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Example Cases

The following case studies provide valuable lessons to all organisations involved in benchmarking.

Carleton University, Canada

Benchmarking applied to universityaccommodation process

In 2004, Carleton University started a benchmarking project to improve the quality of its housing allocation service. The vacancy rate at the time was 3.4%. The vacancy rate was a key performance measure, as it implied lost revenue for the university. A cross-functional team was formed with the task of improving the allocation process to reduce vacancy rates to less than 1%, while improving customer satisfaction. The team began by mapping the existing residence allocation process, followed by two focus groups of resident students. The team then started external benchmarking with a review of the websites of 24 universities in Canada, the United States and Australia. The website search was followed by a telephone survey of twelve of the universities and subsequently, benchmarking visits were carried out at four of the leading universities. Next, the team analysed the gaps and made several recommendations including a reduction in cycle times, changes to the process, the development of a marketing plan, and a transition to on-line housing application by students. The changes that were made led to a reduction in vacancy rate to 0.4% by September 2005 and 0.6% by September 2006. In financial terms, this implied an increase in annual gross revenue of about $400,000 to the university. [14]

Anonymous, Australia

Benchmarking leads to cost reduction in the financial sector

An anonymous company conducted a global benchmarking exercise into its finance organisation and found it had an outdated infrastructure that cost more than 4% of company revenues to run, that staff spent in excess of 50% of their time collecting data, and that the information did not meet its global business information needs. A re-engineering team redesigned the company’s business processes and proposed that the company create a Shared Services Centre (SSC) to process common transactions, drive down costs, and improve the quality of the service delivery. The company achieved the following:

  • Selected a SSC location based on the quality/skill/cost/flexibility of the workforce, taxation, communications costs and infrastructure, real estate cost, travel accessibility, political stability, language suitability, and company infrastructure;
  • Established three teams in the SSC: a supplier process team, a customer process team, and a general accounting team;
  • Teams were trained and a new mind-set developed to service the business units;
  • A Service Level Agreement was introduced and customer satisfaction surveys, employee satisfaction surveys, the Balanced Scorecard, and Six Sigma were used to measure performance;
  • Salary reviews and promotion were aligned with performance.

Within two years, the SSC began to provide high value-added services to the business units, including financial reporting and analysis, treasury management, tax and legal consulting, and credit and collection management. The cost of running the SSC was less than 1% of sales revenue and achieved world-class standards. The SSC reduced the cost of the finance function globally by more than 50%. [15]

Rubber Moulding Company, USA

Benchmarking leads to a significant profit increase in a small company

A small rubber moulding company had its managers attend a breakfast workshop series organised by the Small Business Development Center for Enterprise Excellence of Texas, USA. The managers became friendly with managers from two companies that had shared their success stories (called anonymously ‘Catalyst’ and ‘Sheetmetal’). The company’s managers became convinced of the benefits of benchmarking and maintained frequent contact with their counterparts at Sheetmetal, toured their premises, studied the implementation of manufacturing cells, and researched the concepts to which they were exposed. After several meetings with managers from Sheetmetal and Catalyst, the company gained a greater understanding of manufacturing cell implementation, formed a steering committee, developed a vision of what they wanted to become, and put in place a plan on how to get there. The plan was communicated to the company’s employees so they would be aware of the forthcoming changes, as well as their role in the process. Teams were formed to design and implement cellular manufacturing and met regularly to design cells and plan the move. Then, in one move, the company changed the entire organisation to manufacturing cells. The transformation yielded startling results:

  • Team productivity increased 37%;
  • Sales rose 7%;
  • Profits increased by 80%;
  • Inventory reductions achieved were: 14% overall, work-in-process 88%, raw material 24%, and finished goods 7%;
  • Customer returns were reduced by 29%;
  • A continuous improvement initiative was established and a team structure to facilitate empowerment and continuous improvement was implemented;
  • The measurement and reward system changed to encourage teamwork;
  • Quarterly peer-review processes were established to help employees to constantly improve their performance. [16].

Quebec Hospitals, Canada

Benchmarking logistics in healthcare

The health sector accounts for approximately one-third of the Quebec provincial government’s budget and there is a constant need to improve the efficiency and effectiveness of hospital operations in the province. Consequently, five Quebec hospitals initiated a benchmarking project focusing on logistics, with the aim of identifying benchmarked best practices for large hospitals. Studies have indicated that logistics typically account for 30-46% of hospital expenses. The project involved the identification of the main players in the replenishment process and the mapping of the process. The project identified a number of differences in different institutions; for example, some had a purchasing department while others did not. To enable best practice benchmarking, the hospital logistics process was divided into several components to facilitate analysis. Next, an analytical model and data-collection tool were developed and a data-collection approach was subsequently selected. The study enabled cost identification for each activity and these costs became the primary point of comparison for best practices. The study also examined contextual factors such as hospital budgets, the number of beds, and the type of medical specialties, as well as process-related elements. As a result of the benchmarking study, researchers were able to identify best practice hospitals, while understanding the reasons for their higher levels of performance. [17]

Calcast Ltd, Ireland

Dramatic reject-rate reduction following abenchmarking project

Calcast Ltd is a manufacturing company based in Ireland. In order to improve its efficiency, the company carried out a benchmarking study. At the start of the study, Calcast’s reject rates for manufactured products had reached 4%. Consequently, a consultant was hired to carry out a benchmarking study, which was followed by a 5S workplace organisation initiative and the introduction of a Total Productive Maintenance (TPM) programme. At the start of the initiative, overall equipment effectiveness (OEE) was measured at just 44%. The 5S and TPM programme were used to highlight and to correct machinery defects. A culture of eliminating defects was developed by problem-solving techniques and root cause analysis. Performance measurement tools were put in place, accurate OEE scores were communicated to key staff, and operating procedures for machine cleaning were initiated using photographs. As a result reject rates fell to 0.3%, downtime was cut by 60%, and the working environment was cleaner and safer. [18]

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