6/23/2019 1 Consistent Benchmarks For Competitive Analysis June 22, 2019 ALM Clean Show New Orleans, LA Kevin Martlage Senior Consultant, .orgSource • Introduction • What is Benchmarking? • Why is Benchmarking Important? • Case Study Example of Benchmarking • How to Use Benchmarking • What Makes Benchmarking Successful and Relevant • Benefits of Benchmarking for Competitive Analysis Consistent Benchmarks For Competitive Analysis • Joined .orgSource in January 2019 • Senior Consultant • 4 years with the International Society of Arboriculture • Director of Credentialing • 11 Years working for FedexOffice • Various Levels – District Manager, Senior Manager, Center Manager • 3 Years with Bowne Business Solutions • National Account Manager • 3 Years with Xerox Business Services • Client Account Manager • 2 Years with Galyan’s Trading Company • Department Manager Kevin Martlage - Introduction
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Consistent Benchmark For Competitive Analysis...The Xerox Benchmarking Stages Excellence in Benchmarking, Ou and Kliener, “Industrial Management” pp 22-23 Industry Best Practice
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6/23/2019
1
Consistent Benchmarks For Competitive Analysis
June 22, 2019ALM Clean ShowNew Orleans, LA
Kevin MartlageSenior Consultant, .orgSource
• Introduction
• What is Benchmarking?
• Why is Benchmarking Important?
• Case Study Example of Benchmarking
• How to Use Benchmarking
• What Makes Benchmarking Successful and Relevant
• Benefits of Benchmarking for Competitive Analysis
Consistent Benchmarks For Competitive Analysis
• Joined .orgSource in January 2019 • Senior Consultant
• 4 years with the International Society of Arboriculture• Director of Credentialing
• 11 Years working for FedexOffice • Various Levels – District Manager, Senior Manager, Center Manager
• 3 Years with Bowne Business Solutions• National Account Manager
• 3 Years with Xerox Business Services • Client Account Manager
• 2 Years with Galyan’s Trading Company• Department Manager
Kevin Martlage - Introduction
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What is Benchmarking?
Webster’s Dictionary Defines Benchmarking as:
benchmark nounbench·mark | \ ˈbench-ˌmarka: something that serves as a standard by which other may be measured or judged
b: a point of reference from which measurements may be made
c: a standardized problem or test that serves as a basis for evaluation or comparison
Some common false impressions of benchmarking:
• Benchmarking is all about numbers
• Benchmarking is copying
• Benchmarking is spying or espionage
• Benchmarking is a one-time event
The biggest point of confusion typically arises from the classification and in the understanding of the different types. This would include
deciding what type is best for your situation or project.
What is Benchmarking?
Benchmarking Handbook, Step by Step Instructions
What is Benchmarking?
The key objectives of benchmarking is performance improvement and understanding.
• Identification of opportunities• Assistance in setting goals• Discovery• Prioritization
Ultimately you are trying to identify a target you wish to compare to and set targets against to achieve a goal
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Benchmarking can be a very powerful tool for numerous reasons:• Business Development• Process Improvement• Industry Comparisons• Competitive Advantage• Marketing Plan Development• Hundreds of others….
Why Is Benchmarking Important?
It is an established tool for process and performance improvement
Classification Type Definition
Comparison Target Internal Benchmarking Comparing within one organization
Competitor Benchmarking Comparing with competitors
Industry Benchmarking Comparing with firms in the same industry
Generic Benchmarking Comparing with companies regardless of industry
Content for Comparison Process Benchmarking Focus on work processes
Functional Benchmarking Compare specific business functions
Strategic benchmarking Focus on strategic and not operational choices
What is Benchmarking?
The Benchmarking Book, published by the American Management Association
ALM
ALM
Some Industry Examples?
Estimated 70% of Large US
Corporations were using
benchmarking in 1990
Fedex
Motorola
Internal Revenue Service
Xerox
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Most Scholars agree that Xerox was the pioneer that started benchmarking in the 1970’s, to compare themselves to competitors in relation to manufacturing costs and product features.
Xerox was falling behind their Japanese competitors in several different areas and were losing market share.• They failed to react to this in a timely manner• Xerox created a strategy known as “Leadership Through Quality”
to recapture its position in the market
Industry Best Practice - Xerox
“Leadership Through Quality” was Xerox’s approach to benchmarking and is what many believe to be the leading example of the successful implementation of benchmarking”.
