Absolute Benchmarking Analytics
Absolute Benchmarking is a groundbreaking technique developed by Factory Physics Inc. to understand how well your company is doing versus how well it could be doing. Absolute Benchmarking is a quantitative, practical technique that quickly identifies your company's biggest opportunities for improvement. For executives and managers, it is as fundamental for understanding operations performance potential as revenue and expenses are fundamental for accountants to understand income statements.
Best possible means optimal performance given your current performance "envelope." Your performance envelope consists of your company's:
- Product mix
- Customer base
- Demand and variance of demand
- Supply replenishment time (purchased or fabricated) and variance of replenishment time
- Resources including people, equipment and inventory
- Required response time, i.e. lead time to customer
A practical application of operations science is to determine best possible performance no matter what your performance envelope looks like. Then, of course, you also want to determine how you might improve within your performance envelope to achieve even better performance. How is performance measured? Absolute benchmarking analytics tie directly to your income statement and balance sheet so you can confidently predict return on investment in your operations. Do you want to know how well your company is doing or could be doing on the following?:
- Gross Margin
- Operating Cash Flow
- Inventory Turns (FG, RM or WIP)
- Days of Inventory (FG, RM or WIP)
- On-time Delivery
- Return on Assets
- Employee Productivity
Why benchmark against the competition when you don't know how well they are doing against best possible performance? You might learn some competitive intelligence but that's not the true benchmark of value. The most value comes from an absolute benchmark determining how well you are doing versus best possible performance, with your current resources, and how to "raise the bar" and get even better. Then, you can determine:
- Will current best possible performance enable you to crush your competition?
- What does the data of the absolute benchmark reveal as keys to improve on best possible performance?
Absolute Benchmarking provides scientific, practical answers. There are two types of Absolute Benchmarking: Flow Benchmarking and Inventory Benchmarking.
Flow Benchmarking provides information on how well your process flow is working versus how well it could be working. Understand if your cycle times are as short as they could be. Determine the optimal amount of WIP and labor for your process. Get a quantitative understanding of optimal capacity utilization.
Factory Physics Inc. provides authentic operations science for its clients. This means the science must be universally applicable. To that end Flow Benchmarking can be used in any type of process, not just product production. Some previous applications of operations science include:
- Capacity management for research and product development
- Flow times for patients in a hospital emergency department
- Project management for multi-billion dollar energy and infrastructure projects
Inventory Benchmarking and Optimization provides the answer to the constant question we hear about inventory optimization: What is the optimal amount of inventory for my company?
Click here for more information on this easy-to-use, powerful management tool for practical decision making.
We provide Absolute Benchmarking as an initial assessment and as part of ongoing efforts in our Factory Physics implementations to achieve clients' best possible performance. Is your company truly Lean? Do you have any way to know? Factory Physics Inc. can answer those questions and many more. For more information on Absolute Benchmark Analytics for your company, contact:
Factory Physics, Inc.