Benchmarking

• "Benchmarking is the process of measuring an organization's internal processes then identifying, understanding, and adapting outstanding practices from other organizations considered to be best-in-class.

• "Benchmarking: A continuous, systematic process of evaluating and comparing the capability of one organization with others normally recognized as industry leaders, for insights for optimizing the organizations processes."

Benchmarking

• Benchmarking is the process of comparing the cost, time or quality of what one organization does against what another organization does. The result is often a business case for making changes in order to make improvements. ―

• The systematic process of comparing an organization’s products, services and practices against those of competitor organizations or other industry leaders to determine what it is they do that allows them to achieve high levels of performance.‖ (Society for Human Resources Management)

Diagram of Benchmarking Concept

What is our performance level? How do we do it?

What are others’ performance levels? How did they get there?

Creative Adaptation

Breakthrough Performance

Reasons to Bench Mark

• Assists businesses cultivate strong points and diminish problem areas

• Lets ambitions be set impartially, taken from outside information

• Includes emulation and revision instead of new innovation

• Probable, valuable knowledge can be established and implemented early on

• This will help organizations decide who they will serve and show them the strengths they have that will give them a competitive advantage. When people have the outside information, it tends to be quite a motivator. It is cost-efficient to not have to develop something new.

Advantages of benchmarking

• Benchmarking is a powerful management tool because it

overcomes "paradigm blindness.“• Benchmarking opens organizations to new methods, ideas

and tools to improve their effectiveness.• It helps crack through resistance to change by

demonstrating other methods. • Allows employees to visualise the improvement which can

be a strong motivator for change Helps to identify weak areas and indicates what needs to be done to improve.

STEPS

1. Planning.• The essential steps are those of any plan development: what, who and how.

What is to be benchmarked? • Every function of an organization has or delivers a ―product‖ or output.

Benchmarking is appropriate for any output of a process or function, whether it’s a physical good, an order, a shipment, an invoice, a service or a report.

To whom or what will we compare? • Business-to-business, direct competitors are certainly prime candidates to

benchmark. But they are not the only targets. Benchmarking must be conducted against the best companies and business functions regardless of where they exist.

How will the data be collected? • There’s no one way to conduct benchmarking investigations. There’s an infinite

variety of ways to obtain required data – and most of the data you’ll need are readily and publicly available. Recognize that benchmarking is a process not only of deriving quantifiable goals and targets, but more importantly, it’s the process of investigating and documenting the best industry practices, which can help you achieve goals and targets.

2.ANALYSIS• The analysis phase must involve a careful understanding of your current

process and practices, as well as those of the organizations being benchmarked.

• What is desired is an understanding of internal performance on which to assess strengths and weaknesses. Ask:

• Is this other organization better than we are? • Why are they better? • By how much? • What best practices are being used now or can be anticipated? • How can their practices be incorporated or adapted for use in our

organization? • Answers to these questions will define the dimensions of any performance

gap: negative, positive or parity. The gap provides an objective basis on which to act—to close the gap or capitalize on any advantage your organization has.

3.INTEGRATION• Integration is the process of using benchmark findings to

set operational targets for change. It involves careful planning to incorporate new practices in the operation and to ensure benchmark findings are incorporated in all formal planning processes. Steps include:

• Gain operational and management acceptance of benchmark findings. Clearly and convincingly demonstrate findings as correct and based on substantive data.

• Develop action plans. • Communicate findings to all organizational levels to

obtain support, commitment and ownership.

4.ACTION Convert benchmark findings, and operational principles based on

them, to specific actions to be taken. Put in place a periodic measurement and assessment of achievement.

Use the creative talents of the people who actually perform work tasks to determine how the findings can be incorporated into the work processes.

Any plan for change also should contain milestones for updating the benchmark findings, and an ongoing reporting mechanism.

Progress toward benchmark findings must be reported to all employees.

5.MATURITY• Maturity will be reached when best industry practices are

incorporated in all business processes, thus ensuring superiority.

• Tests for superiority: • If the now-changed process were to be made available to

others, would a knowledgeable businessperson prefer it? • Do other organizations benchmark your internal operations? • Maturity also is achieved when benchmarking becomes an

ongoing, essential and self-initiated facet of the management process. Benchmarking becomes institutionalized and is done at all appropriate levels of the organization, not by specialists.

Types of Benchmarking

• Process benchmarking - the initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office processes where outsourcing may be a consideration.

• Financial benchmarking - performing a financial analysis and comparing the results in an effort to assess your overall competitiveness.

• Performance benchmarking - allows the initiator firm to assess their competitive position by comparing products and services with those of target firms.

FMEABenefits

• Allows us to identify areas of our process that most impact our customers

• Helps us identify how our process is most likely to fail

• Points to process failures that are most difficult to detect

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Application Examples

• Manufacturing: A manager is responsible for moving a manufacturing operation to a new facility. He/she wants to be sure the move goes as smoothly as possible and that there are no surprises.

• Design: A design engineer wants to think of all the possible ways a product being designed could fail so that robustness can be built into the product.

• Software: A software engineer wants to think of possible problems a software product could fail when scaled up to large databases. This is a core issue for the Internet.

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What Is A Failure Mode?

• A Failure Mode is:– The way in which the component, subassembly,

product, input, or process could fail to perform its intended function

• Failure modes may be the result of upstream operations or may cause downstream operations to fail

– Things that could go wrong

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What Can Go Wrong?

