Six Sigma Continuous Improvement Training Introduction to Benchmarking Six Sigma Simplicity

Key Learning Points  Steal Shamelessly  Use the Experience of Others  Plan to improve  Steal Shamelessly  Use the Experience of Others  Plan to improve

What is it: A comparative analysis technique intended to help performance improvement initiatives to set reasonable targets and to obtain vital process design information When to use it: When the need to change or the degree of change is in debate and the process owner and/or other individuals need quantitative evidence that improvement is necessary and realistic Benefits: Helps a learning organization gain insight into leading practices and competitor capabilities What is it: A comparative analysis technique intended to help performance improvement initiatives to set reasonable targets and to obtain vital process design information When to use it: When the need to change or the degree of change is in debate and the process owner and/or other individuals need quantitative evidence that improvement is necessary and realistic Benefits: Helps a learning organization gain insight into leading practices and competitor capabilities BenchmarkingBenchmarking

DefinitionDefinition  Benchmarking:  A process of making improvements supported by structured data collection which involves third parties  Benchmarking:  A process of making improvements supported by structured data collection which involves third parties

When to use Benchmarking  When the team is working on processes so weak that they appear not to exist  When your team is attempting something they have never done before  When the team is considering applying a technology or strategy from competition or another business sector  When you need fresh ideas  When the team is working on processes so weak that they appear not to exist  When your team is attempting something they have never done before  When the team is considering applying a technology or strategy from competition or another business sector  When you need fresh ideas

Results of Benchmarking  Refine Existing Process  pursue process improvement  Emulate  model a best practice – match the best  Leap Frog  combine best of the best – exceed the best  Change the Rules  borrow from another industry – aggressive competition  Refine Existing Process  pursue process improvement  Emulate  model a best practice – match the best  Leap Frog  combine best of the best – exceed the best  Change the Rules  borrow from another industry – aggressive competition

 Decide what to benchmark and why  Define the data requirements  Qualify the targets (set baseline)  Select partners  Make arrangements to collect data and possibly visit the target location  Decide what to benchmark and why  Define the data requirements  Qualify the targets (set baseline)  Select partners  Make arrangements to collect data and possibly visit the target location Benchmarking

 Develop interview guide  Obtain the data  Validate the data  Do comparison analysis  Check for sensibility  Prepare report and gap analysis  Implement a plan of action  Develop interview guide  Obtain the data  Validate the data  Do comparison analysis  Check for sensibility  Prepare report and gap analysis  Implement a plan of action Benchmarking

 Roles: Who does the process and what tasks are performed?  Statistical: What results does the process produce?  Process: How is the process designed and operated?  4 types of benchmarks:  Internal: peer group Business Units or Divisions  External: industry peer group competitors  External: world class industry  Best-in-class (BIC) processes  Roles: Who does the process and what tasks are performed?  Statistical: What results does the process produce?  Process: How is the process designed and operated?  4 types of benchmarks:  Internal: peer group Business Units or Divisions  External: industry peer group competitors  External: world class industry  Best-in-class (BIC) processes Benchmarking

Five Stages Reactions to Benchmarking Bargaining Denial Depression Anger

 Step 1: Preventative actions (future)  Documented feedback for lessons learned  Update system  Step 2: Preventative actions (existing)  Examine current system and process. If none, perform root cause analysis  Inform/ initiate the relevant operational team for the potential corrective actions and follow up  Step 1: Preventative actions (future)  Documented feedback for lessons learned  Update system  Step 2: Preventative actions (existing)  Examine current system and process. If none, perform root cause analysis  Inform/ initiate the relevant operational team for the potential corrective actions and follow up After Benchmarking Prevent Recurrence

Plan for success: Step by Step 1. Define Scope 2. Form Team 3. Set Baseline 4. Select Partners 1. Define Scope 2. Form Team 3. Set Baseline 4. Select Partners  First agree what result you are trying to achieve:  Refine Existing Process  Emulate  Leap Frog  Change the Rules

What questions to ask 5. Develop Interview guide Quantitative questions. e.g To compare the lead times of 4 locations what do you ask for? a) average + standard deviation of lead-time b) capability to achieve a target c) run chart + identification of special causes d) upper quartile lead time e) how many readings do you need? f) should the samples be the same size? Qualitative questions to ease analysis use a scale such as 1- I agree strongly 5 - I disagree strongly Pilot to check for understanding and consistency of answer 5. Develop Interview guide Quantitative questions. e.g To compare the lead times of 4 locations what do you ask for? a) average + standard deviation of lead-time b) capability to achieve a target c) run chart + identification of special causes d) upper quartile lead time e) how many readings do you need? f) should the samples be the same size? Qualitative questions to ease analysis use a scale such as 1- I agree strongly 5 - I disagree strongly Pilot to check for understanding and consistency of answer

GAP analysis 6. A tool - Collect/ Interpret data

Solution - Effect 7. Develop Action Plan 1) Proposed Solution 2) Anticipated effects of solution

8. Implement Plan 9. Institutionalize Here you apply the CI tools that are appropriate to your projects scope i.e. charter and schedule improvements as Kaizens /Projects and monitor the metrics with your steering committee. 8. Implement Plan 9. Institutionalize Here you apply the CI tools that are appropriate to your projects scope i.e. charter and schedule improvements as Kaizens /Projects and monitor the metrics with your steering committee. Implement and Document

Benchmarking and leading change  Identifies burning platform for change  Can identify quick wins  Affirms success and acknowledges that we need to involve others to improve  Shares need to compete using data & demonstration  Identifies burning platform for change  Can identify quick wins  Affirms success and acknowledges that we need to involve others to improve  Shares need to compete using data & demonstration

Benchmarking and leading change  Shares vision of what needs to change by how much  Mobilises commitment by involving people. Team and process owner immersed in many levels of communication  Measurement drives behaviour  Shares vision of what needs to change by how much  Mobilises commitment by involving people. Team and process owner immersed in many levels of communication  Measurement drives behaviour

Overview of Benchmarking Process 1. Define Scope 2. Form Team 3. Set Baseline 4. Select Partners 5. Develop Interview guide 6. Collect/Interpret data 7. Develop Action Plan 8. Implement Plan 9. Institutionalize 1. Define Scope 2. Form Team 3. Set Baseline 4. Select Partners 5. Develop Interview guide 6. Collect/Interpret data 7. Develop Action Plan 8. Implement Plan 9. Institutionalize

Congratulate the team!

Six Sigma Continuous Improvement Training Introduction to Benchmarking