Benchmarking Logo here Paul G. Russell, CPP/Fellow Packaging Process Manager Hewlett-Packard Company March 2002 Overview • Process used to collect information • Analysis • Transferring into action Where packaging has influences in the customer experience lifecycle repurchase & recommend use & grow awareness & consideration loyalty first 30 days Disposal or return select & buy Brand Image & Promise Communicates Solutions Unpacking & OOBE Getting it home Specifications Packaging Cross Functional Interaction Materials Engineering Marketing Manufacturing Engineering Supplier Packaging Receiving Material Handling Outbound Product Packaging Technical Specification/Design Price leverage Graphics Standards Customer Perception Legal Requirements Language Issues Material Handling Electrostatic Discharge (ESD) Process Flow Manufacturability Reliability Manufacturing Costs OEM Contract Mfg.. Relationship Post Mfg. Support (conflict resolution) Quality Assurance Environmental Test Standards Product/Packaging Design Packaging Distribution/Logistics Process Shipping Costs Regulatory Compliance R&D Suppliers Sales & Service Product Design Mechanical Stability Reliability Logistical Considerations Design for Mfg. Managing Relationships Customer Satisfaction Warranty/D.O.A. Environmental Concerns What is benchmarking Performance Process Strategic Strategy Development Project Prioritization Maintain Leadership • It is a process of identifying, sharing, and using knowledge and best practices. It focuses on how to improve any given business process by exploiting top-notch approaches rather than merely measuring the best performance. • It is a combination of competitive intelligence and looking at best in class •Helping to know yourself so you can judge others •Helping you to know your domain so you can determine an advantage Performance Benchmarking Competitive Analysis Program (CAP) – direct comparison of product to product • Process • HP provides information and samples (if possible), 3rd Party conducts analysis • Share results with participating site and post results to program web site • Elements Captured • Component and Total Cost Analysis • Comparisons (% Package Cost/Street Price) • Physical properties • Graphics - Printing process used, # of colors, # of languages, Symbols used • Materials (box, cushion, thermoform, & other) • Attributes - environmental, ergonomics, out-of-box experience, localization, etc • Forensics Photographs Competitive Analysis Program (CAP) Process Flow Pkg samples and information clarification HP Division CAP submission form and samples Competitive Analysis Program No Competitive samples Enough info and samples Obtain Competitors products Publish individual report to HP Division Document & Photograph Load to HP web database Analysis Return all provided samples HP responsibility 3rd party responsibility Performance Benchmarking Performance Benchmarking CAP Summary Example % of P kgoutM arket H P V T otal P roduct ofS hare P kg $ C ube (in) env iro ergo box P roduct C ategory pack out (m in/sec) P allet Load E fficiency 1200x 1000 48x 40 A rea U nits/ A rea U nits/ E fficency Layer E fficency Layer H ig h -E n d H P M o d el X C om petitor M odel C om petitor M odel C om petitor M odel M id -R an g e H P M o d el X C om petitor M odel C om petitor M odel L o w -E n d H P M o d el X C om petitor M odel C om petitor M odel X X X 56 12 16 16 L o w est + 18% + 59% + 35% 1.1 1.3 1.45 2.07 96.98 98.92 93.26 79.49 10 8 5 5 93.95 95.83 90.35 77 10 8 5 5 X X 48 14 10 + 27% L o w est + 59% 1.04 1.25 1.23 79.68 88.71 80.88 8 8 5 96.48 85.94 78.35 10 8 5 X X 35 34 13 + 58% + 9% L o w est 96.98 94.36 89.01 10 12 8 93.95 91.41 86.22 10 12 8 NA NA NA B est M iddle W orst Performance Benchmarking CAP - Forensics Photograph Website Performance Benchmarking Critical Focus Areas • Product Selection • • Get agreement on how products will be selected for comparison (industrial design, price point, features, etc.) Determining Quotable Volumes • Using generic on-going monthly volumes for costing (5K, 10K, 25K) – Use "threshold volume" for generic numbers. This assumes in a competitive environment companies are all using technologies and processes that are cost effective at threshold volumes. – Map to your typical volume runs. • • Highly People Dependent • Use product line representatives to determine what products (yours and the competition) should be benchmarked and volumes to quote. Poor upfront data leads to poor results. • Check information obtained via 3rd party with internal engineers