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
organizations
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 are others
performance levels?
How did they get
there?

What is our
performance
level? How do we
do it?
Creati
ve
Adapt
ation

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 its 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?
Theres no one way to conduct benchmarking investigations. Theres an infinite
variety of ways to obtain required data and most of the data youll need are readily
and publicly available. Recognize that benchmarking is a process not only of deriving
quantifiable goals and targets, but more importantly, its 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 actto 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
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issue for the Internet.

What Is A Failure Mode?

What Can Go
Wrong?

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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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)
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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

Examples

First used in the 1960s in the

Aerospace industry during the Apollo
missions
In 1974, the Navy developed MIL-STD1629 regarding the use of FMEA
In the late 1970s, 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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A Closer Look

The FMEA Form

Identify failure modes

and their effects

Identify causes of the

failure modes
and controls

Prioritize

Determine and
assess actions
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Types of FMEAs

Specialized
Uses

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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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 t
Rt = Reliability of survival
Rt = e - t /
t = Time for operation without failure
= Failure rate = Mean time to
Failure

PROBLEM
Failure Rate = .0002 per hour
What is the probability that it will survive
or reliable during the first 200 hours of
operations?
Solution
Rt = e t
= e (200) (0.0002)
= 96.08 %

FMEA: A Team Tool

Team Input
Required

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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FMEA Procedure

Process Steps

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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FMEA Procedure (Cont.)

Process Steps

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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FMEA Inputs and Outputs

Information
Flow

Inputs

Outputs

C&E Matrix
Process Map
Process History
Procedures
Knowledge
Experience

List of actions to prevent

causes or detect failure
modes
FMEA

History of actions taken

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Severity, Occurrence,
and Detection

Analyzing
Failure &
Effects

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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Rating Scales

Assigning
Rating
Weights

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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Rating Scales

Assigning
Rating
Weights

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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Calculating a
Composite
Score

Risk Priority Number (RPN)

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

Severity

Occurrence

Detection

RPN

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Summary

Key Points

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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