Benchmarking or performance measurement: Which is right for your plant?

Headnote

KEY CONCEPTS

* Benchmarks and performance indicators are not necessarily the same.

* Benchmarking is a process for continuous improvement that involves both metrics and methods.

* Performance indicators can be used to support the benchmarking process.

Most companies today are looking for some parameter by which to measure their maintenance function. However, there is confusion about what the parameter should be. In addition, there is considerable confusion about the difference between a performance measure and a benchmark. To clearly understand the difference and how both should be used in an organization's effort to improve, it is necessary to define both terms and examine their relationship.

Benchmarking

One definition for benchmarking is: An ongoing process of measuring and improving business practices against the companies that can be identified as the best worldwide.

This definition emphasizes the importance of improving, rather than maintaining the status quo. It addresses searching worldwide for the best companies. Most marketplaces have international competitors. It would be naive to think that best practices are limited to one country or one geographical location. Information that allows companies to improve their competitive positions must be gathered from best companies, no matter where they are located.

Companies striving to improve must not accept past constraints, especially the "not invented here" syndrome. Companies that fail to develop a global perspective will soon be replaced by competitors that had the insight to become global in their perspective. In order to make rapid continuous improvement, companies must be able to think outside the box; that is, to examine their business from external perspectives. The more innovative the ideas that are discovered, the greater the potential rewards that can be gained from the adaptation of the ideas.

Benchmarking opportunities are uncovered when a company conducts an analysis of its current policies and practices. Benefits are gained by following a disciplined process, composed of 10 steps:

1. Conduct an internal audit of a process or processes.

2. Highlight potential areas for improvement.

3. Do research to find 3 or 4 companies with superior processes in the areas identified for improvement. 4. Contact those companies and obtain their cooperation for benchmarking.

5....