What is benchmarking?
Benchmarking is a process of evaluating a company’s performance by comparing metrics and processes with those of other companies.
As the saying goes, experience is the best teacher – whether you learn from your own experiences, or learn from others’ accounts, is beside the point. Benchmarking can be seen as a process that evaluates experiences from various organizations. Through this process, best practices that drive the metrics are identified.
The concept of benchmarking should be properly grasped before even taking part in it. Note that though score comparisons are a natural part of identifying benchmarks, identifying processes that have caused such metrics are crucial aspects as well. A common pitfall to avoid in benchmarking is when the metrics are not properly associated with their underlying activities. By understanding the underlying activities in relation to the metrics, an organization can assess whether the same best practices are applicable to their operations or not.
While benchmarking is common across all industries, it is most prevalent in manufacturing. This is evident in the availability of resources that reflect the culture of benchmarking across manufacturing plants. If done properly and continuously, benchmarking can be a vital tool to maintaining a high level of performance.
How to perform benchmarking
Specific benchmarking procedures may vary to suit a particular industry or circumstance. However, there are key steps that form the general framework to perform the process. The following six steps summarize the benchmarking process:
Identify the processes currently being done in your organization
It is best to work with the group and tap into the team’s knowledge and experience to list down current key performance indicators (KPIs) that can be compared with other organizations.
Perform research to gather data on the performance of other organizations
Tools such as maintenance journals, benchmark databases, and other similar sources can provide useful information. The collected data can be used in comparison with your own organization’s KPIs and processes.
Determine best practices in your chosen process
Based on the gathered data, find ways to further explore improvements current processes. One approach is to form groups with other organizations to perform joint studies that aim to improve a certain process.
Analyze the performance gap between you and the best performers
With all the data available, you can now have an objective assessment of how you compare against other organizations. Note that care must be taken in performing the gap analysis, as there might be reasonable explanations some differences in each group’s performance. While numbers and scores are part of the comparison, also look closely into the differences in process steps and execution.
Identify the KPIs applicable to your organization
Based on your current performance, and the industry’s best, come up with a realistic target to be achieved by the group. Also identify the concrete steps to achieve your target KPIs.
Continuously track and benchmark your performance
Uphold a culture of continuous improvement. Document the actions you have undertaken and record the results. The process of benchmarking is a commitment towards excellence through continuously finding ways to improve processes
Popular benchmarks and metrics
For the maintenance industry, the importance of benchmarking has been identified early on. In fact, some best practices have been passed on largely based on experiences accumulated over time from routine maintenance practices.
You might be familiar with some best practice maintenance benchmarks that provide a rough estimate of the range within which your organization’s figures should lie. For example, a usual benchmark is that the total plant availability (or maximum available time) should be greater than 97%. Further, around 85-95% of maintenance activities should be either planned or scheduled – this leaves reactive maintenance activities to be less than 15%.
Examples of benchmarking studies
One of the more historically famous benchmarking studies is the one discussed by Seiichi Nakajima, the known father of total productive maintenance (TPM). In his 1988 book, Introduction to TPM, he was able to identify that highly performing companies are able to achieve an overall equipment effectiveness (OEE) score that is greater than 85%. The OEE score was further broken down into the following metrics – availability, efficiency, and quality.
In more recent years, the same procedure for assessing the performance of a plant is still being used. In 2017, for example, a study done on the maintenance methods of jig cutting used the same method to identify lowest and highest ratings achieved for a period. While the ranges of industry benchmark OEE scores might have varied through the decades, the process of analyzing scores and processes to achieve such scores, prove to be key values towards continuous improvement.