Benchmarking And Lean Six Sigma For Business Process Improvement

Benchmarking for Business Process Improvement

Discuss about the Benchmarking and Lean Six Sigma.

Benchmarking for any organization is an approach to measure the quality of the guidelines, goods and the tactics that a company uses which is further compared with the standard measurement or with the same measurement of its peers (Business Dictionary, 2017). Main objective of benchmarking process is to identify that where exactly improvements are required in the organization and it also helps in evaluating the performance level of other organization and then use this approach to increase the performance of the company (Wood, 2009). It can also be defined as a practice used by business to compare the significant metrics with other similar companies (Rowena, 2011). This approach can be used by all the companies, be it private, public or any industries such as technological, educational and many others. There are many companies that use either positions or offices that take charge of the benchmarking in the organization. These positions are of researchers which include both institutional as well as market researcher. Other positions include the information officer, consultant, and the data and business analysts. Companies basically use this technique to become more competitive as they can easily analyze their performance and can improve their operations by comparing with different company. Some different kinds of benchmarking are peer benchmarking, SWOT analysis, collaborative benchmarking and by the best practices of different organization (Ifeoluwa and Yinchang, 2010). There is another method which helps in increasing the performance of the organization and that is Lean Six Sigma technique (Jesse, 2017).

Lean six sigma is basically a combination of Lean and Six sigma which is an improvement method. These both methods together give a better result than used individually (Brady and Allen, 2006). When these two methods are combined it gives a wide-ranging tool to increase the speed of any process in the organization which results into the increase in revenue, reduction in costs and improvement in teamwork (Pepper and Speeding, 2010). Lean basically creates value for the customers by minimizing the waste and six sigma reduces the defects by just successfully resolving the problems in the organization. And together it solves the problems and improves the process (George, Dave and Amy, 2007). Six sigma also reduces the quantity of substandard products that are manufactured and provides the satisfaction to the customer (Thoms and Okafor, 2008). Now days it is very common for an organization to face the rising costs and competition every day, so this method sanctions the organization to fight these problems and helps in the improvement of business (Qun, 2013) There are many benefits that an organization enjoys by using this method and these are, it increases the profit and decreases the cost by removing waste from the process, improves the efficiency and the effectiveness of the process, develops effective employee by involving them in the enhancement process and develops a sagacity of ownership for the employees (Assarlind, Gremyr, and Bäckman, 2012). Both the benchmarking and lean six sigma techniques can be applied to business change process.

Lean Six Sigma Methodology

Benchmarking involves several steps that help in the change of the business process. These steps are custom-made based on the policies of the company, funds and the projects that organization is dealing with (Ronald, 2010). First step involves the understanding of the company’s current process performance, as it helps in deciding where benchmarking is required. Second step should be from the leadership team as there should be proper support and approval as this will assist and provide adequate resources and will accelerate the benchmark process. Third step is all about the document benchmarking which sets the objective and scope for the organization which is essential for any project. Forth step involves the documentation of the current process as without the knowledge of current process all the time and resources will be wasted in collecting process documentation, and there will also be difficulty in comparing the collected benchmarking data with the requirements. Fifth step involves the benchmarking measurements that are used for the comparisons so that gap between the current performance and that of the partner organizations can be determined. In this step organization has to agree on the primary metrics. In the sixth step all the metrics should be put in the writing which includes the requirements involved in the measurements, what has to be measured and what not. Next step involves the agreement in which everyone must be involved on what to benchmark. Further a plan has to be developed to collect data and research sources are identified which will initiate the data gathering. Next step includes the designing of screening which has to be surveyed to assist with partner selection and then screening of companies takes place. Information about the companies is gathered and is met with the original objectives that will determine the performance gaps. Last step involves the implementation of plan with the process owner so that successful business process change can occur (CGMA, 2017).

Lean six sigma technique can also be applied for the business change process. This process is an effective methodology that is used to fix the problems and includes 5 phases. In the first phase, problem is defined and the requirements needed to satisfy the customer is also demarcated. Second phase involves the collection of data of the current process and is measured. Third phase is important as it includes the investigation on what causes the problems in the organization. Next phase includes the improvement process in which implementation of plan takes place which will solve the problem. And last phase includes the control on that implementation results which should be sustainable. This process works for all the businesses whether it is small or large and same success can be achieved within both the large and small organization. This process provides benefit to the organization as it improves the customer loyalty. By implementing this method there is a reduction in the risk of having dissatisfied customers. It also helps in the time management as employees manage their time effectively which results into a more competent business. This method also plays an integral role in the strategic planning of the business and even helps in the supply chain management (Harris, 2013).

