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11 Lecture 14 Benchmarking and BPR

The document discusses benchmarking and business process reengineering (BPR). It defines benchmarking as comparing processes to industry standards to identify areas for improvement. The main types of benchmarking are described. BPR is defined as the radical redesign of business processes to dramatically improve performance. It involves starting from scratch rather than incremental changes. Steps for carrying out BPR including creating vision, analyzing processes, restructuring the organization, and piloting changes are outlined.

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519 views10 pages

11 Lecture 14 Benchmarking and BPR

The document discusses benchmarking and business process reengineering (BPR). It defines benchmarking as comparing processes to industry standards to identify areas for improvement. The main types of benchmarking are described. BPR is defined as the radical redesign of business processes to dramatically improve performance. It involves starting from scratch rather than incremental changes. Steps for carrying out BPR including creating vision, analyzing processes, restructuring the organization, and piloting changes are outlined.

Uploaded by

ahmed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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Lecture 14: Benchmarking and BPR

Benchmarking(1)
Benchmarking is the process of comparing the cost,
cycle time, productivity, or quality of a specific process
or method to another that is widely considered to be an
industry standard or best practice.
Benchmarking provides a snapshot of the performance
of your business and helps you understand where you
are in relation to a particular standard.
The result is often a business case for making changes
in order to make improvements.
The term benchmarking was first used by cobblers to
measure ones feet for shoes. They would place the foot
on a bench and mark to make the pattern for the
shoes.
CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Benchmarking(2)
Following are the main 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
overall competitiveness.

Performance benchmarking
Allows the initiator firm to assess their competitive position by comparing
products and services with those of target firms.
CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Lecture 14: Benchmarking and BPR

Benchmarking(3)
Product benchmarking
The process of designing new products or upgrades to current ones. This
process can sometimes involve reverse engineering which is taking apart
competitors products to find strengths and weaknesses.

Strategic benchmarking
Involves observing how others compete. This type is usually not industry
specific meaning it is best to look at other industries.

Functional benchmarking
A company will focus its benchmarking on a single function in order to improve
the operation of that particular function.

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Benchmarking(4)
45 to 60 percent of US companies have adopted the technique and
philosophy
Why reinvent the wheel if I can learn from someone who has
already done it?
The benefits:
Cultural change
Tends to overcome the were different justification for the status quo

Performance improvement
Allows the organization to define specific gaps in performance and to select
the process to improve

Human resource
Employees begin to see the gap between what they are doing and what bestin-class companies are doing

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Lecture 14: Benchmarking and BPR

Key Success Factor Matrix

Competitive Analysis
Performance Rating

Key Success
Factors
Weight

KSF
KSF
KSF
KSF

Our

Competitor

Competitor

Competitor

Company

#1

#2

#3

#1
#2
#3
#4

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

The Benchmarking Process(1)


Determine the function/process to benchmark
Select key performance variables
Cost and productivity
Timelines
Differentiation and quality
Business processes

Identify the best-in-class


Measure your own performance
Actions to close the gap

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Lecture 14: Benchmarking and BPR

The Benchmarking Process(2)


The benchmarking process consists of five phases:
1. Planning
The essential steps are those of any plan development: what, who and how.
What is to be benchmarked?
To whom or what will we compare?
How will the data be collected?

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?
CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

The Benchmarking Process(3)


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.

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.

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Lecture 14: Benchmarking and BPR

The Benchmarking Process(4)


5. Maturity
Maturity will be reached when best industry practices are incorporated in all
business processes, thus ensuring superiority.

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

The
Benchmarking
Process(5)

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Lecture 14: Benchmarking and BPR

Selected Best-Practice Companies


Company

Function

Benetton

Advertising

Disney World

Optimum customer experience

Dominos Pizza

Cycle time (order & delivery)

Dow Chemical

Safety

Federal Express

Delivery time

Herman Miller

Compensations and benefits

HP

Order fulfillment

Ritz-Carlton

Training

Wal-Mart

Information system

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Business Process Re-Engineering (BPR)


The fundamental rethinking and radical redesign
of business processes to achieve dramatic
improvement in critical contemporary measures
of performance
Business reengineering means starting all overstarting from scratch
Reorganizing is out: reengineering is in

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Lecture 14: Benchmarking and BPR

Business Process Re-Engineering (BPR)


Five characteristics of a high quality process:
It meets customer requirements effectively
It uses resources efficiently
It is under control; it behaves predictably with
minimum variability
It can be monitored to detect changes
It adds value

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Business Process Re-Engineering (BPR)

Process
Improvement

Process
Redesign

CE590: Advanced Topics in Project Management: Spring 2009

Business
Reengineering

Muhammad Saqib

Lecture 14: Benchmarking and BPR

Business Process Re-Engineering (BPR)


Process Improvement:
Focuses on the individual process and does not include the entire
value chain from suppliers as input and customers as output

Process Redesign:
Goes beyond the process level to include the entire value chain
and is output or result driven; the process can be eliminated if the
output is not valued by the customer

Business Reengineering:
Is strategic in its concept and focuses on the enterprise level of
the organization

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Business Process Re-Engineering (BPR)


Order processing is viewed as a series of individual
tasks in a process-receiving an order form, picking up
goods from the warehouse, and so forth-losing sight of
the larger objective, which is to get the goods into the
hands of the customer who ordered them
The tasks that make up the process are important, but
the customers could care less about them; they only
wants to know if the process works

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Lecture 14: Benchmarking and BPR

How to Carry Out BPR


Create the right environment
Build a BPR vision of an improved organization adding extra
value
Exhibit total commitment
Formulate and communicate a clear plan
Provide appropriate training and education
Identify the core processes
Appoint a champion who will instill enthusiasm and elicit support

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

How to Carry Out BPR


Analyze, diagnose and redesign the processes
Recruit and train teams
Identify process outcomes and linkages
Analyze existing processes and quantify measures
Diagnose conditions for improvement
Benchmark best practices from elsewhere
Redesign processes in order to optimize
Review peoples contribution to new processes (people change)
Review the technological inputs (technologies change)
Validate the new process to ensure they actually provide added
value

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

Lecture 14: Benchmarking and BPR

How to Carry Out BPR


Restructure the organization
Review the structure and technological capabilities
Formulate a new organizational form which is appropriate
Define new roles for all those involved
Deal carefully with those whose jobs may no longer exist
because certain processes are no longer needed
Build new technological infrastructure and applications

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

How to Carry Out BPR


Pilot and roll-out
Select the processes to be piloted and match them to the appropriate
customers
Put together the pilot team who will monitor and report on progress
Ensure that lessons from piloting are fed back quickly into other
processes
Prioritize the actual implementation (roll-out) once these refinements or
amendments have been incorporated

Realize the strategy


This is when the re-engineered organization actually operates the new
processes and structures as a matter of routine

CE590: Advanced Topics in Project Management: Spring 2009

Muhammad Saqib

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