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Goetsch and Davis (2012) define benchmarking as “is the process of comparing and measuring an organization’s operations or its internal processes against those of a best-in-class performer from inside or outside its industry” (p. 352). The difference between benchmarking and competitive analysis is that the former is interested in processes that are conducted to produce, distribute, and support the product. Benchmarking is conducted in several steps, and each of these steps both supports continuous improvement and ensures company’s optimum performance. For example, when processes have baselines, the company can assess how processes work and who is involved in them (Ross, 2017). This way, possible weaknesses can also come to light. Documentation of processes is also essential because it assists in identifying both weak and strong ones, comparing them to the competitor and seeking new, more effective processes to integrate them.
When processes for benchmarking are selected, the company begins researching the best-in-class with regard to the process, not the industry. Thus, the company has an opportunity to learn how to optimize processes from companies that are the best in them and can share their experience, which in turn can improve the performance of the company (Tian & Ketsaraporn, 2013). Data collection is an inseparable part of the benchmarking process because it allows companies identify gaps in performance that lead to decreased efficiency. When a performance gap is identified, the company can plan actions that will help close the gap or even surpass it.
However, the company needs to understand that simply copying the process is not enough because the company has to surpass the benchmark and not transplant the process from the best-in-class player (Goetsch & Davis, 2012). After the implementation of the new process, its monitoring is crucial, because if the process is left without supervision, the company will be unable to identify how it impacts organizational performance. TQM and Six Sigma can be used to facilitate improvement. The focus of TQM is on current processes in manufacturing, while Six Sigma (define, measure, analyze, improve, control) identifies changes that can be implemented to make improvements more effective and control them (Goetsch & Davis, 2012). All benchmarks need to be updated so that the primary aim is not to copy processes of best-in-class companies but to become one of them. Constant updates of benchmarks guarantee continuous improvement and revision of organizational processes.
The PDSA Cycle
According to Goetsch and Davis (2012), the PDSA cycle also known as the Deming Cycle is a framework that can be used for linking the production of the product with the needs of consumers. It also helps to shift the focus of all departments (research, design, production, and marketing) to consumers’ needs. To support continuous improvement, the PDSA cycle is used as a framework for assessing how the product is accepted in the marketplace. The first step is to conduct consumer research and then plan the product accordingly to this research (i.e., plan). The second step is to produce the product (do). The third step consists of checking the product and its consistency with the previously developed plan (check). The fourth step is the marketing of the product (act). The last step is the analysis of how the product was received by the market in terms of the following criteria: quality, cost, and others (analyze) (Goetsch & Davis, 2012). The advantage of this framework in the continuous improvement is that it helps the team use research gained from previous steps with new products, which ensures that the production of each new product will consider mistakes and specifics of all previous products and rely on the research gained during the previous PDSA cycle. This approach helps maintain continuous improvement.
Prioritizations of Areas for Improvement
To understand what areas for improvement might be the most effective ones, Goetsch and Davis (2012) suggest a framework that companies can use. First, with the help of multivoting, employees decide which processes are the most important ones by voting several times in a row and reducing the number of given processes from ten to one or two. Second, customer needs are identified, and based on these needs the company decides what projects need to be improved urgently (Van Der Aalst, La Rosa, & Santoro, 2016). Third, the company should assess how employees spend their time on processes, and whether the right amount of time is given to each process or type of work. If not, it is important to conduct a root cause analysis that will help determine what factors cause an incorrect distribution of time. At last, a problem should be localized (Boutros & Purdie, 2013). The localization happens when the company pinpoints where, when, and how this problem happens. Localization should be conducted before the company starts working on its resolution. As Goetsch and Davis (2012) point out, problems can be removed from their source, which might affect the effectiveness of their localization.
Without an effective team that will determine the areas, improvements will be difficult to achieve. A quality council is equally important as determining the responsibilities of the council’s members. Solving symptoms without identifying their causes leads to resource and time waste (Kobayashi, 2018). Applying scientific approach helps the company ensure that improvements are not temporary and develop adequate and appropriate solutions to these problems. After areas for improvement are identified, the company needs to start working on development plans.
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Goetsch, D. L., & Davis, S. B. (2012). Quality management for organizational excellence. Upper Saddle River, NJ: Pearson.
Kobayashi, I. (2018). 20 Keys to workplace improvement. London, England: Routledge.
Ross, J. E. (2017). Total quality management: Text, cases, and readings. London, England: Routledge.
Tian, Z., & Ketsaraporn, S. (2013). Performance benchmarking for building best practice in business competitiveness and case study. International Journal of Networking and Virtual Organisations, 12(1), 40-55.
Van Der Aalst, W. M., La Rosa, M., & Santoro, F. M. (2016). Business process management. Business & Information Systems Engineering, 58(1), 1-6.