Simple Benchmarking Tips

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Simple Benchmarking Tips

By James Hughes

Once you start a business, it is important to track your progress.

You can achieve this by benchmarking.Benchmarking is the process of comparing business processes and performance metrics to industry best practices in terms of quality, time, cost dimensions, and making such comparisons the basis to do things better, faster, and cheaper.

This is an invaluable tool when used  the right way.

'Simple Tips on Benchmarking'

How does benchmarking help business?

Xerox Corporation, an American company was the first organisation to use the business performance management tool.In mid-1990’s, the company saw its monopoly of the photocopier market shrink by 35%. The problem was later termed the “not invented here” syndrome in which the company was no longer striving to be the best in its industry.As a solution, there was a recommendation that all efforts be geared at reclaiming the top position once again; this was a form of benchmarking.The company then benchmarked all functions and tasks regarding productivity, cost and quality. Xerox  made comparisons with competing companies.

When the recommendations were intensified, it resulted in the following:

  • Suppliers were reduced from 5000 to 3000.
  • The practice of concurrent engineering was introduced. All production development was followed through from scratch,  there were input from design, manufacturing, and enhancement of its service.
  • Increase in the similarity of parts used in production.
  • Restructured the organisation into teams.
The outcome was 50% cut in manufacturing costs, two-third cut in development time, direct labour cut by 50%; corporate staff cut by 35%  and two-thirds cut in quality problems.While the above achievements cannot be  traced to benchmarking alone, it helped to identify operational areas that needed attention.When benchmarking other performance management tools are taken to the extreme; it can serve to discourage you from completing the process. It may damage the self-worth of a business executive and operatives who are not doing as much as the competition.Don’t be too harsh on  yourself when there are specific factors that restrict your operations and move it in a downward trend. Neither should you become arrogant when the benchmarking exercise returns a result that shows you are an industrial leader. This could lead to complacency and the chance for  competition to overtake your operations. There is always room for improvement.Remember, benchmarking is just a means to an end, and it is worthless if not accompanied by a plan to change.

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