Benefits of Benchmarking and Lean Six Sigma

There are many organizations that have used benchmarking and lean six sigma methods to improve their processes. One such company is Microsoft. This company realized that there has to be change in the business structure and the processes that a company uses in order to make improvements.  One of the senior managers VP understood that Microsoft’s sales and marketing division could be made more competent by using six sigma methods. The senior manager observed the issues when he was reviewing the annual budget but he wanted to prove it empirically before any change could be made. Hence he asked for the data from the travel office so that he could track the overstated payments and the unapproved charges employees made in a month. After the results were revealed he was surprised to know that the results were in a positive way and the sales staff of Microsoft was honest enough towards the organization and the overstated charges were only few dollars. Now VP was ready to implement the change. His new policy stated that the sales staff could only submit their expenses through credit cards and there would not be any review and the staff would get back their expenses in two days rather than getting in ten days. Consistent performance is corrupted by the variations. Therefore, experts should identify variations by using lean six sigma and reduce it whenever possible. But a company like Microsoft who recruits number of staff every year did not have time for implementing new processes. Improvements in an organization while changing business process can only be achieved by valid measurements and data and this explains that the process of investigation must be backed up by the accurate data and the facts. This changed process should benefit the customers, identify and should be able to understand the value stream and manage the flow of the process. All the non-value waste should be removed and the improvement activity should be passed on in a systematic way. After the six sigma review, VP decided to concentrate on the micro issues that company was facing. He identified that the filing expenses was complex and company was able to reduce the staff that were getting expenses by 25 percent. Hence it was recommended that sales staff were only required to pay expenses by credit cards. Ever decision in the organization has some risks which should be calibrated before making a decision. And there are also chances that when a change is occurred in the company it can end up creating more waste than efficiency which can be reduced with the help of lean six sigma. In this case study of Microsoft it was noticed that VP was taking a risk by implementing this method. VP was leaving the expenses system to abuse by reducing the stages of expenses process which also included the checks and the balances. Here it is also important to note that the new process was also implemented successfully as VP commissioned further more checks and it was also revealed from the internal audit that there was no rise in the overstated expenses. This is how Microsoft used lean six sigma and managed to bring out the change in the business (Gordon, 2015). There are also many organizations that can use either benchmarking or lean six sigma model to change in their process.

Applying Benchmarking and Lean Six Sigma to Business Change Process

One such company is Motorola that has to develop some change in their process. Many customers have issues with this company related to time as Motorola does not deliver products on time and is unresponsive company to do business with. Hence Motorola should benchmark from Domino’s pizza or Federal Express so that there is improvement in the delivery process. Motorola should implement the Total Cycle Time as the process which is taking three weeks to complete will only take one week. Hence Motorola should adopt benchmark process. First a company should decide what exactly they want to benchmark and then there should be any change in the organization. Motorola should understand the current performance of their organization and should analyze as where a change is required and then follow the strategies of other companies (Wheelen, Thomas and Krish, 2006). For this there should be a proper planning of what has to be benchmarked and how it should be benchmarked. This planning should be well planned and has to be in favor of the company because many times when an organization tries to implement change in their business it backfires the company itself. So Motorola should plan before implementing any change in their organization (Quality Magazine, 2003). As Motorola is having issues with the time so they should study other organization practices and the systems which they want to benchmark. Dominoes is very virtuous with their delivery so Motorola should benchmark this company and follow the same practices what they uses so that there will be less issues with timings (Word press, 2008). To follow the strategies of dominoes, Motorola should gather the data of their company as well as the benchmark company and then a comparison should be made so that it becomes easier and clear for the company to follow the strategies of other companies. And at the Motorola should use the findings and use them in order to enjoy the benefits of the change process in the business. There are many benefits that Motorola might enjoy if benchmark is practiced as there will be reduction in cost and productivity of this company will also increase. Beside all this there will be also be long term benefits which are improved quality of the organization. This will surely help Motorola company to maintain the quality products of their company and delivery of the products will also be improved.  Benchmarking will also help Motorola to identify the gap between the present situation of the company and where it would like to be upcoming years. There are many types of benchmark that Motorola can use and it is up to the top management what they prefer for the company and the benchmarking that management uses will definitely be beneficial for the company it is applied correctly. If Motorola has to be competitive in market then it should follow benchmarking and achieve the world class competitive capabilities.

References

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