Skip to content

Student Learning Objective 8

Manage continuous improvement and benchmarking activities.

Learning Objective B

Construct benchmarks in a total quality management environment.

Content

Benchmarking is a process that allows companies to evaluate and compare their performance to other organizations. Benchmarking has the potential to lead to important improvement. It also has a potential disadvantage that tempts organizations to copy from other organizations. Please be aware that copying from other organizations does not advance you past that organization but can only bring you up to parity.

Slide 10: Benchmarking

  • Definition. Benchmarking is measuring performance against that of best-in-class organizations, determining how the best in class achieve those performance levels and using the information as the basis for goals strategies, and implementation.

  • Reasons to benchmark:

  • Tool to achieve business and competitive objectives.

  • Forces company to look external. Less surprises

  • Allows goals to be set objectively

  • Saves time and money. Not re-inventing the wheel.

  • Weaknesses of benchmarking:

  • Best-in-class performance is a moving target

  • Does not focus on innovation

Slide 11: The Process of Benchmarking

  • Besterfield states that the core techniques are contained in the following six steps

    1. Decide what to benchmark
    2. Understand current performance
    3. Plan
    4. Study others
    5. Learn from the data
    6. Use the findings

Slide 12: Authors' Approach to Benchmarking

  1. Obtain management commitment

  2. Baseline your own processes

  3. Identify and document both weak and strong processes

  4. Select processes to be benchmarked

  5. Form benchmarking teams

  6. Research the best-in-class

  7. Select candidate best-in-class benchmarking partners

  8. Form agreements with benchmarking partners

  9. Collect data

  10. Analysis data establish the gap

  11. Plan action to close the gap or surpass

  12. Implement change to the process

  13. Monitor Results

  14. Update benchmarks: continue the cycle

Slide 13: Deciding What to Benchmark

  • Start by reviewing mission statement and critical activities (critical success factors.)

  • Use quality tools to help in selection

  • Think in terms of metrics

Slide 14: Understanding Current Performance

  • Necessary to (thoroughly) understand and document process

  • Careful examination of exceptions

  • Try to quantify everything

  • Be careful of accounting data

Slide 15: Planning

  • Organize team (if not done already)

  • Use public information to build list of candidates.

  • Three main types

    • Internal Benchmark. Look for other division performing same function. Advantage: easy data, no confidentiality concerns.

    • Competitive Benchmark. Obvious choice. Difficult to get information.

    • Process Benchmark. Advantages: easier to get external input. Data is often available in the public domain.

Slide 16: Studying Others

  • Three techniques for conducting research: Questionnaires, site visits and focus groups.

Slide 17: Learning from the Data

  • Analyze the data (helpful questions)

  • Is there a gap between the organization's performance the performance of the best-in-class organizations?

  • What is the gap? How much is it?

  • Why is there a gap? What does the best-in-class do differently that is better?

  • If best-in-class practices were adopted, what would be the resulting improvement?

  • Three outcomes:

  • Parity. Approximate equal results.

  • Positive Gap. Congratulations are in order.

  • Negative Gap. Work to be done.

Slide 18: Using the Findings

  • If negative gap is found, changes must be made or benchmarking is waste of time.

  • Requires development and execution of action plans (teamwork)

  • Results are objective

Slide 19: Pitfalls and Criticisms

  • Too much focus on copying others

  • Not a panacea

  • Not substitute for innovation