FMEA

• Why– Methodology that facilitates process improvement– Identifies and eliminates concerns early in the

development of a process or design– Improve internal and external customer satisfaction– Focuses on prevention– FMEA may be a customer requirement (likely

contractual)– FMEA may be required by an applicable

Quality Management System Standard (possibly ISO)18

FMEA

• A structured approach to:– Identifying the ways in which a product or process

can fail– Estimating risk associated with specific causes– Prioritizing the actions that should be taken to

reduce risk– Evaluating design validation plan (design FMEA) or

current control plan (process FMEA)

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When to Conduct an FMEA

• Early in the process improvement investigation

• When new systems, products, and processes are being designed

• When existing designs or processes are being changed

• When carry-over designs are used in new applications

• After system, product, or process functions are defined, but before specific hardware is selected or released to manufacturing

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History of FMEA

• First used in the 1960’s in the Aerospace industry during the Apollo missions

• In 1974, the Navy developed MIL-STD-1629 regarding the use of FMEA

• In the late 1970’s, the automotive industry was driven by liability costs to use FMEA

• Later, the automotive industry saw the advantages of using this tool to reduce risks related to poor quality

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Examples

The FMEA Form

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Identify failure modes and their effects

Identify causes of the failure modesand controls

Prioritize Determine and assess actions

A Closer Look

Types of FMEAs

• Design– Analyzes product design before release to

production, with a focus on product function– Analyzes systems and subsystems in early

concept and design stages• Process

– Used to analyze manufacturing and assembly processes after they are implemented

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Specialized Uses

Types of FMEA Major Classification• Design FMEA• Process FMEA Sub Classification• Equipment FMEA• Maintenance FMEA• Service FMEA• System FMEA

• DESIGN FMEA

Design FMEA use in the design process by identifying known and foreseeable failures modes and ranking failures according to their impact on the product.

• PROCESS FMEA

It is used to identify potential process failure modes by ranking failures and establishing priorities, and its impact on the Internal or external customers.

RELIABILITY• Reliability is defined as the probability that the

product will perform as per the expectation for a certain period of time, under the given operating conditions, and the given set of product performance characteristics.

• The part, assembly, or process under consideration, the reliability of each sub system and factors that contribute to failure to be found.

FAILURE RATE• Products follow a pattern of failure.• There is no information about the reliability (i.e.

Failure) of the product.• Failure Rate is a constant is known period of failure

can be found out using Exponential Distribution Rt = e – λt Rt = Reliability of survival

Rt = e - t / θ t = Time for operation without failure

λ = Failure rate θ = Mean time to Failure

PROBLEM

• Failure Rate λ = .0002 per hour• What is the probability that it will survive

or reliable during the first 200 hours of operations?

• Solution

Rt = e – λt

= e – (200) (0.0002)

= 96.08 %

FMEA: A Team Tool

• A team approach is necessary.• Team should be led by the Process Owner who is the

responsible manufacturing engineer or technical person, or other similar individual familiar with FMEA.

• The following should be considered for team members:– Design Engineers – Operators– Process Engineers – Reliability– Materials Suppliers – Suppliers– Customers

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Team Input Required

FMEA Procedure

1. For each process input (start with high value inputs), determine the ways in which the input can go wrong (failure mode)

2. For each failure mode, determine effects– Select a severity level for each effect

3. Identify potential causes of each failure mode– Select an occurrence level for each cause

4. List current controls for each cause– Select a detection level for each cause

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Process Steps

FMEA Procedure (Cont.)

5. Calculate the Risk Priority Number (RPN)

6. Develop recommended actions, assign responsible persons, and take actions– Give priority to high RPNs– MUST look at severities rated a 10

7. Assign the predicted severity, occurrence, and detection levels and compare RPNs

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Process Steps

FMEA Inputs and Outputs

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FMEA

C&E MatrixProcess Map

Process HistoryProceduresKnowledgeExperience

List of actions to prevent causes or detect failure

modes

History of actions taken

Inputs Outputs

Information Flow

Severity, Occurrence, and Detection

• Severity– Importance of the effect on customer requirements

• Occurrence– Frequency with which a given cause occurs and

creates failure modes (obtain from past data if possible)

• Detection– The ability of the current control scheme to detect

(then prevent) a given cause (may be difficult to estimate early in process operations).

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Analyzing Failure & Effects

Rating Scales

• There are a wide variety of scoring “anchors”, both quantitative or qualitative

• Two types of scales are 1-5 or 1-10• The 1-5 scale makes it easier for the teams to decide

on scores• The 1-10 scale may allow for better precision in

estimates and a wide variation in scores (most common)

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Assigning Rating

Weights

Rating Scales

• Severity– 1 = Not Severe, 10 = Very Severe

• Occurrence– 1 = Not Likely, 10 = Very Likely

• Detection– 1 = Easy to Detect, 10 = Not easy to Detect

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Assigning Rating

Weights

Risk Priority Number (RPN)

RPN is the product of the severity, occurrence, and detection scores.

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Severity Occurrence Detection RPNX X =

Calculating a Composite

Score

Summary

• An FMEA:

– Identifies the ways in which a product or process can fail– Estimates the risk associated with specific causes– Prioritizes the actions that should be taken to reduce risk

• FMEA is a team tool• There are two different types of FMEAs:

– Design– Process

• Inputs to the FMEA include several other Process tools such as C&E Matrix and Process Map.

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Key Points