Benchmarking for Lean Six Sigma Businesses or Processes for Projects

In 1912, Henry Ford of The Ford Motor Company watched men cut meat during a tour of a Chicago slaughter house. The carcasses were hanging on hooks mounted on a monorail. After each man performed his job he would push the carcass to the next station. Less than six months later, the worlds first assembly line started producing Magnetos in the Ford Highland Park Plant. In other words the idea that revolutionized modern manufacturing and automotive history was imported from another industry.

Benchmarking is simple as a concept but much more involved as a process. The ultimate payoff is that you can become the best of what you do, and continuously improve upon that superiority.
Benchmarking is a means of identifying best practices and using this knowledge to continuously improve our products, services, and systems so that we increase our capability to provide total customer satisfaction.
Today our performance is not of the same world-class standard as a benchmark business. The delta is the competitive gap
Benchmarking and improving our business as a result means a surge in business performance and a Competitive Advantage.

Key Point: Do Not Just Copy, Adopt and Adapt and then Advance

Define Performance Objectives:

What does it mean to Define Performance Objectives?

A performance objective is a statement of your projects output performance level that will satisfy the project Critical-To-Quality CTQ(s). It is the projected reduction in defects you plan to achieve for your process or product. Typically, this is stated in terms of defects per million opportunities (DPMO) reduction and a corresponding target Z-value. In the Lean Six Sigma Measure Phase, you determined the current process performance. In the Analyze Phase you will state what the end results of the Lean Six Sigma project will be by statistically defining the goal of the project. In addition, an estimate of financial benefits is due in Analyze.

Why is it important to Define Performance Objectives?

It is important to identify your improvement goals in measurable terms in order to define the level of improvement you wish to achieve and provide a focused target toward which you can direct your efforts.

If I benchmark, performance standards are based upon:

Closing the gap with the competition
Exceeded projected competitive performance
Similar performance in dissimilar businesses
Gathering best practices from multiple sources to become best in class
Becoming as good or better than a substitute product/service

If I do not benchmark, performance objectives are based upon:

For a process with a 3 Sigma Quality level or less, decrease percent of defects by 10x and for greater than 3 Sigma Quality level, decrease % defects by 2x
If your process is in statistical control (Run Chart or Control Chart), the next improved performance objective comes from a capability investment as in facilities, equipment, digitization, etc.
Corporate mandate
Voice of the Customer (VOC) data

Key for best results:

Be creative and think out of the box
Consider all organizations, not just corporations
Review all sectors such as Private, Public and NonProfit
Study domestic and International organizations

Benchmarking is the process of continually searching for the best methods, practices and processes, and either adopting or adapting their good features and implementing them to become the best of the best.

Key Point: Benchmarking is a continuous process of measuring products, services, and practices against the toughest competitors and/or those companies renowned as the leaders

Example: In the 1980s the Remington Rifle Company, a division of giant DuPont Corporation, had a technical issue it was struggling with. Market Research showed that customers wanted the shells of the bullets to be shiny. Plant Managers pay little or no attention to this CTQ, after all Remington had been making quality guns for a very long time. Nearby the plant in Arkansas was a Maybelline cosmetics plant that produced shiny lipstick cartridges about the same size and shape of the rifle shells. Remington realised that the company may have useful information to impart and made a site visit. And thus the problem was solved.

Benchmarking is:

A continuous process
A process of investigation that provides valuable information
A process of learning from others; a pragmatic search for ideas
A time-consuming, labor-intensive process requiring discipline
A viable tool that provides useful information for improving virtually any business process

Benchmarking is not:

A one-time event
A process of investigation that provides simple answers
Copying, imitating
Quick and easy
A buzzword, a fad

How is Benchmarking Used?

Compare performance of an existing process against other companies best-in-class practices.
Determine how those companies achieve their performance levels.
Improve internal performance levels.
A performance objective is determined by using Zbench, short-term, benchmarking, or defect reduction goals.
Benchmarking is a process of identify best practices, measuring our own practices against those best practices, and adapting the appropriate best practices to our own processes.
Revenue & cost implications are also due for benefit analysis.