Paul G. Russell, CPP/FellowPackaging Process ManagerHewlett-Packard Company

March 2002

Benchmarking

Logo here

• Process used to collect information

• Analysis

• Transferring into action

Overview

loyaltyuse & grow

awareness & consideratio

n

select & buyfirst 30 days

repurchase & recommend

Where packaging has influences in the customer experience lifecycle

Getting it home

Unpacking & OOBE

Disposal or return

Brand Image & Promise

Specifications

Communicates Solutions

Packaging Cross Functional Interaction

Materials Engineering Marketing Manufacturing Engineering

R&DProduct Design

Mechanical Stability Reliability Logistical Considerations Design for Mfg.

Supplier Packaging Receiving Material Handling

Outbound Product Packaging Technical

Specification/DesignPrice leverage

Quality AssuranceEnvironmental Test Standards

Product/Packaging Design

Graphics Standards Customer Perception Legal Requirements Language Issues

Material HandlingElectrostatic Discharge (ESD)Process Flow

Manufacturability Reliability Manufacturing Costs

OEM Contract Mfg.. RelationshipPost Mfg. Support (conflict resolution)

Distribution/LogisticsProcessShipping CostsRegulatory Compliance

Sales & ServiceCustomer Satisfaction

Warranty/D.O.A. Environmental Concerns

Packaging

SuppliersManaging Relationships

What is benchmarking• It is a process of identifying, sharing,

and using knowledge and best practices. It focuses on how to improve any given business process by exploiting top-notch approaches rather than merely measuring the best performance.

• It is a combination of competitive intelligence and looking at best in class

•Helping to know yourself so you can judge others•Helping you to know your domain so you can determine an advantage

Strategic

Process

Strategy DevelopmentProject PrioritizationMaintain Leadership

Performance

Performance Benchmarking

Competitive Analysis Program (CAP) – direct comparison of product to product

• Process

• HP provides information and samples (if possible), 3rd Party conducts analysis

• Share results with participating site and post results to program web site

• Elements Captured

• Component and Total Cost Analysis

• Comparisons (% Package Cost/Street Price)

• Physical properties

• Graphics - Printing process used, # of colors, # of languages, Symbols used

• Materials (box, cushion, thermoform, & other)

• Attributes - environmental, ergonomics, out-of-box experience, localization, etc

• Forensics Photographs

Competitive Analysis Program (CAP) Process Flow

HP Division

Pkg samples and

information

CompetitiveAnalysisProgram

Enough info and samples

clarification

ObtainCompetitors

products

AnalysisDocument &PhotographLoad to HP web

database

HP responsibility 3rd party responsibility

No Competitive samples

Return all provided samples

Publish individual report to HP Division

CAP submission form and samples

Performance Benchmarking

Performance Benchmarking CAP Summary Example

BestMiddleWorst

Product Category

% of Market Share

HPV Total Pkg $

Pkg-Product

Cube (in) enviro ergo

out-of-box

pack out (min/sec)

Area Efficency

Units/Layer

Area Efficency

Units/Layer

High-EndHP Model X 56 Lowest 1.1 96.98 10 93.95 10Competitor Model X 12 +18% 1.3 98.92 8 95.83 8Competitor Model X 16 +59% 1.45 93.26 5 90.35 5Competitor Model X 16 +35% 2.07 79.49 5 77 5

Mid-RangeHP Model X 48 +27% 1.04 79.68 8 96.48 10Competitor Model X 14 Lowest 1.25 88.71 8 85.94 8Competitor Model X 10 + 59% 1.23 80.88 5 78.35 5

Low-EndHP Model X 35 +58% NA 96.98 10 93.95 10Competitor Model X 34 +9% NA 94.36 12 91.41 12Competitor Model X 13 Lowest NA 89.01 8 86.22 8

1200x1000 48x40Pallet Load Efficiency

Performance Benchmarking

CAP - Forensics Photograph Website

Performance Benchmarking

Critical Focus Areas• Product Selection

• Get agreement on how products will be selected for comparison (industrial design, price point, features, etc.)

• Determining Quotable Volumes

• Using generic on-going monthly volumes for costing (5K, 10K, 25K)

– Use "threshold volume" for generic numbers. This assumes in a competitive environment companies are all using technologies and processes that are cost effective at threshold volumes.

