PRIORITIZATION OF BENCHMARKING ALTERNATIVES - PRIORITIZATION PROCESS

PRIORITIZATION OF BENCHMARKING ALTERNATIVES ” PRIORITIZATION PROCESS

A variety of prioritization approaches are available. Use the one most appropriate to a specific situation.

PRIORITIZATION MATRIX

The following steps are required to complete a prioritization matrix:

1. List all items to be prioritized.

2. List the goals or the prioritization criteria.

3. Specify the goal weights.

4. Indicate the impact score of each item relative to each goal.

5. Determine the value index for each item by totaling the cross product of each goal weight times the impact score.

6. Sort the items from highest to lowest value index.

QUALITY FUNCTION DEPLOYMENT HOUSE OF QUALITY

Quality function deployment is an extension of the prioritization matrix described above. However, the rows and the columns are interchanged. The rows become the evaluation criteria (or goals) and the columns represent the alternative solutions to be prioritized. The following procedure is used to complete the Quality Function Deployment analysis:

1. List the items indicating "what" you want to accomplish. These are the evaluation criteria.

2. List "how" you will accomplish what you want to do. These are the alternatives to be evaluated.

3. Indicate the degree of importance for each of the " whats ." This is a number ranging from 1 to 10 (10 is most important).

4. Indicate the company and the competitive rating using a scale from 1 to 10 (10 is best). Plot the competitive comparison.

5. Specify the planned or desired future rating.

6. Calculate the improvement ratio by dividing the planned rating by the company current rating.

7. Select at most four items to indicate as "sales points." Use a factor of 1.5 for major sales points and a factor of 1.2 for minor sales points.

8. Calculate the importance rate as the degree of importance times the improvement ratio times the sales points.

9. Calculate the relative weight for each item by dividing its importance rate by the total of the importance rates for all "whats."

10. Indicate the relationship value between each "what" and "how." Use values of 9, 3, and 1 to indicate a strong, moderate or light interrelationship.

11. Calculate the importance weight for each "how." This is the total of the cross products of the relationship value and the relative weight of the "what."

12. Indicate the technical difficulty associated with the "how." Use a scale of 5 to 1 (5 is the most difficult).

13. Indicate the company, competitive values, and benchmark values for the "how".

14. Specify the plan for each of the " hows ."

Quality function deployment is usually applied at four different interrelated levels:

1. Product planning

   What ” customer requirements

   How ” product technical requirements

2. Product design

   What ” product technical requirements

   How ” part characteristics

3. Process planning

   What ” part characteristics

   How ” process characteristics

4. Production planning

   What ” process characteristics

   How ” process control methods

IMPORTANCE/FEASIBILITY MATRIX

Importance is a function of urgency and potential impact on corporate goals. It is expressed in terms of high, medium, and low. Feasibility takes into consideration technical requirements, resources, and the cultural and political climate. It is also expressed in terms of high, medium, and low.

Paired Comparisons

This approach is based on a pair-by-pair comparison of each set of alternatives to determine the most important. Count the total number of times each alternative was selected to determine the overall prioritization.

Improvement Potential

To determine how to prioritize cost improvement benchmarking alternatives, perform the following analysis:

1. Make a Pareto analysis of cost components

2. Assess the percent improvement possible for each of the most significant cost components.

3. Multiply the cost times the percent improvements possible to determine the improvement potential.

4. Prioritize the benchmark studies based on improvement potential.

This approach can be used to prioritize other areas as well.

Prioritization Factors

When prioritizing benchmarking candidates, it is important to take into consideration many factors. Some of these factors are listed below. It is important to narrow projects down to the significant few and to choose a good starting project to showcase the value of the approach.

The first project should be a winner. It should address a chronic problem, there should be a high likelihood of completion in several weeks, and the results should be (a) correlated to customer needs and wants, (b) significant to the company, and (c) measurable. Factors to be used subsequently are:

• Importance of business need long term

• Basis for a sustainable competitive advantage

• Percent improvement possible

• Customer impact

• Realism of expectations

• Urgency

• Ease of implementation/degree of difficulty

• Time to implement

• Consistency with mission, values, and culture

• Organizational buy in

• Passionate champion identified

• Resource requirements and availability

  • Capital expenditures

  • Working capital

  • Time by skill category

• Synergy

• Risk versus return

• Measurability of result

• Modularity of approach

• Anticipated problems

• Potential resistance

ARE THERE ANY OTHER PROBLEMS? WHAT IS THE RELATIVE IMPORTANCE OF EACH OF THESE?

The Japanese approach to improvement is called "Kaizen." This philosophy espouses an innovative, small-step -at-a-time approach that is implemented by creating an awareness of need and empowerment throughout an organization. This contrasts to the Western approach, which tends to be higher tech, capital intense , and focused on major innovative changes. (Several studies have demonstrated that the U.S. is much better at discovery and invention than Japan, but that we lag in commercial development and implementation of the ideas.) Could the low tech, people-oriented focus work in your competitive situation? What does this suggest in terms of benchmarking prioritization?