Why some industrial organizations find benchmarking difficult
Benchmarking, in the simplest terms, involves comparing performance to peers, understanding gaps in operations, and taking steps to close those gaps and improve performance. Unfortunately, it is not as simple as it sounds.
Matthew Littlefield, LNS Research
The concepts behind benchmarking research for industrial operations have been applied successfully by many leading organization in the world. However, many companies still struggle with the basics. Benchmarking, in the simplest terms, involves comparing performance to peers, understanding gaps in operations, and taking steps to close those gaps and improve performance.
Unfortunately, it is not as simple as it sounds. Below are the top three challenges I’ve seen industrial organizations face while benchmarking operations.
Granularity: Benchmarking research is too general or too specific
Often the topic that needs to be benchmarked is too general or too high level, which makes it difficult to take specific steps for improvement. A good example of this is benchmarking “operational excellence.” This means many things to many different companies and it’s difficult to garner real, actionable steps for improvement when companies look to benchmark such a topic.
On the other extreme, there’s a similar issue if the business process that needs to be benchmarked is very specific. For any benchmarking process to be successful, it’s critical to understand how the outcome of the process impacts the key goals of the division or plant or even the overall organization. This, in turn, means specific is good, but that can make the quest for data very challenging.
A good example of this would be trying to benchmark the throughput and mean time to failure metrics for a very specialized piece of machinery in a specialized industry. All I can say is good luck getting a statistically relevant sample in such a case.
Data: Availability, quality, statistical relevance, and more.
The second key challenge with benchmarking industrial operations is data. If all data had the following characteristics, benchmarking projects would almost always run smoothly:
- Easily available
- In one central location
- Using common definitions
- Having a statistically relevant sample size
Unfortunately, this is not the case and it takes a lot of hard work to get there.
For example, if you’re planning to benchmark the quality processes of five plants in North America, and there is no consistency in the way data is collected across these plants or how metrics are defined, it will be an uphill battle. In such a case, it becomes very challenging to effectively execute the benchmarking process internally and even harder to do it externally.
Getting value from the results
The final challenge has two parts and focuses on the way the results of the benchmarking process are utilized. This stage is often more important than the benchmarking process itself. If what you learn from the results of the benchmarking process isn’t applied to the business, the entire exercise may have been done in futility.
The first challenge is in understanding which actions need to be taken based on the results and also how to execute these actions. To accomplish this effectively there needs to be buy-in from all levels of the organization as well as the right culture in place to accept the change due to the new actions.
The second part of this challenge lies in answering the question, “What happens next?” Organizations that think about the benchmarking process as a one-time exercise are likely to fail. The key to the success of any benchmarking process is in setting up a culture and process of continuous improvement.
The real value of a benchmarking exercise is delivered when you learn from the results of the program, apply those recommendations, track the success of the actions, and continuously improve based on the results of those actions.
Matthew Littlefield is principle for LNS Research will be holding the first meeting for the Global Quality Advisory Counci in March. For more informnation, click this link.
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