– Map to your typical volume runs.

• Highly People Dependent

• Use product line representatives to determine what products (yours and the competition) should be benchmarked and volumes to quote. Poor upfront data leads to poor results.

• Check information obtained via 3rd party with internal engineers to validate assumptions and findings.

• Sourcing Products

• Develop clear budget expectations upfront for buying competitors products. Using a “buy & return” method is difficult and can exceed regional sourcing capabilities.

• Leverage internal competitive test labs – they may already have what you want

• Purchase products quickly, once products are identified, as they have a tendency to roll to the next generation

Performance Benchmarking

Process Benchmarkingusing a survey instrument

We used a questionnaire that addressed 4 major categories:

• Procurement processes

• Packaging processes and interactions

• Marketing approach and customer value

• Environmental focus

For each area, subcategories of interest include:

• Structure

• Process

• Metrics

• Future (Packaging only)

• Customer values (Marketing only)

• E-commerce and total buy (Procurement only)

Who we looked at

Company Co

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rate

Bus

ines

s P

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Fax

es o

r All

-in-

One

Hom

e P

C

Imag

ing

Ink

Pri

nter

s

Ink

Sup

plie

s

Las

er P

rint

ers

Las

er S

uppl

ies

Per

sona

l App

lian

ces

Ser

vers

NT

Ser

vers

UN

IX

Sto

rage

Wor

ksta

tion

s

OtherAgilent unspecified*

Company ACelestica International Inc unspecified*Cisco unspecified*CompaqDellEpsonCompany BIBM MicroelectronicsIntel Enterprise Server GroupCompany CCompany DSun Microsystems unspecified*Company EHewlett-Packard

*NOTE: Due to an error in the electronic version of the survey, respondents could not enter text into the "other (specify)" response for this question

Process Benchmarking

Critical Focus Areas in using a Survey Instrument

• Selecting right players and getting them to participate can be difficult

• Use of a 3rd Party is critical• Pre-established relationships are

helpful (conferences and seminar)• Develop the right questions

• Spend about half of your total project time designing/optimizing the questions

• Sell the benefits/value to participants• Give them examples of what they’ll

get for their effort (report)• Make them part of a team• Provide frequent updates

• Get you hands on the raw data• Allows drill down and complete

understanding of the details• Provides opportunity to validate 3rd

party analysis

?Process Benchmarking

• Know your strategic opportunities • Identify companies, outside our

sector, which are best in class in those areas

• Engage companies • Why them and your intent• Non-disclosure agreements• Reciprocal

• Agree on process and amount of time

• Conduct interviews and document• Compile into recommended lists of

projects or process modifications

Strategic Benchmarking through interviewing

Critical Focus Areas

Interviewing In Teams Of Two• Each Interviewer takes a different role• Each is tracking and recording different types

of information on different levels• Each can offer help when the other gets

stuck• Having two interviewers is indispensable for

reconstructing and interpreting later in the synthesis process

Good information is:• Specific attributes which are important to you• Useful for creating a clear understanding • Focused on key drivers for your business • Captures key issues/challenges• Identifies what isn’t known by the interviewee• Adds value in both directions

Ask permission to follow up and/or come back

“Two people are 80% more effective in gathering

information than by one person

alone”Strategic Benchmarking

Analysis• For each approach

(Performance, Process, Strategic)

• Bring in a fresh person

• review first draft findings

• distill it down to the key areas

• Team works with the new person

• explain the unique elements of the raw information and first draft analysis

• Key activities during this phase include:

• Analyzing trends

• Identifying best practices

• Determining opportunities

• Team identifies critical few opportunistic strategies

Raw Data

Processed Data

Knowledge

Understanding

Used HP change management process

• Developed a list of opportunistic strategies

• Tactical projects mapped into strategies

• Identified key stakeholders to own each strategy

• Internal packaging council (control resources)

• Get their input and use their language

• Gain acceptance and buy off

• Use council meetings to track progress and keep everyone on the same page.

• Develop/modify reward structure to drive the right behaviors.

Pulling it all together

Conclusion

Benefits I hope came across:

• Exposure to our benchmarking methodologies

• How we identify key opportunities

• How we transfer this knowledge into actionable strategies and projects

Thank You

Any questions?