BenchmarkingBenchmarking

BenchmarkingBenchmarking

““People seldom improve when they People seldom improve when they have no other model but have no other model but themselves to copy after…”themselves to copy after…”

-Oliver -Oliver GoldsmithGoldsmith

writer, poet, and physicianwriter, poet, and physician

1728 –17741728 –1774

BenchmarkingBenchmarking

Defined as:Defined as:A process of COMPARING and MEASURING A process of COMPARING and MEASURING an organization’s preparations of its an organization’s preparations of its internal process against those of a BEST-IN-internal process against those of a BEST-IN-CLASS PERFORMER FROM INSIDE OR CLASS PERFORMER FROM INSIDE OR OUTSIDE ITS INDUSTRY.OUTSIDE ITS INDUSTRY.

Objective:Objective: To have major performance To have major performance improvement achieved quickly.improvement achieved quickly.

BenchmarkingBenchmarking

× CheatingCheating× ImmoralImmoral

× UnethicalUnethical× IllegalIllegal

× Industrial Espionage (Spying)Industrial Espionage (Spying)

Benchmarking helps establish where Benchmarking helps establish where improvement resources should be improvement resources should be allocated.allocated.

Benchmarking allows company to Benchmarking allows company to finds secrets of success so that they finds secrets of success so that they can learn from the information – and can learn from the information – and improve on it.improve on it.

To close the gap with the best-in-To close the gap with the best-in-class performer without having to class performer without having to start all over.start all over.

Benchmarking VS Competitive AnalysisBenchmarking VS Competitive Analysis

Competitive Analysis – Comparing a competitor’s Competitive Analysis – Comparing a competitor’s product against our product.product against our product.

Benchmarking – Benchmarking – • Beyond competitive analysisBeyond competitive analysis Comparing how the Comparing how the

product is engineered, manufactured, distributed and product is engineered, manufactured, distributed and supported.supported.

• Focuses on processes and practices, not product.Focuses on processes and practices, not product.• Done by consenting agentDone by consenting agent• Is a component of total qualityIs a component of total quality• Intent of benchmarking is to become the best –in-class, Intent of benchmarking is to become the best –in-class,

not just simply improved.not just simply improved.

Rationale for benchmarkingRationale for benchmarking

It makes no sense to stay locked in It makes no sense to stay locked in an isolated laboratory trying to an isolated laboratory trying to invent a new process that will invent a new process that will improve the product, when that improve the product, when that process already exist.process already exist.Eg; Company A might take 4 years to Eg; Company A might take 4 years to have the improvement, but after have the improvement, but after have improved, they are still lagged have improved, they are still lagged by 2 years by their competitorsby 2 years by their competitors

Just in Time (JIT)Just in Time (JIT) Defined as;Defined as;

• Producing only what is needed , when it is needed, and Producing only what is needed , when it is needed, and in the quantity needed. (See Figure 21-3)in the quantity needed. (See Figure 21-3)

JIT is not so much related with supplier activities, but more to manufacturing floor activities.JIT is not so much related with supplier activities, but more to manufacturing floor activities. There are 5 discrete processes, each carried out by one worker (see figure 21-1)There are 5 discrete processes, each carried out by one worker (see figure 21-1) Traditional approach: Place a bulk material in a warehouse, doing so many pieces at one time.Traditional approach: Place a bulk material in a warehouse, doing so many pieces at one time. However, JIT controls the line from the output (customers).However, JIT controls the line from the output (customers). After received an order, final assembly process is turned on. Then the assembler pulls After received an order, final assembly process is turned on. Then the assembler pulls

required material to the process enough to refill the required number made by final assembly required material to the process enough to refill the required number made by final assembly process.process.

Similarly, the same fabrication process is pull from the preceding processSimilarly, the same fabrication process is pull from the preceding process

Figure 21-1Figure 21-1

Rationale for JITRationale for JIT Mass production manufacturer set schedules Mass production manufacturer set schedules

based on a forecast of future needs based on based on a forecast of future needs based on historical data and trend. (See Figure 21-2)historical data and trend. (See Figure 21-2)

Weakness – NO ONE can predict the future Weakness – NO ONE can predict the future certainty.certainty.• Edsel case (page 699)- automobile produced with great Edsel case (page 699)- automobile produced with great

fanfare but disinterested publics. fanfare but disinterested publics. • Coca-Cola also suffered.Coca-Cola also suffered.• IBM caseIBM case

This shows that it is DIFFICULT to try to determine This shows that it is DIFFICULT to try to determine beforehand what will sell and in what quantity.beforehand what will sell and in what quantity.

