Six SIgma–Why Benchmark?

In the fourth chapter of their book Six Sigma:  The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, the authors Mikel Harry, Ph.D., and Richard Schroeder discuss the issue of bench-marking and how it is related to Six Sigma.   Benchmarking is basically comparing your company’s business and industrial processes to those of their competitors.   The goal is identifying your company’s strengths and weaknesses vis-a-vis the competition.

Some companies don’t benchmark because they feel they are already better than the competition, or that a comparison with the competition is impossible because their company culture is “unique”.   Let’s take the second excuse for not benchmarking first:   a company culture may be unique, but in all likely the business and industrial processes are not.   There must be some processes that a company has in common with the competition.

The first excuse depends on what the Six Sigma level is of the company and its competitors.   If your company is at 5 Sigma, and the competition is at 4 Sigma, that’s one thing.   But what if there is only a difference of, say, 0.4 Sigma between you and the competition?   That’s not a lot of gap between you and the competition.    What’s more, if your company is at 3.5 to 4 Sigma, and the competition is not as good as you are, that still puts you in the category of average as far as all companies are concerned.

Here’s some characteristics of such an “average” company whose processes are between 3.5 and 4 Sigma:

Although it has a quality-assurance program, and is profitable and growing:

  • It spends 20-30% of sales dollars repairing or reworking products before shipping.
  • It contracts with 10 times the number of suppliers necessary.
  • 5-10% of its customers are dissatisfied with the product, sales, or service and would not recommend the product or service to someone else.
  • It does not believe that the goal of zero defects (6 Sigma) is realistic; however, it is also unaware that increasing to a best-of-class Sigma level (5.5 Sigma) would make their product 100 times more defect free.

This is why a company should benchmark–because complacency may prove fatal if the competition gets it into their heads to take up a quality-improvement like Six Sigma, and overtake your company while it standing still.


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