Xerox Supply Chain – Benchmarking Case
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Abstract
Remember playing your favorite songs on the record player? How if the record was scratched the needle would skip? Once the record was played “out,” we would use them as flying saucers in the backyard? Lets explore how the importance the first benchmark led the revolution of benchmarking in the world of business. To Benchmark is to define a starting point with a purpose of collecting data for continuous improvement. Throughout this paper, we will explore the definitions of benchmark/benchmarking, who started this revolution and how it saved their company and other various applications used today through the use of benchmarking. By placing a stake in the sand as a starting reference point, then collecting future data, one has performed a benchmark.
Benchmark/Benchmarking
A Chinese proverb says, “If we dont change our direction, we might end up where were headed.” Benchmarking is a direction-setting exercise, and it is nothing more than a quality tool, just one of many ways to improve and become more productive. However, it has been extremely important for us, so you may want to know why and how it fits in with an overall quality agenda.
According to both Websters Dictionary (2010) and BusinessDictionary (2010), Benchmark is a point of reference from which measurements may be made by something that serves as a standard by which others may be measured or judged, a standardized problem or test that serves as a basis for evaluation or comparison. Benchmarks may also be drawn from ones own experience, from the others experiences within industry or from legal requirements such as environmental regulations. According to Barrett, the origin of Benchmark was invented in the early 19th century and is the mark made by a surveyor on a stationary object of a previously determined position and elevation to be used as a point of reference (Barrett, 2007).
Benchmarking is the continuous search for an adaptation of significantly better practices that leads to superior performance by investigating the performance and practices of other organizations (benchmark partners). In addition, it can create a crisis to facilitate the change process (Camp, 1989).
Benchmarking, in practice, tends to be more about sharing good practice and measurements collected. Benchmarking is also setting levels against which quality is measured. In industry, quality is measured by what the customer wants and is willing to pay for. This is defined as value added. However, what the customer is not willing to pay for is considered non-value added and thus waste. So, the collection of the right data becomes critical due to costs associated with data collection and analysis.
A standard method to collect data is most effective when benchmarking. Data collection should be standardized to ensure little to no variances in results. To benchmark is to also allow for a self-improvement tool. This allows organizations to compare themselves with others to continually improve current practices (Vlãsceanu. 2009, p. 25). Helps to keep the competitive edge fresh and the imagination flowing.
Benchmarking is also a process of continuous measuring system results, comparing those results to an optimal system performance and then defining steps and procedures to improve system performance (Baltzan-Phillips-Haag, 2009).
There are many benefits of benchmarking. The following list summarizes the main benefits:
provides realistic and achievable targets
prevents companies from being industry led
challenges operational complacency
creates an atmosphere conducive to continuous improvement
allows employees to visualize the improvement which can be a strong motivator for change
creates a sense of urgency for improvement
confirms the belief that there is a need for change
helps to identify weak areas and indicates what needs to be done to improve.
To look at quality performances back in the early 1980s, a company who had a rating of 96% was considered excellent. However, when compared to their Japanese competitor, 96% was below threshold since they were measuring quality by a few hundred parts per million by focusing on process control to ensure quality consistency. It is not a secret that the Japanese were well versed in continuous improvement long before America with the aid of Dr. Deming.
There are four types of benchmarking, strategic, functional, best practice and product. They are not mutually exclusive and analysts can choose any one or a combination to meet their objectives. However, it is recommended that strategic benchmarking is conducted first to create a context and rationale that will enhance all other benchmarking efforts.
Strategic Benchmarking is concerned with comparing different companies strategies and assessing the success of those strategies in the marketplace. Analyses the strategies with particular reference to:
strategic intent
core competencies
process capability
product line
strategic alliances
technology portfolio
Strategic Benchmarking should begin with the needs and expectations of the customer. This can be achieved through surveys to measure customer satisfaction and the gaps between a companys performance and its customers standards.
Functional Benchmarking investigates the performance of core business functions. It does not focus on direct competition but, depending on the function to be benchmarked.
Best Practices Benchmarking applies to business processes. It breaks the function down into discrete areas that are the targets for benchmarking and is therefore a more focused study than functional benchmarking. Some business processes are the same regardless of the type of industry and attempts to benchmark not only work processes, but also the management practices behind them.
Product Benchmarking is commonly known as reverse engineering or competitive product analysis. This type of benchmarking assesses competitor costs, product concepts, strengths and weaknesses of alternative designs and competitor design trade-offs, by obtaining, stripping down and analyzing competitors products.