Figure 21-2: Factory producing to forecast demand Figure 21-2: Factory producing to forecast demand (mass production)(mass production)

Figure 21-3Figure 21-3

Taiichi Ohno, (JIT creator) saw mass Taiichi Ohno, (JIT creator) saw mass production system produced waste at production system produced waste at every step of the way.every step of the way.

7 types of wastes;7 types of wastes;• OverproducingOverproducing• WaitingWaiting• TransportingTransporting• Processing itselfProcessing itself• Having unnecessary stock on handHaving unnecessary stock on hand• Using unnecessary motionUsing unnecessary motion• Defective goodsDefective goods

Eliminating these wastes, will produce Eliminating these wastes, will produce better products at low cost.better products at low cost.

JITJIT Assume the supermarket is the Assume the supermarket is the

preceding process in the production preceding process in the production line. The customer goes to the line. The customer goes to the supermarket to get exactly what and supermarket to get exactly what and when they need it.when they need it.

What should the process do?What should the process do? It must reload products which has It must reload products which has

been withdrawn by the subsequent been withdrawn by the subsequent processprocess

JIT- a pull systemJIT- a pull system

The production demand comes from The production demand comes from the customer.the customer.

Demand is made on the final Demand is made on the final assembly process.assembly process.

Figure 21-5 and 21-6 shows Figure 21-5 and 21-6 shows difference relationship between the difference relationship between the customer and the factory.customer and the factory.

Figure 21-5, 21-6Figure 21-5, 21-6

Mass production system (PUSH Mass production system (PUSH system)system)• Manufacturer forecasts and place Manufacturer forecasts and place

demands on the factory months in demands on the factory months in advance of production.advance of production.

• Full of InventoryFull of Inventory

JITJIT• Customer’s demand is felt through the Customer’s demand is felt through the

system all the way to the factory system all the way to the factory suppliers.suppliers.

• Zero/minimum inventory is aimedZero/minimum inventory is aimed

Benefits of JITBenefits of JIT

1.1. Inventory reductionInventory reductionWhy? (cost of inventorying raw materials, labor, cost of spoilage and Why? (cost of inventorying raw materials, labor, cost of spoilage and government taxes can be avoided. Also, intangible cost can be eliminated)government taxes can be avoided. Also, intangible cost can be eliminated)

2.2. Reduce cycle timeReduce cycle time

3.3. Continual improvementContinual improvement

4.4. Can reveal hidden problems in Can reveal hidden problems in productions.productions.

5.5. Can eliminate waste Can eliminate waste (waste of overproducing, waiting (waste of overproducing, waiting

time, over-processing,transport etc)time, over-processing,transport etc)

Figure 21-8Figure 21-8HiddenHidden

problemsproblems You look over a lake and You look over a lake and

see the calm, flat surface see the calm, flat surface on the water, however on the water, however rock under the surface is rock under the surface is not evident, until we crush not evident, until we crush on it.on it.

Rocks represents Rocks represents problems.problems.

Water represents the Water represents the inventory, raw material inventory, raw material and parts.and parts.

IF we change to JIT, we IF we change to JIT, we start reducing the those start reducing the those water (inventories), level water (inventories), level of water is lowered and of water is lowered and reveal the real problems.reveal the real problems.

Traditional vs JITTraditional vs JIT(Figure 21-9)(Figure 21-9)

TraditionalTraditional• To difficult to determine how much a process is needed.To difficult to determine how much a process is needed.• Wasted motion, timeWasted motion, time• QueuesQueues• Process unclearProcess unclear

JIT JIT • Warehousing area is goneWarehousing area is gone• Factory is divided into discrete areas dedicated to Factory is divided into discrete areas dedicated to

different product rather than process.different product rather than process.• Each product area is equipped with material required for Each product area is equipped with material required for

that product.that product.

Kanban Pull SystemKanban Pull System kankan,, 看 看 / / カンカン , means "visual," , means "visual," banban,, 板 板 / / バンバン , means "card" or "board" , means "card" or "board" Kanban is an inventory control system for tracking the flow Kanban is an inventory control system for tracking the flow

of in-process materials through the various operations of a of in-process materials through the various operations of a just-in-time production process just-in-time production process

Used by shop floor control very efficiently.Used by shop floor control very efficiently. Act as a method of JIT production that uses standard Act as a method of JIT production that uses standard

containers or lot sizes with a single card attached to each. containers or lot sizes with a single card attached to each. It is a Pull system in which work centers use a card to signal It is a Pull system in which work centers use a card to signal

that they wish to withdraw parts from feeding operations or that they wish to withdraw parts from feeding operations or suppliers. suppliers.

See Figure 21-12See Figure 21-12

Figure 21-12Figure 21-12

See video 2-bin Kanban systemsSee video 2-bin Kanban systems