Performance Benchmarking In Manufacturing
Performance benchmarking is a comparative assessment exercise that helps manufacturers understand and measure their performance relative to their competitors and industry standards. Periodical performance benchmarking exercise can establish a consistent feedback loop that can help optimize performance and efficiency. It enables the manufacturer to make business critical decisions regarding areas for focus and prioritization of resources.
Benchmarking in the manufacturing industry has evolved over the past half a century. The focus in benchmarking has expanded from the product, to the process and even to the business. As practices matured, manufacturers started measuring and comparing hundreds of indicators that became available through both published data and professional experience.
Benchmarking also comes with its fair share of challenges in the manufacturing industry. One of the difficulties in arriving at a benchmark is because of the difference in definition of key measures across the organization. While geometry deviations are in-line waste in some companies, they are end-of line rejects in others. The definition of unscheduled downtime can also vary depending on the circumstances of failure. So selecting the right metrics for benchmarking will define the success or failure of the effort.
Performance benchmarking is applied in two different contexts. It can be applied to benchmarking the product or offerings of the company against competitors and alternatives. It could also be done internally within product families or product variants. It compares all parameters influencing the man, machine, and material. It also includes factors, the method and money involved in making and taking the product to market.
When applied at the business level, it involves comparing business performance indicators with industry standards and competitors. Depending on the findings, performance benchmarking helps to identify areas of excellence or areas of concern, which in turn define priorities for initiatives and investments.