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Benchmarking is a topic of general interest in Six Sigma. Thus the discussion here goes beyond the use of benchmarking in defining customer expectations, developing process or product requirements and setting goals. In general terms benchmarking can be defined as measuring your performance against the best in class companies , determine how the best in class achieve your performance those performance levels and using the information as the basis of your own companies targets , strategies and implementation.
Benchmarking goes beyond the mere setting of goals. It focuses on practices that produce superior performance .benchmarking involves setting up partnerships that allow both parties to learn from each other.
The benchmarking process
1. Planning
1.1 Identify what is to be benchmarked
1.2 Identify comparative companies.
1.3 Determine data collection method and collect data
2. Analysis
2.1 Determine Current performance “gap”.
2.2 Project future performance levels
3. Integration
3.1 Communicate benchmark findings and gain acceptance.
3.2 Establish functional goals
4. Action
4.1 Develop action plans
4.2 Implement specific actions and monitor progress
4.3 Recalibrate benchmarks
5. Maturity
5.1 leadership position is achieved
5.2 Practices are fully integrated into process
The first step in benchmarking is determine what to benchmark. To focus the benchmarking initiative on critical issues begin by identifying the process outputs most important to the customers of that process.
Getting Started with Benchmarking
The essence of benchmarking is the acquisition of information. It begins with the identification of the process that is to be benchmarked. The process chosen should be one that will have major impact on the success of the business.
Once the process has been identified, contact a business library and request a search for information relating to your area of interest. The Library can be variety of external resources like search engines or your company intranet.
Why Benchmarking efforts fail
1. Lack of Sponsorship
2. Wrong people on team.
3. Teams don’t understand their work completely.
4. Lack of long term management commitment.
5. Focussing on metrics rather than processes
6. Not positioning benchmarking within a larger strategy-benchmarking is one of the many six sigma tools such as problem solving, process improvement and process reengineering-used to shorten cycle time, reduce costs and minimize variations.
7. Misunderstanding the organizations mission, goals and objectives.
8. Failure to monitor progress
The benefits of benchmarking.
1. Creating a culture that values continuous improvement to achieve excellence.
2. Shifting the corporate mind-set from relative complacency to strong sense of urgency for ongoing improvement.
3. Focussing targets through performance targets set with employee input.
4. Prioritizing the areas that need improvement.
5. Sharing the best practices between benchmarking partners.
Some Dangers of benchmarking
Competitive analysis is an approach to goal setting used by many firms. This approach is essentially benchmarking confined to one’s own industry. Although common competitive analysis virtually guarantees second rate quality because the firm will always follow their competition. If the entire industry follow this approach it will lead to stagnation or the entire industry, setting them up for eventual by outside innovators.
For comments and queries the author Suresh Menon can be contacted at testconsultants@outlook.com who has done Business Process Consulting for Conglomerates.
