by Mike Bradley

At its core, manufacturing success hinges on making better decisions than the competition. To do so, an organization must quickly assimilate and act on accurate information—information that reflects an in-depth understanding of both internal performance and the choices the competition is making to succeed in the marketplace.

There are many good sources for obtaining an “external” understanding. Industry associations, magazines, media reports, and professional peer groups all provide insights on what top-performing companies are doing.

Another source that is often overlooked is the practice of benchmarking, a systematic comparison of strategies, processes, and practices. Benchmarking has been used as a management tool for more than two decades, and it can give manufacturers valuable information to help improve performance and competitiveness.

Despite the obvious operational and financial benefits of benchmarking, many manufacturers find the process problematic. For starters, getting complete and valuable information can be a difficult challenge, one that’s not always worth their investments of time and resources. Companies that glean best practices from other companies without context and without consideration for their own specific circumstances, cultures, and capabilities will likely face disappointment. Numbers and statistics in a vacuum will not provide useful benchmarks.

What matters is usually what’s missing

When seeking to establish benchmarks, it is critical that manufacturers use participant data that’s comparative and comparable—in other words, striving for an apples-to-apples assessment.

Certainly some pertinent information is available through comparisons and ratios at the profit-and-loss or balance-sheet levels. However, that information alone will not create useful benchmarks, as it primarily compares an organization’s historical performance using a set of generic and conventional expectations.

Besides, simply matching these static results is never a proactive method for determining where your organization should focus its future efforts. Manufacturers should want to know what choices a company is making and how it’s performing in order to implement improvements. Therefore, well-defined benchmarking should include a range of dynamic data that zeroes in on what’s important to compare.

Using the right tools, a manufacturer can tailor benchmarking further to compare organizations with similar business segments, of similar size, or with the same longevity. They can consider companies in comparable geographic regions, recognizing the differences that exist in manufacturing environments in various parts of the country or world.

Alternatively, they can examine specific strategies and choices in which top-performing companies are engaged. For example, they might look at companies that have achieved significant progress toward world-class practices or those that use ERP systems successfully. With a view to the competition’s strategic choices, manufacturers will garner more actionable and more meaningful benchmarks.

Get specific

Benchmarking is about uncovering best practices. Drawing on specific, germane information instead of relying solely on generic tools gives an organization a much clearer picture of the external competitive environment—behind what makes the best better—without jeopardizing confidentiality or investing excessively on exhaustive research.

It also puts a manufacturer in full control of the data, and in the best position to adopt those practices that will have the biggest impact on its performance.

About the author

Mike Bradley is a senior manufacturing consultant at Wipfli.  With an engineering education and more than 30 years of industry experience, Mike approaches manufacturing processes with an analytical perspective, dissecting complex manufacturing issues into simple causes and effects that are linked to performance metrics. Please contact Mike at our Green Bay office at 920.662.2886 or mbradley@wipfli.com.