Benchmarking in Sigma Six Certification is a part of the DMAIC approach where the company benchmarks the “standard” which is a leading competitor in the market space. In technical terms, it is an Output Performance vs Standard of the Output comparison that, conducted in the measurement phase of the DMAIC project.
The Output resembles the efficiency with which the consumer’s needs are being met by the products and services supplied by the Business. While the Standard could signify the compliance standard used in business or the parameters that define the excellence of the leading competitor Lean Six Sigma Green Belt Certification in the market
It is rightly said that Benchmarking is not competition research that tabulates the performance of a competitor-company to gain an advantage. It involves a process of comparing your processes with an industry leader to learn how to be better. Benchmarking bags a competitive edge by tailoring the practices that best suit the company’s individual business styles and targets in order to effectively meet the changing needs of the consumer in the market.
Types of Benchmarking
Benchmarking comes in four types:
This benchmark gauges the techniques in which the leading company competes in the marketplace. The company being investigated and the Standard may be from different industries yet its competitive positioning within that particular industry should tally with your aspirational position within your industry.
This benchmark investigates the strategy and techniques like project management and product introduction. The development should focus on the feasibility and the time required to achieve the standard goals.
This benchmark is an assessment of competitive positioning. The analysis focuses on either the quality or the price since competing on both the meters would not yield results but would only generate complexities.
The process is the actual task carried out. It may concentrate on specific units or sectors of work like best-operating practices, customer service, or manufacturing.
Role of Benchmarking
The businesses thrive to improve and add value-innovation to their companies because they constantly experience the change in stakeholders’ expectations of getting better services at lower costs. The six sigma methodology assists the businesses in acquiring an “integrated, disciplined and data-driven approach for reducing defects and producing measurable financial results.”
Implementing the 5-phase cycle of the DMAIC approach – define, measure, analyze, improve, and control – six Sigma practitioners target at improvisation, optimization, and stabilization of a business. Therefore, Benchmarking plays a central role within the Six Sigma methodology by enabling practitioners to stimulate improvement by assisting them obtain the measurements or the standard for the data they want to analyze.
1. Developing a perspective on how well you fare in comparison to other companies
While conducting research on the competition in the market, a business can well gauge its position pertaining to the trends of the space. Benchmarking includes site visits, interviews, and documentation of processes of the Standard, therefore, it provides ample practical reports on how well your own company fares than other companies in the market and in which particular sectors, you surpass the organization in the Standard company.
2. Drill down into performance gaps to identify areas for improvement
After selecting the best benchmark that aligns with the strategy of the organization, you need to compare the strategic objectives of your company with the standard. If the indicators rightly reflect your needs to improve in that specific domain, consider focusing on working on that area.
“For instance, if an organization’s imperative objective is to improve their position within the customer service sector and their benchmarked partner’s objective is to enhance, production it is common sense that most of the indicators measured by the competitive partner will reflect production measures and fewer will assess the customer service department.”
Hence, while selecting the benchmarks for a functional area, six sigma practitioners have to ensure that the indicators being considered, directly reflect the correct areas of focus, making sure that their benchmarking partners are performing at an optimum level in that area and recognize gaps between the standard and the company’s current performance.
3. Develop a standardized set of metrics to design performance expectations
If a company works on mere theories and sets of rules, it shall fail to deliver the performance.
Benchmarking is a cost-effective and practical methodology to introduce optimized practices in an organization. The business needs to define its project in a systematic fashion and build up an effective project plan to eliminate the risks of failure. The Research-work being done during the process of benchmarking highlights a number of successful practices beyond a variety of dimensions of business development and management. This includes the development of a holistic approach to project management, the processes to identify opportunities for improvement, the steps, and programs for optimization and tools to track progress.
It is ideal, to start with, the preliminary planning and further develop it with time, to the required level of accuracy. The plan has to include ways to define the objectives, measure success and eliminate the defects within one’s company but the six sigma practitioners need to manage the benchmarking projects the way they would handle any other project through steps to Admit plan elements in the project such as the scope of the project, its objective, timeline, budget, and approach.
4. Enable a mindset and culture of continuous improvement
When a team collaborates over a DMAIC approach to optimize the existing system of manufacturing and distribution, they develop values within the organization. Since every process takes time and management, the development of a work culture comes as an imperative requirement as well as a polished outcome of the work.
“To introduce any benchmarking in process improvement, individuals have to set achievable targets and define the range of their efforts. They require support from their organization in this attempt.”
Benchmarking introduces a credible source of knowledge to the participants no matter to which six sigma certification the practitioners belong, the quality management process allows them to introduce innovative knowledge into the sphere of workspace. It gives ample opportunity for a six sigma yellow belt and six sigma green belt to learn and improve better than just being taught in the six sigma training.
5. Monitor company performance and manage change
Using the lean Six Sigma methodology to establish a quality-control and improve the performance, you can monitor the sustainability of the business processes introduced. The DMAIC approach provides an excellent way to control the introduced changes by gauging the creative solution lent out by the competitors.
Extensive research would also provide to learn from the mistakes that the competitors initially committed and by correcting which of them, they were able to meet the need of the market. The output for your company can be monitored and managed accurately to prevent the chances of failure.
6. Innovate and Dominate
For the fresh companies, the biggest challenge is to establish their place on the market, while for the leader in a position to innovate in order not to lose market share. This implies that the indicators and the targets set by each organization for the indicators will be different.
The solutions should, therefore, target innovation and the creation of a blue ocean that would help you make most of the competition in the market irrelevant. Moreover, Six Sigma specialists should make sure they understand what their benchmarking partners consider to be indicators of growth and success. You can target achieving those indicator levels in your unique space of domination.
7. Enhancing Relationship with Companies
The benchmarking code of conduct includes the following terms:
- Treat confidential information with care
- Use the information as permitted to.
- Don’t get into an illegal conversation
- Contact after being permitted by the key collaborators
- Prepare a plan
- Don’t investigate- but communicate and learn
- Seek clarifications rather than assuming
This helps to improve the cross-company connections and help you qualify for future friendly-collaborations.