Benchmarking closes the gaps in your operation
Benchmarking is a term that’s used often today, but is not well-understood by many. If we go back to the first documented book on benchmarking by Robert C. Camp in 1989, when he was at Xerox, he defined it this way: "Benchmarking is the search for best practices that lead to superior performance." Best practice is another term we can define: a practice that works for you.
These are the questions a leader must ask:
- Who is the best at what we do? This is a tough question, because it can be your industry competition or in your specific process but way outside your industry. For Xerox warehousing, Camp found that L.L. Bean, the outdoors company in Maine, used a best practice of segmenting their warehouse to reduce the waste of walking to kit orders. When he suggested a benchmarking visit there, his managers asked, "Why should we go there?They sell canoes and rubber boots, and we are a high-tech company." The answer was that warehouses all have a process even if the products are not the same! They went, they learned, they set goals and they changed.
- How well are we doing? What performance measures do you have? What are the benchmark goals?
- What are our strengths and gaps? Which areas are reaching the goals? These are strengths. Which areas are not reaching goals? These are gaps.
- How will we close the gaps and share the strengths? Involve management to proceed with changes based on the best practices found in benchmarking.
It’s particularly valuable to benchmark companies that have had to change in fast-moving markets and high competition. You really don’t want to benchmark solely in your industry because it really will not be a step function, but could only make you"the best of the dogs!"
For example, to benchmark the "new-product development process," it’s best to survey industries that have to move faster than you and people that have had to drastically change to stay on the leading edge. We were able to benchmark with a leading integrated circuit chip company, since we knew they had to come out with a smarter, faster chip about every six months. We visited and discussed our process and theirs, since there was no competitive sensitivity, and came back to make some significant changes to our process, which greatly reduced our cycle time.
Bill Baker is editorial board chairman for Target magazine, for the Association for Manufacturing Excellence (AME), which is a CFE Media content partner.