Getting Started: The Strategic Level · • Sourcing Approach • Executive Commitment • Process Classification Framework • Quest for Continuous Improvement • Knowledge Sharing

Getting Started: The Strategic Level

2©2010 APQC. ALL RIGHTS RESERVED. 2

Very Popular Scenario

My boss just told me we need to benchmark!

Where do I start?

How do you structure a benchmarking program?

Where should benchmarking report?

How do you govern benchmarking?

How do we ensure the entire organization benefits from our benchmarking activities?


Focal Point for Benchmarking Activities

Decentralized

Centralized

Full‐Time Part‐Time

9.3%

3.3%

20.8%

21.3%

10.4%

35.0%

No Focal Point

Hybrid

Source: APQC; 2009 State of Benchmarking Study.N=183


Random Acts of Improvement

Strategic

Operational

Tactical

OrganizationalPerformance

GroupPerformance

IndividualPerformance

Strategy, Goalsand Objectives

= Processes/Programs

= Benchmarking Activities


Random Acts of Improvement

Strategic

Operational

Tactical

OrganizationalPerformance

GroupPerformance

IndividualPerformance

Strategy, Goalsand Objectives

= Processes/Programs

= Benchmarking Activities


Strategy• Business

Improvement Opportunity

• Desired Market Position

• Target Market• Target Customer• Critical Success

Factors (CSF’s)• Benchmarking

Business Goal• Sourcing Approach• Executive

Commitment• Process

Classification Framework

• Quest for Continuous Improvement• Knowledge Sharing• Teamwork / Collaboration

• Learning • Open Minded • “Out of the Box” Thinking

Culture

Process• Benchmarking Methodology• Business Process Analysis• Project Management• Secondary Research

• Partner Identification• Primary Research• Partner Interviewing• Data Collection

• Data Analysis• Instrument Design• Report Development• Knowledge Transfer

Team StructureCORE

• Team Leader• Data Collectors• Analysts• Writers• Interviewers• “Out of the Box”

Thinkers

STRATEGIC• Executive Champion• Process Sponsor• Facilitator• Customer

• Project Management Skills• Process Analysis Methods• Research Methods• Data Collection Techniques

• Data Analysis Methods• Instrument / Tool Design• Interviewing Skills• Writing Skills• Presentation Skills• Implementation Skills

Competency

Tools• Benchmarking Code of Conduct• Process Classification Framework• Business Process Analysis Tools• Scope Management Tools• Project Management Software/Tools• Databases / Other Data Sources• Data Collection Software / Tools• Data Analysis Software / Tools• Report / Presentation Formats

Delivery Support• In-House Benchmarking

Competency Center• Third Party Benchmarking Company

• Executive Management• Benchmarking Partners• Implementation Support

Results

• Best Practices Identified from Inside and/or Outside the Industry

• Reduced Cycle Time for Innovation

• Avoidance of Mistakes from ‘Lessons Learned’ by Others

• Expanded Business/ Professional Network

Benchmarking Framework


Strategy

• Business Improvement Opportunity

• Desired Market Position

• Target Market• Target Customer• Critical Success

Factors (CSF’s)• Benchmarking

Business Goal• Sourcing Approach• Executive

Commitment• Process

Classification Framework

• Quest for Continuous Improvement• Knowledge Sharing• Teamwork / Collaboration

• Learning • Open Minded • “Out of the Box” Thinking

Culture

Process• Benchmarking Methodology• Business Process Analysis• Project Management• Secondary Research

• Partner Identification• Primary Research• Partner Interviewing• Data Collection

• Data Analysis• Instrument Design• Report Development• Knowledge Transfer

Team StructureCORE

• Team Leader• Data Collectors• Analysts• Writers• Interviewers• “Out of the Box”

Thinkers

STRATEGIC• Executive Champion• Process Sponsor• Facilitator• Customer

• Project Management Skills• Process Analysis Methods• Research Methods• Data Collection Techniques

• Data Analysis Methods• Instrument / Tool Design• Interviewing Skills• Writing Skills• Presentation Skills• Implementation Skills

Competency

Tools• Benchmarking Code of Conduct• Process Classification Framework• Business Process Analysis Tools• Scope Management Tools• Project Management Software/Tools• Databases / Other Data Sources• Data Collection Software / Tools• Data Analysis Software / Tools• Report / Presentation Formats

Delivery Support• In-House Benchmarking

Competency Center• Third Party Benchmarking Company

• Executive Management• Benchmarking Partners• Implementation Support

Results

• Best Practices Identified from Inside and/or Outside the Industry

• Reduced Cycle Time for Innovation

• Avoidance of Mistakes from ‘Lessons Learned’ by Others

• Expanded Business/ Professional Network

Focus of Today’s Session


Strategic Decisions You Have to Make1. Who are your customers?

2. What are your organization’s key business objectives and desired outcomes?

3. What are your Critical Success Factors (CSFs)? (What is the most direct thing you can measure that makes you successful?)

4. What are the core business processes impacting these CSFs?

5. How would you prioritize and select the processes that have the greatest impact on accomplishing your business objectives? (We all have limited resources).

6. What type of benchmarking activities are needed to improve your highest priority business processes?


Who Are Your Customers?

Internal

External

Stakeholders

Stockholders


Key Business Objectives

Should be established at the top level of the organization.Should cascade downward.

Enterprise‐level strategiesOperating units objectivesDepartment processes and programsStaff activities

Are communicated throughout the organization.Should have accompanying outcome measures.


