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ROI CalculatorBenchmarking refers to the structured manner employed in comparing quality performance or processes with other leading organizations to determine the gaps and set out improvement goals. ASQ describes it as using a measure for evaluating products, services, and processes based on the leaders within the benchmark. In a similar fashion, NIST speaks of what benchmarking is about and mentions the detection of best practice processes and results used in or outside a certain industry.
In the framework of ISO 9001, benchmarking contributes to the process of performance assessment by introducing better methods of analysis and investigation of quality-related data.
Unless benchmarking is done, one runs the risk of being driven solely by internal standards. For example, a reduction of 5% in scrap rate is worth celebrating in a particular organization, but if a competitor has achieved a much better 15% reduction due to the use of the new automation technology, the above-mentioned 5% can be considered a “victory” but, in reality, signifies a lost competitive advantage.
Benchmarking helps to escape the state of self-satisfaction within the organization as it determines the “Performance Gap” that indicates the difference between one’s performance and that of the best-performers.
The process of benchmarking has changed from being done manually and on demand to being a time-bound digital process. While it started out as “Competitive Intelligence” that mainly dealt with product disassembly, it has changed with the introduction of Industry 4.0 and modern QMS to become a strategy that is undertaken ahead of time. Today’s leadership has applications such as Cross-Site Quality Analytics that can be utilized for the benchmarking of internal companies against one another.
To extract value from a QMS Benchmarking Strategy, leaders must understand the four distinct directions the analysis can take.
Internal Benchmarking – Comparing Within the Organization
This is often the starting point for enterprise quality. By checking the defect rates or cycle times of one of the plants in Europe against that of a plant in Asia, a company can figure out which of the two is more efficient in a given process. The idea is to make use of these internal successes throughout the company through centralized document control and training modules.
Competitive Benchmarking – Against Direct Competitors
Engaging in a side-by-side comparison of goods and methods with competitors is what this refers to. Although acquiring precise information may be challenging, reports from the industry as well as reverse engineering allow one to determine the level of product quality from the consumer's perspective.
Functional Benchmarking – Across Similar Functions in Different Industries
The thing about excellence is that it applies to any branch of the economy. For example, a drug manufacturer could compare its shipping and receiving logistics techniques to the ones used by e-commerce giant Amazon.
Generic Benchmarking – Best Practices across Industries
It deals with generalized business operations such as the onboarding process for HR personnel, setting up IT systems, or applying the automated workflows in a QMS. It looks for a state that a business process should achieve irrespective of the type of products being manufactured.
