST
GOAL 1
CURRENT PERFORMANCE
WHERE WE ARE
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Bench marking-where to apply?

• Strategic PlanningForecasting
• Marketing..Customer Satisfaction
• Manufacturing.Quality Control
• Buying.Inventory Control
• Employee SkillsGoal Setting
• Asset UtilizationCost Reduction

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How to bench mark?

• Bench marking is hard investigative work, with
  open mind, in sight, nothing impossible
  concept futuristic vision and good judgment.
• Know your operation.
• Fix your goal.
• Know industry leaders, competitors.
• Bench mark partners.
• Incorporate the best.
• Gain superiority and competitive edge.

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How to bench mark?

• Plan Search Data Consolidate.
• Dissect Analyze Investigate
• Act Implement Adapt Achieve
• World class best practices,
• Functional best practice,
• Industry best practices.
• Bench marking should be an integrated effort on a
  business purpose, and not an isolated department
  effort, or reducing the costs, at the cost of
  quality

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Bench mark potential information sources

• Companies in identical or allied business.
• Balance sheet information.
• Give and take information.
• Government and trade association statistics.
• Research statistical data compiled by
  professional institutes,
• Professional conferences.
• Research scholars.
• Books, journals, news papers.
• Internet sites.

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Bench marking who practice?
TOYOTA XEROX FORD ATT DUPONT HEWLETT
PACKARD JOHNSON AND JOHNSON IBM HINDUSTAN
LEVER CITIBANK MOTOROLA CANNON RPG
GROUP ARVIND MILLS RANBAXY DCM ACC ETC.
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ABC Chemicals Limited
Inventory Management Case Study On Bench
Marking MAA Saraswati Institute of Continuous
Learning
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Inventory Management

• Problem Excess and Erratic Inventory
• Solution Benchmark Ideal Levels
• To Ensure - Smooth Flow Of Raw Materials
• Reduce Working Capital To Ideal Levels
  (Determine)
• Comfort Level In Procurement
• (Avoid Rush/ Emergency Purchase)

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Inventory Management

• Magnitude of problem Feb. 96 all time high
  inv. Rs. 499 mil.
• Objective Reduce to 250 mil. In 6 months
• How achieved ? how to improve further ?

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Constraints

• Industry data not available
• How to bench mark with the best questions?
• Are we on the right track?
• Can we do still better?

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Thank You

• T.K.Magazine
• Contact rose_at_traambiz.com