A Balanced Perspective


Critical Success Factors

Characteristics, conditions, or variables that have a direct influence on objectives

Areas where satisfactory performance is essential in order for a business to succeed

Examples:Product Quality

Order Fulfillment

Service Responsiveness

Reliability


The APQC Process Classification Framework


Process Classification Framework (PCF)The PCF decomposes functions down to the activity level. PCF levels are: category, process group, process, and activity.

Category: The highest level within the PCF, currently 12 major enterprise‐wide macro‐processes through which an organization delivers value to its customers and stakeholders.

Process Groups: PCF items with one decimal numbering (e.g., 8.1) indicate a process group; a logical collection of processes that deliver a major output or outcome inside the macro‐enterprise process.

Process: PCF items with two decimal numberings (e.g., 8.1.1) indicate processes; a collection of activities that deliver an output for a subsequent process in the process group. Together, they allow the process group to achieve its objective within the larger macro‐enterprise process category.

Activity: Items with three decimals (e.g., 8.3.1.1 and 9.1.1.1) indicate activities.


Business ProcessesDefine Subgroups

7. Manage Information Technology and Knowledge7.1 Plan for information system management

7.1.1 Understand information and knowledge needs of business and users

7.1.2 Define and administer service levels

7.1.3 Develop information management and knowledge management strategies

7.1.4 Derive information system requirements from business strategies

7.1.5 Define enterprise information system architectures

7.1.6 Plan and forecast information technologies/methodologies

7.1.6.1 Conduct research

7.1.6.2 Manage IT offerings portfolio

7.1.7 Establish enterprise data standards

7.1.8 Establish information systems quality standards and controls

7.1.9 Establish information systems enterprise security standards and controls


Core Process Ranking


APQC’s Benchmarking Alignment WorksheetOrganizational Outcomes

(Strategies/Goals)Operational Outputs(Objectives/CSFs)

Tactical Processes and Initiatives

Process:

Metric 1:

Metric 2:

Process:

Metric 1:

Metric 2:

Process:

Metric 1:

Metric 2:

Process:

Metric 1:

Metric 2:


Strategic Goals Drivers Processes

Management Performance

Cost, Schedule & Technical Performance

On‐Time Delivery

Accurate Estimate of Work

Inventory Planning, Control

Product Dev. Cost

Rqmts. Def., Stability, Flow

Requirements Definition

Preliminary Design

Detailed Design

Design Integration

Forecasting

Production & Test Cost

Cost/Quality/On‐Time SW

Supplier Management

Market Understand, Need

Test, Verification, Validation

Financial Performance

Growth

Product Innovation

Business Transformation

A Graphical View of LinkagesObjectives


APQC’s Benchmarking Alignment Worksheet: Product Innovation Example

Organizational Outcomes(Strategies/Goals)

Operational Outputs(Objectives/CSFs)

Business Processes and Initiatives

Product Innovation Cost, Schedule & Technical Performance(Metric: Product Development Costs)

• Process: Requirements Definition

• Metric: Total Cost of Requirements Gathering Phase

• Process: Preliminary Design

• Metric: Total Cost of Preliminary Design Phase

• Process: Detailed Design• Metric: Total Cost of Detailed Design Phase

• Process: Design Integration

• Metric: Total Cost of Design Integration Phase


Understanding Your Process


Process Map Example


APQC’s Benchmarking Alignment Worksheet

Organizational Outcomes

(Strategies/Goals)

Operational Outputs(Objectives/CSFs)


Scope of Benchmarking

Activities

Process: Benchmarking Scope:

Metric 1: Metric 1:

Metric 2: Metric 2:


Metric 1: Metric 1:

Metric 2: Metric 2:


Metric 1: Metric 1:

Metric 2: Metric 2:


Metric 1: Metric 1:

Metric 2: Metric 2:


APQC’s Benchmarking Alignment Worksheet: Product Innovation Example

Business Processes and Initiatives Scope of Benchmarking Activities

• Process: Requirements Definition• Metric: Total Cost of Requirements Gathering Phase

• Technology enablement of requirements definition.

• Metric: Total IT costs for product innovation requirements gathering.

• Process: Preliminary Design • Metric: Total Cost of Preliminary Design Phase

• Role of engineering in preliminary design phase.

• Metric: Total hours spent by engineering FTE during preliminary design phase.

• Process: Detailed Design• Metric: Total Cost of Detailed Design Phase

• Process: Design Integration• Metric: Total Cost of Design Integration Phase


Organizational Forecasting ExampleOrganizational Outcomes

(Strategies/Goals)Operational Outputs(Objectives/CSFs)


Top Performing WorkingCapital Management

Top Performing Financial Process Management

Process: Budgeting

Metric 1: Cycle Time to Complete Annual Budget

Process: Forecasting

Metric 1: Cycle Time to Complete MonthlyFinancial Forecast

Process: MarketEvaluation

Metric 1: Cycle Time to perform financial evaluation of changing market conditions and their impact on product mix


Results of Benchmarking Exercise

102

22

32

68

1015

42

4 5

0

20

40

60

80

100

120 Company A

Median

Top

Cycle time to complete annual budget(days)

Cycle time to complete financial forecast(days)

Cycle time to perform financial evaluation of changing market conditions and their impact on product mix(days)


Questions?

Next Step: Lunch!


Working Session Exercise

Complete a Benchmarking Alignment Worksheet.

We’ll report out and discuss as a group


Parking Lot Questions?

Getting Started: The Strategic Level · • Sourcing Approach • Executive Commitment • Process Classification Framework • Quest for Continuous Improvement • Knowledge Sharing

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