Benchmarking the Structural Steel Industry. SAISC Breakfast Presentation Marts 2011
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1 Benchmarking the Structural Steel Industry SAISC Breakfast Presentation Marts 2011
2 Overview of Presentation What is Benchmarking? (5 slides) Benchmarking is Measuring. What can be Measured? What is Measured in the benchmark? Why should we measure? Some Benchmarking Results (7 slides) Processes vs. Performance scores Perception vs. Financial Performance Ambitions vs Capabilities International comparison Improvements (7 slides) Strategy Productivity Industry
3 What is Benchmarking?
4 Benchmarking is a Measuring Tool Establish a standard for comparison. Developed by two British consulting firms: Winning Measures Comparison International Financed by DTI, UNIDO and SAISC. In conjunction with profiling and development. Photo: Bar used as standard for one meter. Made in 90% platinum and 10% Iridium and measured at zero degrees Celsius.
5 This Measuring Tool Questionnaire Financial Data Self-Perception Meeting lasting five hours. Business Review Evidence/stories Factory Tour Report Financial Ratios Scoring Suggestions for Improvements
6 The Questionnaire: Financial Data. 47 Financial Questions
7 The Questionnaire: Perception Data 54 Perception Questions
8 Leading vs. Lagging Indicators Quality > Customer satisfaction > Turnover > Profit R&D > Product Quality > Customer satisfaction Preventative maintenance > Delivery performance > customer satisfaction All driven by employee satisfaction and skills/abilities. Business Models different for different industries.
9 The Average Company In smaller companies the CEO or MD manage the customer relationships. About 100 employees. Large companies that are part of a construction group. High focus on production and processes. Questionnaire has bias towards industry and size of company.
10 Some Benchmarking Results
11 An Ambitious Industry?
12 The Average Perception Scores
13 Processes vs Performance Practice vs. Results Behaviour and Results Cause and Effect
14 Processes vs. Financial Performance Type I: Falsely rejecting something good. Type II: Falsely accepting something bad.
15 Good Learning and Growth Results
16 Average Scores from Results
17 Average Scores from Operating Processes
18 Scores from Management and Support processes
19 Areas for Improvement To a hammer, everything looks like a nail
20 Strategy is Prioritizing Time is spend on tasks that are urgent, (but not Important). Less time for important things. More tasks become urgent because important tasks are not taken care off. Establish structures that help do the important things e.g. periodic meetings, performance reviews, work standards. Fix the root cause.
21 Porter s Generic Strategies Cost Leadership The same, but with less Differentiation More, but with the same Either way: Output / Input = Efficiency
22 Balance Sales and Production Our industry is different because we only produce to order and not to jobs are the same. Flexibility cannot be achieved from lack of organization. Sales is priority in smaller companies. The large companies seems sometimes to forget about their customers, but have good processes.
23 Production and Productivity Divide and join steel - cut and weld. South Africa known for low productivity. Labour managed as an abundant (cheap) resource. Labour managed as a scarce (expensive) resource. Productivity is the responsibility of management. What is the productivity level in your company? Better than last year?
24 Competition from the Far East Why should we pay more for cars, TV s, shoes, etc. Because the local producers cannot match prizes from the Far East. Everyone will be better off in a strong industry. Examples: Silicon valley, Italian shoe manufacturers, medico companies around Copenhagen.
25 Performance Measurements Estimates are not accurate enough to distinguish between good and bad. Therefore not sensitive enough to warn about problems. Can you estimate if you delivery performance is 80% or 90%? How much time in your factory is spend on rework?
26 Summary Prioritize long term competitiveness and establish structures to drive improvements. Be part of the industry and help make it stronger. You need to be organized to be flexible. People are still the ultimate driver of value in organizations. Labour productivity is the responsibility of management. Government intervention in international trade is temporary for any government. The difference between good and bad cannot be estimated, but must be measured.
27 Presentation by Mikkel Christiansen Consultant at Rheo Systems Rheo Systems specialize in lean manufacturing and develop software for solving operational problems. The company has developed a system that allow supply chain visibility between suppliers and customers. For more information visit
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