Strategy is the practice of being humble enough to
admit that someone else is better at something, and
being wise enough to learn how to match them and even
surpass them at it.
MGN571
CORPORATE STRATEGY AND DECISION
SIMULATION
Benchmarking
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LEARNING OBJECTIVES
Understand what is
benchmarking and how it is
done?
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GOSH-ABOUT THE HOSPITAL
 Child Care
 Founded in 1852 (Era of high infant mortality & Malnutrition)
 First children’s hospital in English Speaking world
 Largest pediatric epilepsy surgery centre in UK & second largest in Europe
 Excellent Rating (6/157)
 Infrastructure & Facilities
 335 Bed hospital
 315 Doctors
 900 registered nurses
 135 Healthcare professionals
 Largest unit treating children’s brain tumors
 Largest pediatric ICU in UK (48 bed, 8 high dependency beds & 5 transitional Beds)
SITUATION
 Mid 1990s High morality for surgery
 Contentious Public Inquiry
 Study-Journey from operating room to the intensive care unit was-HIGH RISK
 Staff related factors
 Patient Related factors
RECEPTIVE FOR CHANGE
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BENCHMARK
Allan Goldman
Martin Elliot
PIT STOP
HANDOVER
WHAT WAS LEARNED?
• Way of addressing possible failure
• Everyone’s idea was given equal weight
• Failure Modes and Effect Analysis
• Process mapping & Description
• Describe people’s task
• Key to Successful Pit Stop
• The routine in the pit stop is taken seriously
• What happens in pits top is predictable so problems can be anticipated and
procedures can be standardized
• Crews practice those procedures until perfection
• Everyone know their job
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IMPLEMENTATAION
Videotape
handover
RORMULA1
TEAM
 Filming & Rehearsals
 Dance Choreographer
 Lollipop
12 PAGE
HANDOVER PROTOCOL
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WHAT WASN’T TRANSFERABLE
• Engineer out parts & get new equipment's
• Multiple Rehearsals not possible
• Too many permutations of what could go wrong
• Machine Vs. Human Life
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RESULT
 The mean number of technical errors was reduced from 5.42 (95% CI ±1.24) to
3.15 (95% CI ±0.71)
 The mean number of information handover omissions was reduced from 2.09
(95% CI ±1.14) to 1.07 (95% CI ±0.55)
 Duration of handover was reduced from 10.8 min (95% CI ±1.6) to 9.4 min (95%
CI ±1.29).
 Nine out of twenty-three (39%) precondition patients had more than one error in
both technical and information handover prior to the new protocol, compared with
three out of twenty-seven (11.5%) with the new handover.
 Regression analysis showed that the number of technical errors were significantly
reduced with the new handover (t = −3.63,P < 0.001)
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SOME OTHER EXAMPLES
PROBLEM
Long admittance times in hospitals
COMPARED WITH
Hotel receptions
Too lengthy setup of machines
Formula 1 pit crews
Planning the delivery of fresh concrete
Hot pizza delivery
Unstructured maintenance of power turbines
Maintenance of
aircraft engines
Difficult to manufacture shell cases with the
smooth surface
Manufacturing of
lipstick tubes right
cylindrical shape
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WHY
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DEFINITION
Xerox Corporation is credited with originating the practice of
benchmarking among American companies. Xerox’s chief executive,
David Kerns, defined benchmarking as “the continuous process of
measuring products, services, and practices against the toughest
competitors or those recognized as industry leaders.”
Robert Camp, the logistics engineer who initiated Xerox’s
benchmarking program and who is generally regarded as the guru of
the benchmarking movement, offered an even simpler definition.
“Benchmarking is the search for industry best practices that lead to
superior performance”
Xerox
Benchmarking against Japanese competitors, Xerox found out that it took twice as
long as its Japanese competitors to bring a product to market, five times the
number of engineers, four times the number of design changes, and three times
the design costs.
The company also found that the Japanese could produce, ship, and sell units for
about the same amount that it cost Xerox just to manufacture them.
In addition, Xerox's products had over 30,000 defective parts per million - about 30
times more than its competitors.
Benchmarking also revealed that Xerox would need an 18% annual productivity
growth rate for five consecutive years to catch up with the Japanese.
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BENCHMARKING
Xerox initiated functional benchmarking with the study of the warehousing and
inventory management system of L.L. Bean (Bean), a mail-order supplier of sporting
goods and outdoor clothing. Bean had developed a computer program that made
order filling very efficient. The program arranged orders in a specific sequence that
allowed stock pickers to travel the shortest possible distance in collecting goods at
the warehouse.
Xerox zeroed in on various other best practice companies to benchmark its other
processes. These included American Express (for billing and collection), Cummins
Engines and Ford (for factory floor layout), Florida Power and Light (for quality
improvement), Honda (for supplier development), Toyota (for quality management),
Hewlett-Packard (for research and product development), Saturn (a division of
General Motors) and Fuji Xerox (for manufacturing operations) and DuPont (for
manufacturing safety).
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RESULTS
Overall customer satisfaction was rated at more than 90% in 1991. Some of the other benefits
Xerox derived were:
• Number of defects reduced by 78 per 100 machines.
• Service response time reduced by 27%.
• Inspection of incoming components reduced to below 5%.
• Defects in incoming parts reduced to 15 0ppm.
• Inventory costs reduced by two-thirds.
• Marketing productivity increased by one-third.
• Distribution productivity increased by 8-10 %.
• Increased product reliability on account of 40% reduction in unscheduled maintenance.
• Notable decrease in labour costs.
• Errors in billing reduced from 8.3 % to 3.5% percent.
• Became the leader in the high-volume copier-duplicator market segment.
• Country units improved sales from 152% to 328%.
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TYPES OF BENCHMARKING
Strategic Benchmarking: Aimed at improving a company's overall performance by
studying the long-term strategies and approaches that helped the 'best practice‘
companies to succeed. It involves examining the core competencies, product/service
development and innovation strategies of such companies.
Competitive benchmarking or Performance Benchmarking: Used by companies to
compare their positions with respect to the performance characteristics of their key
products and services. Competitive benchmarking involves companies from the same
sector.
Process Benchmarking: Used by companies to improve specific key and operations
with the help of best practice organizations involved in performing similar work or
offering similar services.
Functional Benchmarking or Generic Benchmarking: Used by companies to
improve their processes or activities by benchmarking with other companies from
different business sectors or areas of activity but involved in similar functions or work
processes.
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POLL
Which best describes the process of benchmarking?
a) Comparison of actual performance with budget
b) Comparison of the costs of one product with another
c) Comparison of direct competitors' performance
d) Comparison of the performance of one operation or business with another
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THANK YOU
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