Alignment of Strategic Benchmarking Performance Measures: A Lean Manufacturing Perspective

ABSTRACTThis article examines the relationship between lean manufacturing practices and alignment of strategic benchmarking performance measures. A set of nine hypotheses was used to examine the differences between conventional companies and lean manufacturing companies in setting organizational goals and objectives, scanning environmental factors, building core competencies, setting competitive priorities, establishing manufacturing objectives, and alignment of competitive capabilities with competitive priorities. Statistical results indicate compared with conventional companies, lean manufacturing organizations are overall better in setting long term goals and objectives, recognizing external environmental factors, building organizational core competencies, aligning competitive capabilities with competitive priorities, and utilizing a broad range of balanced performance measures.Key Words: Alignment, Performance measurement, Lean manufacturingINTRODUCTIONBenchmarking is an effective improvement tool utilized by organizations for improving aspects of organizational competitive priorities such as cost, quality, delivery, flexibility, and customer service. Benchmarking may be defined as a process in which an organization tries to learn from the best-in-class organizations, determine how the best-in-class achieve superior performance levels, and utilize those practices as benchmarks to their own organization (Watson, 1992, 1993; Whiting, 1991). The primary reasons world-class organizations use benchmarking are: 1) Benchmarking is a flexible tool that can be used for gradual continuous improvement as well as for major changes of process reengineering (Bogan & English, 1994). 2) It is a valuable educational tool that provides opportunity to leam and prepare a company for change, because it exposes employees to new approaches, systems, and procedures of other organizations (Welch, 1993; Kuebler, 1993; Zairi, 1994). 3) It is an efficient tool to capitalize on proven ideas and to avoid the cost of additional resources for developing new ideas from scratch. 4) It is an effective tool for improving quality, increasing customer satisfaction, while minimizing both the cost of good quality as well as the cost of poor quality (Blanchard, 2008).Deming (1982) and a number of other quality advocates have strongly recommended the use of benchmarking as an essential component of continuous improvement (Graham, 1993; Ishikawa, 1985; Venetucci, 1992; Dawkins, Feeny, & Harris, 2007). Since 1987, benchmarking has been a major component of the Malcolm Baldrige National Quality Award criteria; it has consistently influenced more than half of the total Baldrige points (Bogan & English, 1994; Ford & Evans, 2001). The practice of benchmarking is also being widely used for six sigma process and for organizations seeking ISO 9000 certification.Although for the past three decades there has been a considerable volume of research on the application of benchmarking in various areas of business, the primary focus of the research has been on short term technical and financial aspects of benchmarking. Fundamental strategic factors such as changing organizational culture, recognizing external environmental factors, and building organizational core competencies have been generally disregarded. However, research for the past two decades shows that organizations with an effective LM system are successful not only in areas such as inventory reduction and quick delivery, but also in other areas such as quality improvement, supply chain management, and new product development (Handfield, 1993; Meybodi, 2005b; Pettersen, 2009). The focus of this article is to examine if there are relationships between LM practices and alignment of benchmarking performance measures.LITERATURE REVIEWSince the early 1980s, a large number of articles have been written on the development and application of benchmarking in diverse areas of businesses such as manufacturing, health care, marketing, supply chain, energy, and customer service. …