Benchmarking for Process Improvement
Benchmarking is the process of comparing the current project, methods, or processes with the best practices and using the information gathered to drive improvement of overall company performance. Benchmarks are points of reference from which measurements and/or comparison may be made, an activity, process, service or product that serves as a standard by which others may be measured.
Benchmarking is a continuous improvement process by which an organization:
- Measures the most relevant specific attributes of its own products, services, and processes (including Operations, Performance, Procedures, Project, Processes, and Strategies).
- Compares its own performance against Best-in-class company performance, companies recognized as industry leaders, company’s toughest competitors, and known process that is significantly superior to the company’s.
- Identifies how the organizations achieved their superior level of performance.
- Uses the information to improve its own performance.
- Ultimately reaches the level of performance achieved by the benchmarked process (or a level above that process).
- Continually repeats the process in an iterative fashion.
Juran, a thought leader in benchmarking, presents the following examples of benchmarks in an advancing order of attainment:
- The customer specification.
- The actual customer desire.
- The current competition.
- The best in related industries.
- The best in the world.
According to the above, benchmarking is the process of comparing the current project, methods, or processes with the best practices and using the information gathered to drive improvement of overall company performance. The standard for comparison may be competitors within the industry, but is often found in unrelated business segments. The concept of benchmarking can be applied in scores of different business situations.
It is done to identify opportunities, set SMART goals (Specific, Measurable, Achievable, Realistic and Time-Bound) and challenge internal status quo on possibilities. Benchmark enables proper understanding of methods for improved processes. It uncovers strengths and weaknesses within organization. It assists in overall performance improvement initiatives.
Classes of Benchmarking
- Internal: Comparisons between similar operations within an organization.
- Competitive: Comparisons among competing organizations for a specific product.
- Functional: Comparing similar functions within the same industry.
- Generic: Comparing processes independent of industry or overall functions.
Applications of Benchmarking
These applications can be grouped into distinctive types such as the following:
- Process Benchmarking
Process benchmarking places emphasis on discrete work processes and operating systems which include customer complaint process, the billing process, or the strategic planning process. The aim of this form of benchmarking is to identify the most effective operating practices from many companies that perform similar work functions.
- Performance Benchmarking
In this, managers are able to assess their positions in the competitive market through product and service comparisons. This form of benchmarking placed high emphasis on elements of price, technical quality, ancillary product or service features, speed, reliability, and other performance characteristics.
- Project Benchmarking
This form of benchmarking is easier than many other business processes, because of the opportunities for selecting outside of the group of direct competitors. Areas such as new product introduction, construction, or new services are activities common to many types of organizations. Even if the project objectives are different, the projects still share the same constraint factors of time, costs, resources, and performance. This type of benchmarking can be used in selecting new techniques for planning, scheduling, and controlling a project endeavor.
- Strategic Benchmarking
Strategic benchmarking is focused on examining how companies compete. This type of benchmarking isn’t always focused on specific industries. It cuts across industries with the goal of trying to identify the winning strategies that have enabled high-performing companies to be successful in their marketplaces.
The Benchmarking Cycle
Benchmarking activities most times follow the DIAMR sequence below:
- Determine the current practices
- Select the problem area.
- Identify key performance factors.
- Define and study your own processes and the processes of others.
- Determine performance criteria based on needs and priorities.
- Identify best practices
- Measure the performance within the organization.
- Determine the leader(s) in the criteria areas.
- Look for an internal or external organization to benchmark with.
- Analyze best practices
- Visit the organization as a benchmark partner after prior information.
- Collect information and data of the benchmark leader.
- Evaluate and compare current practices with the benchmark.
- Take note of potential improvement areas.
- Model Best Practices ‘
- Drive improvement changes to advance performance levels.
- Extend performance breakthroughs within the organization.
- Incorporate the new information in the decision making process of your business.
- Share results of study with the benchmark partner.
- Keep seeking other leaders within and/or outside of your industry for further improvement.
- Repeat the cycle
About the Author
Adebayo is a thought leader in continuous process improvement and manufacturing excellence. He is a Certified Six Sigma Master Black Belt (CSSMBB), Digital Manufacturing Professional and ISO Management Systems Lead Auditor (ISO 9001, 45001 & ISO 22000) with strong experience leading various continuous improvement initiative in top manufacturing organizations.
You can reach him here.
