This action might not be possible to undo. Are you sure you want to continue?
Benchmarking is the process of comparing and measuring an organization's operations or its internal processes against those of a best-in-class performer from inside or outside its industry.
There is a clear distinction between benchmarking and competitive analysis. The reason is that competitive analysis involves comparing your product with your competitors. On the other hand, benchmarking goes into more detailed comparison that includes how the product is engineered, manufactured, distributed and supported.
Key Points About Benchmarking
Benchmarking is an increasingly popular improvement tool. Benchmarking concerns processes and practices. Benchmarking is a respected means of identifying processes that require major change. Benchmarking is done between consenting companies that may or may not be competitors. Benchmarking compares your process or practice with the target company's best-in-class process or practice. The goal of benchmarking is to find "secrets of success" and then adapt and improve for your own application.
Rationale for Benchmarking
The most important reason why benchmarking has become an effective means for every organization is the process of continuous improvement. The rationale is that benchmarking can show which processes are candidates for continuous (incremental) improvement and which require major (one shot) changes.
Furthermore, benchmarking offers the fastest route to significant performance improvement. It can focus an entire organization on the issues that really count. Some factors that drive companies to benchmark are commitment to total quality, customer focus, product-tomarket time, manufacturing cycle time and financial performance at the bottom line.
Key Points About Benchmarking As It Relates to Continuous Improvement
Today's competitive world does not allow time for gradual improvement in areas in which a company lags way behind. Benchmarking can tell a firm where it stands relative to best-in-class practices and processes and which processes must be changed. Benchmarking provides a best-in-class model to be adopted, or even improved upon. Modern customers are better informed and demand the highest quality and lowest prices. Companies have a choice to either perform with the best or go out of business. Benchmarking supports total quality by providing the best means for rapid, significant process/practice improvement.
Benchmarking Approach and Process
The benchmarking process is a relatively straightforward but steps must flow in sequence. This process contains 14 steps. These 14 steps represent the three phases of benchmarking: preparation, execution and post execution.
Fourteen Steps for Benchmarking Approach and Process
**Refer to MS Word notes.
Role of Management in Benchmarking
Management plays a crucial role in the benchmarking process. The most important element in the benchmarking process is the management's commitment either in terms of time or money. This is shown through the approval given by the management.
There are five areas where the role of management can be seen: i) commitment to change ii) funding iii) human resources iv) disclosure v) involvement
Prerequisites for Benchmarking
Will and Commitment Will and commitment to benchmarking will ensure that the organization can proceed. Don't waste time or the time of a benchmarking partner in the absence of a commitment and a will to benchmark on the part of the company's top management.
Vision/Strategic Objective Link
Benchmarking objectives must link to the company's vision and strategic objectives. This is important since benchmarking requires a strong focus to avoid it going off in numerous different directions.
Goal to Become The Best - Not Simply Improved
In order to guarantee the success of the benchmarking process, the organizations must set a long-term goal and not just merely hope for an incremental improvement.
Openness to New Ideas
A company must be open to new ideas for benchmarking to provide value. This is because benchmarking is capitalizing on the work and ideas of others.
Understanding of Existing Process, Products and Services
It is mandatory that organizations understand its own processes, products, services and practices thoroughly so that it can determine what need to be benchmarked. In addition, it is necessary to have a solid understanding of your process in order to make meaningful measurements against that of the partner.
Processes need to be documented based on three reasons: i) documentation can ensure that everybody involved in the benchmarking process have a common understanding ii) a documented starting point is important against which to measure performance improvement after benchmarking changes have been implemented iii) documentation can give clear understanding to the people (partners) who are not familiar with the organization's processes
Process Analysis Skills
People with the skills to characterize and document processes are needed to guarantee the success of the benchmarking process. Furthermore, these people also play a role to analyze the benchmarking partners processes and help to adapt those processes to the organization's needs. These people can be the employees themselves or consultants.
Research, Communication and Team-Building Skills
Additional skills required include research, communication, and team-building. Research is required to identify the best-in-class process owners. Communication and team building are required to carry out the benchmarking both on an internal basis, and with the partners.
Obstacles to Successful Benchmarking
The following are some of the common obstacles to successful benchmarking as drawn from the experiences of dozens of companies:
An internal focus limits visions. If a company is internally focused (as many are), it may not even realize that its process is 80 percent less efficient that the best-in-class company. Is someone better? Who is it? Such organizations don't even ask the question. This situation can destroy the organizations
Benchmarking Objective Too Broad
An overly broad benchmarking objective such as "Improve the bottom-line performance" can guarantee failure. In contrast, the benchmarking team needs something more specific and oriented such as "how" instead of "what". A narrower target can give the team a clearer idea of what they can go after.
Benchmarking is an involved process that cannot be compressed into a few weeks. Patience is the key point in order to take advantage of benchmarking. The acceptable shortest schedule for an experienced team is four to six months whereas for a normal team it will take about six to eight months.
Poor Team Composition
Poor team composition can also be the obstacle to success. People who should really be involved in the benchmarking process should be the ones who know the most about how the process really operates. Furthermore, they should be the one who can most readily detect the often-subtle differences between your process and that of the benchmarking partner.
Settling for "OK-in-Class"
Too often organizations choose a benchmarking partner who is not the best-in-class. There are three reasons for this: The best-in-class company is not interested in participating Research identified the wrong partner The benchmarking company got lazy and picked a handy partner
At the conclusion of the benchmarking project with your partner, data analysis will have produced both quantitative and qualitative information. Between these two types of information, quantitative data are always sought and used. But, qualitative information has its own value as it describes the atmosphere and environment in which best-in-class processes can be developed and sustained.
At the end of the benchmarking process, if the partner's process is significantly superior, the organization must modify its own process such as implement it or adapt it so that it can be competitive in the marketplace.
The benchmarking process is not a limited or specific period process. To be the best-in-class organization requires continuing effort. In other words, the organization needs to stay up-to-date with best-in-class organizations through all means at its own disposal, stay current with its own processes as it is continually improved and benchmarking the weaker processes. In conclusion, the benchmarking process is a never-ending process.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.