Benchmarking
...our coworker to develop fresh ideas, which is what benchmarking, is all about. Industry is competitive, and with the rapid pace of technology, it is beneficial for organization leaders to share information with one another. It seems taboo for big businesses whose primary goal is to outperform competitors to share information, but this act of teamwork creates overall success. With benchmarking, management can remove the trial-and-error period and can focus on making improvements on existing ideas that can improve the organization. Sharing information speeds up the business process, and for that reason it is becoming common for company’s to exchange processes, information and data. Once benchmarking is understood by management, decisions need to be made as to where the areas of improvement are. The point of benchmarking is to add value to a company; just because an organization does something different does not mean you should follow suit. According to William Stevenson, “No organization should make changes to their products, processes, or their organization if the changes do not bring benefits (Productions/Operations Management 1996).” It seems obvious, but if it appears that your company will not benefit from making changes found in the benchmarking process, then change is not necessary. When benchmarking, a company needs to follow some kind of pattern to ensure changes are necessary and done correctly. These patterns are often referred to as the value chain, and Productions/Operations Management lists the 5 step process that should be followed when benchmarking: 1. Identifying a critical process that needs improvement 2. Identify an organization that excels in the process, preferably the best 3. Contact the organization that you are benchmarking; visit them, and study the process or activity 4. Analyze the data 5. Improve the critical process at your own organization (Stephenson 1996). These steps are crucial to the benchmarking process because it forces management to identify the weak areas, evaluate other businesses performance and to decide when benchmarking standards should be established. Timing of benchmarking strategies is important – benchmarking when changes are taking place within the organization could create misunderstanding of the information. Management must be on top of its game when implementing change. Benchmarking is not a sure fire way to succeed and to achieve success steps need to be taken to make sure staff understands not only the changes, but why the changes are occurring. Understanding your staff and their attitudes/beliefs/work styles is vital when implementing the change process. Managers can either make changes quickly or take time to make sure staff is on the same page and to avoid unnecessary losses. Christopher Bogan suggests there are 5 ways to implement change to attain benchmark standards: 1. Clear articulation of benchmarking objectives and their linkage to the overall department as well as the organization vision 2. Strong and visible senior management commitment throughout the process 3. Identification of a critical mass of people from all levels of the organization who will push for the change and demonstrate ownership and commitment 4. Honest, open and regular communications with staff 5. A clear migration approach from the current to the future state based on benchmarking results (Benchmarking Best Practices 1994). Following through with change requires work on the part of management and staff. Keeping open communication with employees will help management evaluate whether or not effective changes are being made throughout the benchmarking process. Weaknesses of Benchmarking The weaknesses of benchmarking are not whether or not it works, but whether or not it is ethical. Many organizations feel that benchmarking is nothing more than copying other people’s ideas and claiming them for your own. There is a risk of management simply evaluation other organizations way of business and implementing the exact same ideas and processes, but that is not benchmarking. Benchmarking is not a “copy cat” theory, but a theory that allows for future improvements on other’s ideas. If a company has an incredible manufacturing process, and another company comes and implements the same process but with further improvements, both will benefit. Business is all about competition; healthy competition forces organizations to find better, more efficient ways of functioning. Another reason why benchmarking and copying are not the same is that if an organization simply copies other organizations ideas, they will not be on top of the game – they will be equal. Businesses that thrive are ones that improve processes and become leaders of innovation. Copy-cat companies will always struggle because they do not look for better ways of conducting business. Another weakness of benchmarking is change is often met with criticism. If management has a group of people working for them that have been doing the same process the same way for 20 years, it can be difficult to get them all agree to change. Even one or two people who are unwilling to cooperate can defeat the benchmarking process. What is the point of monitoring competitors if changes are never going to be made? Understanding not only the benchmarking process but how to implement change is crucial for managers. Ethical concerns will always plague benchmarking because many view the theory as spying and feel it is an unfair business practice. If you have come out with a way to cut down costs by decreasing you MTBF and another company swoops in and takes that idea and uses it for their own gains, you would be upset right? Benchmarking is not about stealing ideas, however, and to make sure business are benchmarking ethically a general code of conduct has been established. The SPI Council on Benchmarking and the International Be...