to validate assumptions and findings. Sourcing Products • Develop clear budget expectations upfront for buying competitors products. Using a “buy & return” method is difficult and can exceed regional sourcing capabilities. • Leverage internal competitive test labs – they may already have what you want • Purchase products quickly, once products are identified, as they have a tendency to roll to the next generation Performance Benchmarking Process Benchmarking using a survey instrument We used a questionnaire that addressed 4 major categories: • Procurement processes • Packaging processes and interactions • Marketing approach and customer value • Environmental focus For each area, subcategories of interest include: • Structure • Process • Metrics • Future (Packaging only) • Customer values (Marketing only) • E-commerce and total buy (Procurement only) A gilent C om pany A C elestica International Inc C isco C om paq D ell E pson C om pany B IB M Intel E nterprise S erv er G roup C om pany C C om pany D S un M icrosystem s C om pany E H ew lett-P ackard W orks ta tions Stora ge Se rve rs U N IX Se rve rs N T Pe rs ona l A pplia nc e s L a s e r Supplie s L a s e r Printe rs Ink S upplie s Ink P rinte rs Im a ging H om e PC Fa xe s or A ll-in-O ne B usine s s P C C om pany C orporate Who we looked at O ther unspecified* unspecified* unspecified* M icroelectronics unspecified* *N O T E : D ue to an error in the electronic v ersion of the surv ey, respondents could not enter tex t into the "other (specify)" response for this question Process Benchmarking Critical Focus Areas in using a Survey Instrument ? • Selecting right players and getting them to participate can be difficult • Use of a 3rd Party is critical • Pre-established relationships are helpful (conferences and seminar) • Develop the right questions • Spend about half of your total project time designing/optimizing the questions • Sell the benefits/value to participants • Give them examples of what they’ll get for their effort (report) • Make them part of a team • Provide frequent updates • Get you hands on the raw data • Allows drill down and complete understanding of the details • Provides opportunity to validate 3rd party analysis Process Benchmarking Strategic Benchmarking through interviewing • Know your strategic opportunities • Identify companies, outside our sector, which are best in class in those areas • Engage companies • Why them and your intent • Non-disclosure agreements • Reciprocal • Agree on process and amount of time • Conduct interviews and document • Compile into recommended lists of projects or process modifications Critical Focus Areas Interviewing In Teams Of Two • Each Interviewer takes a different role • Each is tracking and recording different types of information on different levels • Each can offer help when the other gets stuck • Having two interviewers is indispensable for reconstructing and interpreting later in the synthesis process Good information is: “Two people are 80% more effective in gathering information than by one person alone” • Specific attributes which are important to you • Useful for creating a clear understanding • Focused on key drivers for your business • Captures key issues/challenges • Identifies what isn’t known by the interviewee • Adds value in both directions Ask permission to follow up and/or come back Strategic Benchmarking Analysis • For each approach Raw Data (Performance, Process, Strategic) • Bring in a fresh person • review first draft findings • distill it down to the key areas Processed Data Knowledge • Team works with the new person • explain the unique elements of the raw information and first draft analysis • Key activities during this phase include: • Analyzing trends • Identifying best practices • Determining opportunities Understanding • Team identifies critical few opportunistic strategies Pulling it all together Used HP change management process • Developed a list of opportunistic strategies • Tactical projects mapped into strategies • Identified key stakeholders to own each strategy • Internal packaging council (control resources) • Get their input and use their language • Gain acceptance and buy off • Use council meetings to track progress and keep everyone on the same page. • Develop/modify reward structure to drive the right behaviors. Conclusion Benefits I hope came across: • Exposure to our benchmarking methodologies • How we identify key opportunities • How we transfer this knowledge into actionable strategies and projects Thank You Any questions?