miercuri, 1 februarie 2012

8. Voice of the Market

What do we mean by the Voice of the Market? Immediate customers as well as competitors / The customers of competitors / Potential competitors and potential customers

Benchmarking: A Benchmark is an organization recognized for its exemplary operational performance. e.g.: Toyota for processes; Intel for design; Motorola for training; Scandinavian Airlines (SAS) for service, and Honda for rapid product development // To be a benchmark a company must be willing to open its doors and allow others to view its operations and tour its facilities. Benchmarking is the sharing of information between companies so that both can improve. Why is this a good practice? “The worst thing for a business is a weak competitor.”Openness provides an impetus to continual improvement.

“We do not mind if the others come to see how we produce our product. Once they see what we can do, they will not want to compete against us.”

Purposes of Benchmarking: Learning from success,Borrowing ideas,Best-in-firm,Beating industry standards,Best-in-class,National Leadership,Best-in-world

Types of Benchmarking:

Process - comparing prices // Financial - comparing business results // Performance - cost structure, speed, quality levels // Product - product attributes and functionality // Strategic - firm competitiveness along several dimensions // Functional - How another firm performs a particular function

Benchmarked Performance Measures: KBFs – Key Business Factors: attributes of a business that influence its operations and decision-making (e.g., values, key customer segments, core capabilities, governance etc.) // KSFs – Key Success Factors: factors that help to determine the success of the firm // KMs – Key Measures: metrics that need to be monitored to gauge the health of the business

Financial ratios: ROA, ROI, etc. // Productivity ratios: Labor productivity, Plant and equipment productivity, Energy productivity, Material productivity, Firm overall productivity // Customer-related results: Retention, Gains/ Losses, Customer perceived value, Competitive awards, Customer ratings // Operating results: Cycle times, Waste-reduction measures, Value-added measures, Time from concept to market, Setup times // Human resource measures: Employee satisfaction measures, Training expenditures, Training hours per year, Work system performance, Turnover, Safety statistics, Absenteeism, Employee effectiveness measures // Quality measures: Reject rates, Capability information, Scrap and rework measures, Percent defectives, Field repairs, Costs of quality, Process performance measures, Average response time for phone inquiries, Number of people a caller must contact to get a problem resolved // Market-share data: Shares in different markets served by the firm // Structural measures: Objectives, policies and procedures followed by the firm concerning: safety, production, accounting, financial, engineering.

The concept of 5w2h: What? – subject matter, Why? – purpose, Where? – location, When? – sequence, Who? – people, How? – method, How much? - cost

Eliminate unnecessary Tasks: What is being done?, Why is this task necessary? // Change the sequence or combination: Where is it being done?, When is the best time to do it?, Who is doing it? // Simplify the task: How is it being done? // Select an improvement method, How much does it cost now?

Setting-up a benchmarking program Robert Camp’s 10 steps:

Planning: Decide what to benchmark (identify key processes that offer the greatest potential for improvement) // Identify whom to benchmark (competitors in your industry, firms outside your industry with outstanding results or processes) // Plan and conduct the investigation (gather necessary info and data and observe best practices)

Analysis: Determine the current performance gap (which processes have the greatest performance gap with the benchmarking company) // Project future performance levels (the performance gap will narrow or widen in the coming years; how this will affect the company)

Integration: Communicate benchmarking findings and gain acceptance (communication to those who will be affected by the results to minimize uncertainty and fear) // Revise performance goals (develop new goals)

Action: Develop action plans (set specific steps and objectives for implementation) // Implement specific actions and monitor progress (implement best practices, monitor and report progress)// Recalibrate the benchmarks (identify new best practices)

Benchmarking Cons: Benchmarking is expensive both in employee time and potentially, travel costs., Benchmarking is time consuming., Benchmarking may expose weaknesses in management procedures or style., Benchmarking exposes the firm to potential liability. Benchmarking Pros: Benchmarking is an investment in continuing quality improvement., Benchmarking exposes your firm to concepts and ideas generated by companies that have been designated best-of–the-best., Benchmarking provides a structured manner for growth.

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