2 Highlights What is bench mark ? Bench marking – background Why bench mark? DANTOTSU Bench marking – evolution Bench mark – a bird’s 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
3 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 company’s toughest competitors or those companies renowned as industry leaders” =Robert camp=
4 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. What is bench mark?
5 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”.
6 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.
7 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 methods…wherever 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= Why bench mark?
8 BENCH MARKING IS CARVED OUT OF JAPANESE WORD DANTOTSU “STRIVING TO BE THE BEST OF THE BEST”
9 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.
10 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. Bench marking-Evolution
11 While utilizing bench marking techniques, Xerox discovered that their manufacturing process was grossly inefficient and cost ineffective. Xerox did massive business re-engineering during 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. Bench marking-Evolution
12 Benchmarking-a bird’s eye view -Where we want to be WORLD CLASS CUSTOMER REQUIREMENTS INDUSTRY BEST CURRENT PERFORMANCE WHERE WE ARE GOAL 1 GOAL 2 GOAL 3
13 Bench marking-where to apply? Strategic Planning……Forecasting Marketing…..Customer Satisfaction Manufacturing……….Quality Control Buying……….Inventory Control Employee Skills……Goal Setting Asset Utilization………Cost Reduction
14 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.
15 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
16 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.
17 Bench marking – who practice? TOYOTAXEROX FORDAT&T DUPONTHEWLETT PACKARD JOHNSON AND JOHNSONIBM HINDUSTAN LEVERCITIBANK MOTOROLACANNON RPG GROUPARVIND MILLS RANBAXYDCM ACCETC.
18 ABC Chemicals Limited Inventory Management Case Study On Bench Marking MAA Saraswati Institute of Continuous Learning
19 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)
20 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 ?
29 Constraints Industry data not available How to bench mark with the best questions? Are we on the right track? Can we do still better?