Bench marking and Lean manufacturing

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What is bench marking all about, and why should a company do it?

It is about adopting the best practices prevalent in the industry. Bench marking is basically about not reinventing the wheel. Often companies are in a situation where there is a dearth of new ideas and the existing ideas do not seem to be working. Some may think that Benchmarking is a copycat technique. This is not true. Bench marking is learning from others , within ethical boundaries and norms.

"Bench marking is simply the process of measuring the performance of one's company against the best in the same or another industry"(Stevenson, 1996).

The knowledge that is available for comparing operations and processes are vast (Boxwell,1994). "An organization's ability to evaluate its practices against specific business strategies and objectives is critical to leveraging its knowledge capital" (Harper, 1996).

With the Knowledge revolution, information is free and available to share. Knowledge actually grows when it is shared. The bench marking approach is a collaborative approach and involves leveraging the knowledge and experience of others for competitive advantage. Because bench marking does not reinvent the wheel, it eliminates the trial and error and time involved in implementing new ideas and strategies.

Thus companies benefit from bench marking in the following ways :

1. It reduces the time of implementation of new ideas.
2. It reduces the cost of generating new ideas.
3. It increases efficiency because it eliminates trial and error.
4. It increases collaboration in the industry.
5. Bench marking could be for a specific product or process or function or division.
6. It raises the bar so to speak for industrial performance as a whole, promoting world class performance .

Is it best to look only at your direct competitors for bench marking statistics? Why or why not?

The answer depends on the areas that the company feels is in need of bench marking. The areas could be related to products, processes or functions or strategies. Competitive bench marking is useful when you are looking at expanding your product portfolio or adding features to your product or service. It would also be in order when it comes to pricing, distribution and promoting your product. However, when it comes to process bench marking, approaching your competitors may not be feasible. Instead, it would be better if the company looks to companies from non competitive industries, to see how they perform a generic process, such as order handling, or supply chain or CRM and so on. B2B sellers could also benchmark their inventory or quality systems, with their customers or buyers and vice versa. Suppliers could be your source of bench marking.

In fact global organizations with subsidiaries or divisions in multi city and multi country locations, go for internal bench marking. Whenever McDonald's plans to plans to expand into new territories, the employees are sent for training to their existing businesses, in order to learn the best practices in procurement, operations and delivery.

How would you go through the bench marking process?

In bench marking, it is a good idea to look at it from the value chain point of view and see which critical processes need improvement (Stevenson,1996).

The following steps in bench marking offer you a guideline, though it would be wrong to consider only these steps and refuse to look at other ways, because bench marking is a term that encompasses numerous techniques and methods.

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 bench marking; visit them, and study the
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