Benchmarking Opportunities and Challenges of Benchmarking the Term Paper

  • Length: 13 pages
  • Subject: Business - Management
  • Type: Term Paper
  • Paper: #25025446

Excerpt from Term Paper :


Opportunities and Challenges of benchmarking

The first question to be asked is what benchmarking can do for any organization. The process of benchmarking permits the entire organization to identify, share and use the knowledge that exists within the organization as also the best practices prevalent within the organization. The attempt is to concentrate on improving the situation of any business unit and not to just measure the best performances that have been achieved. The method for this is to apply the use of best known methods of solving the problems that are facing the business. The results come from the utilization after determination of the problems and this can come only after a careful study of the problems. On determination it is expected that the best solutions will be implemented. (Defining Benchmarking)

The result will come to the organization in the form of gaining important advantages for the organization in the form of advantages. These can be in any form or more than one form -- strategic advantages, operational advantages, or direct financial gains. At the same time, it also is an indirect admission that some others are better at the function that we are involved in than ourselves. At the same time, we are being wise enough to understand our own shortcomings and are trying to improve our position so that we can improve and match them in performance. If all our efforts are in the direction of development, a stage may come when we would be in a position to perform better than them. (Defining Benchmarking)

The process of benchmarking is not just calculating numbers, getting briefs about sites on which organizations are to be set up or traveling through the factories of other organizations, or even copying, spying or espionage. The process does not end here and it has to continue further throughout the entire life of the organization and as the organization improves to a better position, there has to be additional steps which have to be taken so that the organization can successfully step even further. When benchmarking is not performed and a major in any industry ignores the competition levels there are chances that it would tend to fall behind in its own development and leadership qualities. It is also not the same with regard to establishing benchmarks which involve the setting up of acceptable levels of standards, so that the product or service can move forward to the next immediate step and not be rejected automatically as a result of quality control.

Benchmarks are defined in terms of how many units are to be produced in one unit of time, how quickly the product line can transfer itself into manufacturing another product, how high the production levels can be from one shift, or what the minimum levels of production are which are being acceptable. The similarity of benchmarking and benchmarks is in that benchmarking tries to find out and understand the direct reasons for the production to be high in certain relevant situations and not be so high in other situations/conditions. Once the reasons are being determined then the same methods can be expanded for use in other parts of the complete production process so that the total production level can be at higher levels and correspondingly the profits of the organization as well. This is the real benefit that can be obtained from the practice of benchmarking. (Defining Benchmarking)

Looking at the acts of benchmarking in benefiting the organization, one can see some direct benefits. It prevents reinventing the wheel and what is meant by that is that since the process or machinery or item has already been invented, anybody else trying to reinvent the same is only wasting money. The second method in which it provides benefits is through using tested and proven practices that have already been used successfully by others, it convinces people who do not take kindly to fresh ideas by demonstrating to them that it works, and it forces the organization to move at a rapid pace as it knows that competitors are already using the method. The third advantage is that it leads to development of some ideas that were not being used earlier and these are innovative ways to improve methods and in many cases they have come from outside the industry. The use of benchmarking also forces organizations to check on the present process and many times these may lead to direct improvements in terms of quality or quantity directly. The last use of benchmarking is also advantageous in making changes more likely as the process involves the direct participation by the owners. (Defining Benchmarking)

Define the problem

Today is the age of competition and it is very difficult to say which manufacturer is the best, and at the same time, this is an age when every manufacturer can claim that they are the best based on scientific studies of their machines. Let us view it in a simpler context and try to determine which team is the best in baseball, and may be you have a reason for determining this -- you may love the game, you may be laying a bet on the results of the current season, or just curiosity. It is known that New York Yankees have won the World Series Championships seven consecutive times. In the opinion of quite a few of the fans, that would make them the best team. Thus one of the first points in benchmarking is deciding on the benchmark, and then one has to decide as to how the performance can be measured against the benchmark. If the required standard is not known by the organization trying to be the best then it cannot possibly reach the target. (Who's best? How good are they? How do we get that good?)

In certain cases they are measured by definitions like Mean Time between Failures or MTBF. This will help the customer also and make him ask the manufacturer as to the MTBF for the product. Then let us say that on one of the products of the client is 120 hours and on another product is 150 hours, then that will have to be mentioned to the customer. Then to be the best, the concerned organization has to find out or determine the method to get to the best possible benchmark. Now let us say that on investigation it is found out that for competitors, the MTBF is 10,000 hours. It is clear now as to which manufacturer will get the order. Thus often benchmarking is not a stand alone exercise, but a part of a Process Re-engineering or Quality Improvement Initiative. The requirement is not a management fad, but is a requirement to be able to compete in the market. Most of the initial work on benchmarking was done in manufacturing, and it is important that it is still done there, but benchmarking has now developed into a management tool that can be used anywhere. (Who's best? How good are they? How do we get that good?)

One has to develop a system which permits the organization to produce material of a certain quality, as if that is not produced many incidences may occur which are of great importance to the organization but also to the nation. Let us take a few examples of this and one of them is the case of the disaster of the space shuttle Columbia, and another is the power outages in August 2003 in New York which was followed by power failures in United Kingdom and Italy. There are reasons for this and one reason which is often quoted is "failure of maintenance." (An Introduction to the Maintenance Scorecard)

At the same time, maintenance is also a part of benchmarking and it is not a benchmarking of the product, but of the service system in the organization. Thus the problem can be manifest in many different ways in the field. There were four charges of manslaughter placed on individuals who were in charge of maintaining or managing railways in United Kingdom at the time of the Hatfield Train Disaster. The charges against these people were dropped only in August 2004. Among the people who were charged was the previous Chief Executive Officer of the company who owned all the assets indirectly. Another case is the legislation in Canada which imposes criminal liability on businesses and individuals when workplace accidents take place. In short it is becoming very important that proper maintenance is done and for that purpose, benchmarking is essential for the assets. (An Introduction to the Maintenance Scorecard)

Desired future state and goals against which to evaluate alternatives

It is clear that benchmarking is an activity of the individual organization undertaken with a purpose of developing the organization and giving it benefits or advantages over competition. The details for such studies are obviously not available, and we got information only from an instance when the exercise was done at the initiative of the Surface Mining Association…

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