Don’t overlook the value or necessity of benchmarking in making sure you successfully reach your continuous improvement destination.
Al Gargano
Profitability. Quality. Customer Service. These are a few of the areas of performance that we measure and aspire to improve. The good news is there are numerous tools available to aid us in the improvement process. Unfortunately, this is the bad news, too, because many organizations get bogged down just trying to identify the best tool and never get started on the improvement itself. For example, if you Google “continuous improvement tools”, you will see more than 22,000 results—lean six sigma, TQM and process mapping to name a few. At this point, many organizations just pick a tool and forge ahead. Unfortunately, many overlook a very critical component—benchmarking.
Think of the continuous improvement process as a journey. All of us can relate to the challenges of travelling from point A to point B. To simplify the process, we often use a GPS. Merely tell the system where you want to go, and based on your current location it guides you, step by step, to your final destination. But what if your GPS is unable to identify your current location? As we’ve all learned the hard way, if your current location is unknown or can’t be determined, the GPS is worthless. No route can be identified. The same holds true for the continuous improvement process. If we don’t know precisely where we are, it is nearly impossible to identify the best route to get to our final destination.
The First Step
Benchmarking is the first step in the improvement process. Think of it as the way in which the GPS of our continuous improvement process is initialized. Through benchmarking, the organization can accurately identify and compare its current performance metrics with industry leaders or “gold standards”. Typically, many organizations believe they know where they are relative to industry norms or their competitor’s performance. The harsh reality is that too often this “knowledge” is not quantified but based on anecdotal details or organizational beliefs. The process of benchmarking forces the organization to take a data based approach to precisely pinpoint its current performance and position. Once this step is completed, effective and viable options for our improvement journey can be identified.
The most difficult part of any change process is taking that first step. You can begin your continuous improvement journey in three simple steps:
- First, identify and communicate who is the owner of the continuous improvement efforts. This is the person who will be responsible and accountable for leading the improvement process.
- Next, establish your key performance metrics (KPM’s). Don’t go overboard—start small and identify two or three metrics to get started. Once you have some experience and success you can add more. Ideally, you should never have more than six that you are focused on.
- Gather performance data for the key metrics that you identified. Make sure you have adequate, relevant data, both in terms of quantity and quality. Remember—it is your continuous improvement process must be data driven. If you do not have sufficient information, now is the time to gather it.
The benchmarking process should not be viewed as a difficult or daunting process. There are numerous resources available that can be used to complete the task painlessly and at little cost. For example, industry publications, consultants, and equipment manufacturers are good sources of information as well as your current vendors. Look for information that directly relates to the key performance metrics that you identified. If machine processing throughput is one of your KPMs, compare your current processing throughput rates with those provided by the equipment vendor. If your performance is less than what the vendor claims, meet with them and ask questions until you understand the reason for the variance. Has there been an upgrade that you have not installed on your system? Are you operating the system in a way that is different than what the vendor has defined? Don’t be afraid to ask “why”, and don’t be afraid to aggressively and diligently gather information and insights that you need for your continuous improvement journey. Benchmarking is not about trying to steal trade secrets; it’s about understanding your performance relative to others in the field. Don’t be afraid to ask.
Change and Adaption
Competition will only grow stronger, and the companies that prosper will be the ones that change and adapt. Success is achievable, but only if the proper programs and processes are in place, and if effective improvement initiatives are identified and executed. Don’t overlook the value or necessity of benchmarking in making sure you successfully reach your continuous improvement destination.
Al Gargano is Vice President of Operational Excellence for Leadoint Business Systems, a waste and recycling industry leader in providing contingent labor, as well as workforce and process optimization. He has more than 25 years experience in process and profitability improvement. Al can be reached at (602) 509-4131 or via e-mail at [email protected].