Successful companies continually strive for improving business practices and increasing profits. Benchmarking helps many organizations to attain operational excellence by focusing on comparing performance metrics to relative competitors’ best practices. To achieve positive results from benchmarking, a firm has to be willing to implement organizational changes, determine the goals, and constantly strive for improvement. Companies become market leaders only when they attempt to make sure that their current performance outpaces the industry average metrics. The purpose of this paper is to examine the impact of benchmarking on productivity in the manufacturing areas, as well as to show how the tool can be applied in practice.
Benchmarking is broadly regarded as an effective strategic tool used to boost productivity levels in the manufacturing process. The assessment process provides information regarding the efficacy of the internal manufacturing policies and allows comparing them to those of the key competitors and other companies, thereby increasing the bottom line. An organization can then utilize this method to narrow the focus of its resources on one area of manufacturing operations, copying the best strategies and approaches. Importantly, proper understanding of company’s productivity in comparison to major competitors can help to critically view and revise the existing practices, avoiding unwanted biases. For example, when the company is striving to improve new product defect rates, managers are particularly interested in the current industry average. It is worth mentioning that sometimes just a few points can substantially affect the overall productivity, so it can be a right decision to suggest using resources for a different purpose or propose an investment.
Nevertheless, benchmarking does not necessarily require a competitive component. For instance, many large firms implement this technique to benchmark products and services having comparable processes. In such a way, the analysis provides a more comprehensive approach to determining why a particular facility or product is underperforming. Furthermore, companies tend to apply both internal and external benchmarking reports to evaluate their performance and set annual precedents. Such projects provide an idea of what can be regarded as performance excellence and therefore can present an effective method for assessing the effectiveness of products, business units, and services.
Additionally, firms often aim to identify the productivity gaps by benchmarking the overall equipment effectiveness. More specifically, this tool helps to deeply investigate different variables and thus identify where the problem resides. For instance, the OEE process can be divided into several particular elements, such as efficiency, quality, and availability. Notably, the key to any successful benchmarking project is demonstrating a comprehensive standard for measuring, which can be maintained by adopting the industry average. Meanwhile, benchmarking results significantly promotes a culture of continuous improvement. The staff members can see metrics performance and consequently consider how their actions influence particular areas of business. For example, managers may want to show employees’ existing performance indicators, comparing them to industry goals or even internal objectives, which eventually can serve as a strategy to increase productivity and innovation of manufacturing to exceed those industry averages. Widening the gap between industry benchmarks ultimately results not only in a profit increase, but also in a leadership position in the market.
In conclusion, benchmarking can be considered as an essential improvement strategy needed to compare the effectiveness of manufacturing within the company, as well as compare its performance metrics to those of its key competitors. Companies can significantly benefit from comparing their metrics to the industry average in order to make an accurate evaluation of productivity. Apart from the competitive intelligence, the firms successfully use this comparison to identify what business unit or product within the company is poorly performing. The culture of continuous improvement actively encourages employees to exceed the market averages.
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