1 ©2006, all rights reserved Best Practice Institute Best Practice Benchmarking Best Practice Benchmarking Robert C. Camp PhD, P E Principal, Best Practice Institute President (Emeritus), Global Benchmarking Network President, Council of Logistics Management No part of this publication may be reproduced, transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise stored in any information storage or retrieval system of any nature, without the prior written permission of the author. For Global Competition and Cooperation

2 ©2006, all rights reserved Best Practice Institute Key Messages l Critical Need For Benchmarking F Today's Imperatives demand innovative change l Global Initiative For Excellence F Worldwide search and best practice mastery l Proven Steps For Success F Improve A Critical Process (What) F Source Best Practice Partners (Whom) F Document Superior Practices (Info. Resources) l Breakthrough Results Continue

3 ©2006, all rights reserved Best Practice Institute Todays Imperatives l More l Better l Faster l Cheaper l Growth F Profitable growth F New markets, products l Quality/Satisfaction F Meeting requirements F Customer Loyalty l Cycle Time Compression F Non-value added F No value added l Return on Assets F Business results F Human assets

4 ©2006, all rights reserved Best Practice Institute Key Factors for Successful Change l Believing there is a NEED for change l Determining WHAT you want to change l Developing a PICTURE of what you want to look like after the change

5 ©2006, all rights reserved Best Practice Institute Benchmarking Makes Change Successful l The GAP between internal and external practices creates the NEED for change l Understanding industry BEST PRACTICES identifies WHAT you must change l The composite practices gives a PICTURE of the END POINT after the change

6 ©2006, all rights reserved Best Practice Institute How To and Case Study Books ASQ Quality Press, , fax,

7 ©2006, all rights reserved Best Practice Institute Changing Popularity Source:Fortune, Bain & Co.

8 ©2006, all rights reserved Best Practice Institute Top 10 Tool Usage (1993 to Present) Usage Rank% First Year Satisfaction Strategic Planning*83%79% CRM*** Benchmarking Outsourcing** Customer Segmentation** Mission/Vision Statements Core Competencies Strategic Alliances Growth Strategies* Process Reengineering TQM *Added in 1996, **Added in 1998, ***Added in 2000Source: Bain & Co.

9 ©2006, all rights reserved Best Practice Institute Worldwide Reach (Organizations & Processes)

10 ©2006, all rights reserved Best Practice Institute Worldwide Reach (Cost Savings & Benefits)

11 ©2006, all rights reserved Best Practice Institute Benchmarking is... The process of identifying, understanding and adapting superior practices from organizations locally and worldwide to help your organization improve its performance and achieve priority business results

12 ©2006, all rights reserved Best Practice Institute Critical Focus How High? How does he vault that high? Technique Coaching Conditioning, Nutrition Psychological Preparation Choice of pole WRONG FOCUS RIGHT FOCUS POTENTIAL PRACTICES FOR BEST PERFORMANCE

13 ©2006, all rights reserved Best Practice Institute Types of Benchmarking l Internal (20%) l Competitive (10%) l Functional (35%) (Selection Criteria) l Generic Process (35%) Similar operations within an organization The best direct competitors The same function outside the industry Innovative, exemplary work processes Comparison to:

14 ©2006, all rights reserved Best Practice Institute Improve A Critical Process (What) Objective: Improve a Mission Critical Process Steps: Identify (List), Prioritize, Document, Analyze and Develop Vital Few Measures for a Key Work Process Outcome: Process Defined for Best Practice Search

15 ©2006, all rights reserved Best Practice Institute Supply Chain Detail BUYBUY REPROCESS DISPOSEDISPOSE INSTALLINSTALL ACQUIREACQUIRE TEAR DOWNREMOVE BUILDDELIVERY DISTRIBUTE A closed loop Supply Chain operation providing an extensive capability from new product production, through to asset recovery and disposal

16 ©2006, all rights reserved Best Practice Institute Improvement Opportunity Data not available 100% 2.2 days 98.4% 6 days 19 days 5.6% $461K 34.8 days 33.4 days % 5.6 days 79.3% 30 days 76 days 9.7% $239K 68.5 days 84.5 days 1.7 Your organizations performance

17 ©2006, all rights reserved Best Practice Institute The Supply-Chain Advantage Automotive Appliances Chemical Computer Packaged Goods Pharmaceutical Semiconductor Telecom Industry 4.3% 8.8% 8.1% 14.1% 6.4% 12.0% 7.3% 6.5% 11.9% 13.3% 3.9% 5.8% 9.1% 7.4% 14.1% 10.4% Best in ClassAverage (Percentage of company revenue spent on supply-chain activities)

18 ©2006, all rights reserved Best Practice Institute Source Best Practice Partners (Whom) Objective: Source Partners For Best Practice Exchange Steps: Best Competitors and Functional Industry Leaders, Think Laterally, by Analogy, Generalize the Concept Outcome: Best Practice Organizations Identified

19 ©2006, all rights reserved Best Practice Institute Best Practice Search Customer HQ Cold call 800 number Answer center Suppliers Research Web pages Posting board Associations Publications Annual Report Referral Colleague Conference VIP reference Periodical Best practice Award winner Case study Academia Network Coordinator Consortium Consultants Software Previous study

20 ©2006, all rights reserved Best Practice Institute Document Superior Practices (Information Resources) Objective: Identify Existing Best Practice Information Steps: Information Sources (Which are Primary?), Information Searches (How conducted?), Site Visits Outcome: Best Practice Findings Reports Obtained

21 ©2006, all rights reserved Best Practice Institute Best Practice Collection Alternative Approaches Key: Essential, Priority, Procedural

22 ©2006, all rights reserved Best Practice Institute Mine Haul Truck Courtesy Caterpillar Inc.

23 ©2006, all rights reserved Best Practice Institute Best Practice Management Dilemma: l If we only knew what we know F Jack Swindle, Director, Texas Instruments Solution: l Leverage the organizations Best Practice knowledge for maximum value

24 ©2006, all rights reserved Best Practice Institute Benchmarking Future Will be less formal, done faster, less cost. Done in distributed, networked environment. Use real time, interactive meeting technology. Fewer site visits, electronic with desktop video. Information sharing unique to competitive markets. Pre-packaged, best practice learning, case studies. Key strategic planning need for continuous innovation.

25 ©2006, all rights reserved Best Practice Institute Benchmarking A CRITICAL TOOL FOR HOW YOU RUN YOUR BUSINESS A Strategic Strength When Practiced A Fatal Weakness if not Pursued

26 ©2006, all rights reserved Best Practice Institute THE RISE AND FALL OF FADS Influence Index T-Group Training Brainstorming Theory X and Theory Y Satisfiers / Dissatisfiers Managerial Grid Decision Trees Management by Objectives Conglomeration Theory Z One-Minute Managing Corporate Culture Intrapreneuring Kanban Matrix MBWA Portfolio Management Restructuring Excellence Quality Circles Wellness Decentralization Value Chain Zero - Base Budgeting Strategic Business Units Theory Z Experience Curve Diversification From: Managing on the Edge; Pascal, Richard T., p 20

27 ©2006, all rights reserved Best Practice Institute MESSAGE The mean life of productivity improvement fads has been 8.3 years. BEST PRACTICE BENCHMARKING has been used for over 20 years. Why? because It works

28 ©2006, all rights reserved Best Practice Institute A View of Benchmarking The prime objective of benchmarking is to understand those practices which will provide a competitive advantage in the market place; target setting is secondary. Paul Allaire Chairman, Xerox Corporation

29 ©2006, all rights reserved Best Practice Institute I Need You To Benchmark!