Benchmarking Steps

Total Quality Management

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Benchmarking Steps

Benchmarking Steps

There are many versions of Benchmarking Steps used by very successful orgImage result for Benchmarking Steps in tqmanisations. AT&T has 12, Xerox uses 10, Alcoa has 6 and others recommend 7 or 8 steps. The software program benchmarking, based on the work of James Harrington in business process improvement, uses an 18-step process. All current models use the same steps. The differences between them are that some of the steps are divided into multiple steps.

Benchmarking Steps 1: Plan

The first step in the Benchmarking Steps process is to plan. The needs assessment team provides insight into key customer needs and the processes in the organisation that address those needs. When a customer need is identified, the processes that directly fulfil that need become critical processes. We only benchmark critical processes. Typically, we try to identify weak critical processes that can give us the most leverage if they are fixed.
The benchmarking team needs to perform the following:
Understand the critical processes and how they are measured
Decide what kind of data is needed and how data will be collected
Identify all team members and find a sponsor
A key step in the planning process is using flow charts so that the team first understands their own critical processes. The team needs to understand the process and how it is measured, both in their own terms and in the customer’s terms. The kinds of measurements (or metrics) chosen have to be useful to compare performance with a benchmark partner. If the metric chosen uses information that could be sensitive to either partner, it is not a good measure. There is a golden rule of benchmarking which is as follows:
Do not ask your benchmarking partner to tell you things you are not willing to reveal about your own operation.
The planning stage is where the benchmarking team begins the process of linking their study to the organisation’s strategic goals. The benchmarking effort should focus its energies on those customers and customer needs that are most important. One way to determine relative importance is to develop a list using this selection methodology:
State the mission, purpose or goal of the function or department.
List the outputs and customers for each.
Identify major customers by value or volume.
List the major customers’ needs and complaints.
Identify which processes affect these needs or complaints.
Identify which processes add the most value and which add the most cost.
(For competitive benchmarking) Identify which areas are subject to competition.
The needs assessment team may have already done some of the above. Clearly defining the processes will help to define the data required in the next step.
A sponsor, someone with authority and stature in the organisation, is necessary for effective benchmarking. As we find in internal auditing, we need to report our findings to someone with enough clout to take action and implement the improvements. Due care should also be focused on assembling a team with the right mix of skills. Especially look for those with experience in the process being studied.

Benchmarking Steps 2: Research

Following are the purposes of research:
To establish the metrics to be used
To identify the benchmark candidate
To collect public data
Before collecting a lot of data about others, a benchmarking team needs to collect baseline data about its own processes. Collecting this data will refine the measurement process and help develop the final set of metrics to be used in the benchmarking effort. Use TQM tools or other analytical tools to observe and analyse your own process. The benchmarking team can use this internal review as benchmarking practice prior to the site visit with the benchmarking partner.
Identifying potential benchmarking partners is another step in the research phase. It is always best to develop a list of three to five potential benchmarking partners for cooperative benchmarking. Some potential partners may not be interested, not have the time, or not wish to share information. Although benchmarking practice stresses using the “best in class” for our benchmark yet often that has to be tempered with other factors such as cooperation, costs, time, location and already established relationships.

Benchmarking Steps 3: Observe

Eventually, the benchmarking team should go to the source of the data and visit the benchmarking partner. The team will have already prepared itself by:
Establishing a benchmarking agreement with a partner organisation
Establishing a data collection plan and method
Becoming experts in the measurement of their own system
Preparing themselves by absorbing and cataloguing all relevant public information
To save embarrassment, it would be helpful if the benchmarking team reviewed the common sense principles found in the “Benchmarking Code of Conduct” or similar document. This list of “correct behaviour” will ensure that benchmarking efforts are not derailed over a breach of etiquette.

Benchmarking Steps 4: Analyse

Analysis of the collected data usually takes several steps:
Summarise and interpret the data.
Analyse the gap between your process and your partner’s process.
A project where future gaps will be.
Analyse things that were not on the agenda.
Develop key findings into new operational goals.
Analysing the benchmark performance “Gap” can be done as a snapshot or as a trend over a period of time. Either method (or both) may be appropriate for the process being studied. When cost, productivity or quality is the metric under study, sometimes it is useful to look at the historical trend as well as the current gap. Projecting future performance levels of your productivity and the benchmark partner’s, given the current rate of improvement for each, creates what we call the “Z Chart” of productivity improvement required to attain parity with your benchmark partner.