Through the “Leadership Through Quality” program, Xerox was able to:• Reduce cost while emphasizing quality• Recover lost market share• Develop a benchmarking model that helped them understand
what was going onXerox: The Benchmarking Story
Industry Best Practice - Xerox
The Xerox Leadership Through Quality program identified the following areas that caused the Xerox Executive Team to address by developing their benchmarking model.• It took Xerox twice as long as their competitors to bring a
product to market• Five times the number of engineers• Four times the number of design changes• Three times the design costs• This resulted in Xerox needing to increase production by 18%
annually to keep pace with their competitors. Reported by the IBS Center for Management Research
Industry Best Practice - Xerox
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Not only focused on internal process improvement and competitive advantage, Xerox also utilized generic benchmarking to assist in other areas.
“In total, Xerox benchmarked over 200 performance areas during the 1980s.”
Benchmarking for Best Practices: Winning Through Innovative Adaptation, Christopher Bogan and Michael English
Industry Best Practice - Xerox
Planning• ID what is being benchmarked• ID best performers for comparison• Determine Data Collection method and collect data
Analysis• Determine current performance gap• Project future performance levels
Integration• Communicate findings and gain acceptance• Establish functional goals
Maturity• Practices integrated into processes?• Leadership position attained?
The Xerox Benchmarking
Stages
Excellence in Benchmarking, Ou and Kliener, “Industrial Management” pp 22-23
• Policies and procedures are updated as we continue to monitor and adjust
• Identify if results were successful and met
• Communicate the improvements and changes to performance to appropriate stakeholders
Benchmarking is only as good as the information being reviewed?• A specific area or best practice must be identified• You have to determine what you are comparing
• Internal• External
• What are the outcomes that you are looking for?• How are you going to achieve those outcomes?• What KPIs or monitoring will be completed to determine
success?
How do you ensure the information being collected is accurate?
Using Benchmarking To Improve a Process
What Makes Benchmarking Successful and Relevant?
Ensure diversity
Commitment to the process
Identify critical success factors
Use only credible information and research
Data CollectionKey Attribute
Builds Trust and
Transparency
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Benefits Of Benchmarking For Competitive Analysis
Linen Industry Specific Benchmark Examples
Volume Based Metrics• Lost Workdays• Recordable Injuries• Pounds per Operator Hour• Direct Labor Cost per CWT• Overtime Percentage• Linen Inventory Costs per CWT• Garment Utilization• Washroom Chemical Cost per CWY• Water Usage per Pound• BTUs per Pound• kWh per Pound
Revenue Based Metrics• Revenue per Pound• Labor Cost as Percentage of Sales• Garment Inventory Costs as Percent
of Sales• Linen Inventory Cost as Percent of
Sales• Washroom Chemical Costs as Percent
of Sales
Benefits Of Benchmarking For Competitive Analysis
How To Use Industry Metrics to Improve Performance
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20
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60
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100
120
140
160
PPOH (2016) PPOH (2017) PPOH (2018) PPOH (2019)
Corporation A – Pound Per Operator Hour (PPOH) Trend
Location 1 Location 2 Location 3
Benefits Of Benchmarking For Competitive Analysis
Planning• ID what is being benchmarked• ID best performers for comparison• Determine Data Collection method and collect data
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20
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PPOH (2016) PPOH (2017) PPOH (2018) PPOH (2019)
Corporation A – PPOH Trend
Location 1 Location 2 Location 3
• Metric has been identified – PPOH
• Location 1 is the best performer
• How is the data collected and verified?
How To Use Industry Metrics to Improve Performance
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Benefits Of Benchmarking For Competitive Analysis
0
20
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100
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140
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PPOH (2016) PPOH (2017) PPOH (2018) PPOH (2019)
Corporation A – PPOH Trend
Location 1 Location 2 Location 3
• What is causing the performance gap identified?
• What is the acceptable performance level that needs to be obtained?
Analysis• Determine current performance gap• Project future performance levels
How To Use Industry Metrics to Improve Performance
Benefits Of Benchmarking For Competitive Analysis
0
20
40
60
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100
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PPOH (2016) PPOH (2017) PPOH (2018) PPOH (2019)
Corporation A – PPOH Trend
Location 1 Location 2 Location 3
• Communicate the findings with the executive team and necessary personnel
• Determine the functional goal necessary to reach the desired goal
Integration• Communicate findings and gain acceptance• Establish functional goals 2020 Goal – 130 PPOH
How To Use Industry Metrics to Improve Performance
Benefits Of Benchmarking For Competitive Analysis
• Work with Executive Team to develop necessary action plans
• Implement and communicate those action plans to the necessary departments