How benchmarking helps to improve process quality?

Module II. Process Quality Improvement

Lecture -6 How benchmarking helps to improve process quality?

Benchmarking is a systematic method by which organizations can measure themselves against the best industry practices. It promotes superior performance by providing an organized framework through which organizations learn how the "best in class" can do things, understand how these best practices differ from their own and implement change to close the gap.

Benchmarking is the systematic search for best practices, innovative ideas, and highly effective operating practices. Benchmarking considers experience of others and uses it. Indeed, it is a common-sense proposition to learn from others what they do right and then imitate it to avoid reinventing the wheel. Benchmarking is not new and indeed has been around for a long time. Infact, in the 1800s, Francis Lowell, a New England colonist, studied British textile mills and imported many ideas along with improvements he made for the burgeoning American textile mills. Benchmarking is used extensively by both manufacturing and service organizations, including Xerox, AT&T, Motorola, Ford, and Toyota. Benchmarking is a common element of quality standards, such as the Chrysler, Ford, and General Motors Quality System Requirements.

As shown in Figure 2-24, benchmarking measures performance against that of best-in- class organizations (may be entirely different organization with different product or service), determines how the best in class achieve those performance levels, and uses the information as the basis for adaptive creativity and breakthrough performance.

Implicit in the definition of benchmarking are two key elements. First, measuring performance requires some sort of units of measurement. These are called metrics and are usually expressed numerically. The numbers achieved by the best-in-class are assumed benchmark or target. An organization seeking improvement then plots its own performance against the target. Secondly, benchmarking requires that managers understand why their performance differs. Benchmarkers must develop a thorough and in-depth knowledge of both their own processes and the processes of the best-in-class organization. An understanding of the differences allows managers to organize their improvement efforts to meet the desired goal. Benchmarking is all about meeting goals and objectives by improving processes.

Reasons to Benchmark

Benchmarking is a tool to achieve business and competitive objectives. It is powerful and extremely effective when used for the right reasons and aligned with organization strategy. It is not a panacea that can replace all other quality efforts or management processes. Organizations must still decide which markets to serve and determine the strengths that will enable them to gain competitive advantage. Benchmarking is one tool to help organizations develop those strengths and reduce their weaknesses.

By definition, benchmarking requires an external orientation, which is critical in a competitive world where the competitor can easily be on the other side of the globe. An external outlook greatly reduces the chance of being caught unaware by the competition. Benchmarking can notify the organization if it has fallen behind the competition or failed to take advantage of important operating improvements developed elsewhere. In short, benchmarking can inspire managers (and organizations) to compete. The primary weakness of benchmarking, however, is the fact that best-in-class performance is a moving target.

Pitfalls and Criticisms of Benchmarking

The basic idea of benchmarking can be summed up quite simply. Find someone who executes a process better than you do and imitate what he or she does. The most persistent criticism of benchmarking comes from the idea of copying others. How can an organization be truly superior if it does not innovate to get ahead of competitors? It is a question, but one can also ask the reverse: How can an organization even survive if it loses track of its external environment?

Benchmarking is not a strategy, nor is it intended to be a business philosophy. It is an improvement tool and must be used properly. Benchmarking isn't very helpful if it is used for processes that don't offer much opportunity for improvement. It breaks down if process owners and managers feel threatened or do not accept and act on findings. Over time, things change and what was state-of-the-art yesterday may not be today. Some processes may have to be benchmarked repeatedly.

Benchmarking is also not a substitute for innovation; however, it is a source of ideas from outside organization. Benchmarking forces an organization to set goals and objectives based on external reality. Consumers care about quality, cost, and delivery, and not productivity of the organization.