An Introduction to Six Sigma Benchmarking

Originally applied during topographical surveying efforts, benchmarking has proved valuable in measuring process-related performance In a business environment, an organization can use the tool with a two-pronged approach

Originally applied during topographical surveying efforts, benchmarking has proved valuable in measuring process-related performance. In a business environment, an organization can use the tool with a two-pronged approach. They can establish a benchmark according to what their competition has accomplished. Then, they can use that as a yardstick by which to measure - and improve - their own business processes.

Six Sigma initiatives fit seamlessly within the framework of benchmarking. While establishing points of reference based upon competitor performance yields useful data by which to measure internal processes, Six Sigma is invaluable for modifying those processes.

In this article, we''ll take a brief tour through the typical phases of a benchmarking project. We''ll explore the identification of business processes, review of data, and setting goals to measure improvement. I''ll also describe potential obstacles that can impede the project.

Identification Of Target Processes

Even though a conventional benchmarking initiative can be used to identify specific operations to improve, a Six Sigma project is better suited for the task. Ideally, a project team will be brought in to study existing processes in order to isolate areas of waste or inefficiency. This is the point at which establishing benchmarks is valuable. While the Six Sigma team collects process-related data, another team can begin studying competitors'' performance in the same areas.

Once a sufficient amount of data has been collected, it needs to be reviewed in order to establish reasonable goals. The next phase assumes that competitive analysis has been performed in order to collect each competitor''s performance data. This data is used as a benchmark against which the organization''s internal processes are measured.

Data Review And Goal Setting

With internal process-related data and competitors'' performance data in hand, the Six Sigma and benchmarking teams can start identifying gaps. If an organization''s competitors are achieving a higher level of efficiency for a given operation, the project team is tasked with the job of determining the reasons. This can include analysis of the competitors'' inputs and outputs as well as a study of failings within the organization''s work processes.

Once the gaps have been identified and a rigorous assessment of root causes has been performed, reasonable goals must be established. Assuming that the organization has access to the same level of resources as its competitors, the objective is to achieve a similar or higher level of efficiency.

Application And Ongoing Review

Before steps can be taken to improve internal processes, the Six Sigma and benchmarking project teams must communicate their findings to top management. Not only does this help secure critical buy-in from the principals, but it also helps to ensure a seamless integration of efforts with the goal of improving operations. From the CEO to the various department heads, the project teams must keep everyone informed.

Finally, steps can be initiated to improve the target process. As data begins to collect, the Six Sigma and benchmarking project teams will need to continuously review it in order to determine the effectiveness of their efforts.

Potential Obstacles

The most common obstacles are a lack of understanding about the initiative''s objectives and resistance from an organization''s department heads. The former problem can lead to lack of buy-in from top-level principals. Without their full commitment and support, it can be difficult to deploy the initiative successfully, especially given the need for participation from an organization''s staff.

The latter problem is related. If an organization''s department heads resist the initiative - whether due to lack of resources or corporate posturing - employees within those departments may become less inclined to participate. This is the reason why thorough and frequent communication is imperative to the initiative''s success.

Six Sigma and benchmarking efforts can have a significant impact on an organization''s ability to compete. However, as with all process management efforts, much of a project team''s success depends upon working well with an organization''s staff.

This information on six sigma and lean processes is provided by BMGI, a leading education and consulting firm in the innovation field.