Multi-criterion and multi-period performance benchmarking of products and services

Abstract

Purpose A product or service usually has multiple measurable characteristics, and its performance on different measures may vary and may change over time. Multi-criterion and multi-period performance benchmarking presents a challenge for management to determine performance gaps among comparable products or services. The purpose of this paper is to propose a new performance benchmarking method to address this challenge. Design/methodology/approach The author develop this method by formulating two benchmarking functions: a differentiation function based on Shewhart average and standard deviation charts to distinguish the performance of products or services on a single measure, and a categorization function to classify each product’s or service’s overall performance across all measures. By systematically removing the lowest-performing products or services from comparison, the author use these functions iteratively to detect performance gaps. Findings Using this method, the author find performance gaps in each of three benchmarking applications of airports, hotels, and minivans, although a number of performance gaps are not obvious from the raw data. Research limitations/implications This benchmarking study focuses on the quantifiable outcome performance of products and services. Practical implications This benchmarking method is generic and applicable to most products and services. It is robust not only for discovering performance gaps, but also for providing useful insights for managers to prioritize improvement efforts on individual performance measures. Originality/value The novelty of this benchmarking method lies in that it can not only find the “best overall” products or services for all performance measures, but can also pinpoint the “best-in-class” products or services as well as performance gaps for each performance measure. In addition, this paper presents several original ideas for performance benchmarking, including: using the control limits of Shewhart control charts to categorize performance gaps, systematically removing the lowest-performing products or services from comparison for the purpose of detecting hidden performance gaps, and using symbolic expressions to integrate benchmarking results from all measures and to show all performance gaps intuitively.