Gap analysis is a method that companies use to gauge their current performance next to their performance goals. In other words, gap analysis is the process of identifying a performance gap and then developing a plan to bridge that gap.
Companies often pursue gap analysis when they notice they are not operating at peak efficiency, or in other words, when it has become apparent to business leaders and personnel that the company is not utilizing its current resources (money, workforce, material, time) to its full potential.
When a gap becomes apparent, it is time for companies to quantitatively and qualitatively define that gap with benchmarks, goals, gap evaluation, and solutions.
Gap analysis is the process of comparing the gap between a company's current performance and its target performance.
There are four basic steps to performing an intelligent Gap Analysis: Benchmark, Define, Analyze, and Develop.
A good time to perform Gap Analysis is when it becomes apparent that the business is not using its resources and/or capital to its full potential.
Gap Analysis helps companies stay on track with their current goals and mission.
Gap analysis consists of 3 basic factors:
Current State - Gap - Desired State
Gap analysis can be compared to planning a route between one geographical destination and another. You need to look at a map and measure the distance between where you currently are and where you’d like to be. Once this distance gap is identified, you can begin to plan the most efficacious route and methods you’ll use to traverse the gap.
It is the same for any gap analysis. Businesses compare their current perforce with their desired performance and identify how much space sits between them. Once these two are identified, companies can begin to plan the best methods to close the gap.
In most cases, when you are initiating a Gap Analysis of your business, you’ve already noticed a gap that you would like to address. Now it's time to formalize the process.
The first step of Gap analysis is to assess your business’s current benchmarks. These benchmarks can be gathered through statistical data where the performance is measured in easily defined numbers and/or qualitative data that measure performance using surveys and recorded feedback.
For example, the number of products produced in a day can be represented by a specific number and range of time. On the other hand, customer satisfaction is often represented by direct feedback with words.
Typical benchmarks can include:
Throughout gap analysis, good data is your best friend. Bad data can lead to bad decisions, so make sure to gather data from reliable sources that look at the whole picture.
Since your workers contribute to every process on your shop floor, a worker-centric MES is an incredibly reliable source for manufacturing data and KPIs.
Once your benchmarks have been gathered, it's time to set some realistic goals that you would like to achieve. It is crucial that you have a clear company vision and mission. Specifically, why are you trying to achieve your goals?
These goals should have 5 basic qualities.
Taking these 4 qualities into account, instead of saying: “We want to achieve more compliance and standardization”, a good mission statement could be phrased: “we plan to integrate a standardization tool within 90% of our businesses by the end of the year.”
Now that you have your benchmark performance and a precisely defined goal, you can begin to analyze and quantify how big of a gap there is between the two.
However, there's more to do than simply quantifying the gap. You also need to investigate and find out why the gap has been occurring.
If you’ve identified a gap in quality performance, you’ll need to understand why quality is suffering. This will help you develop a proper strategy in the next step.
For example, perhaps you have experienced a gap in quality performance due to one or more of the following lacks:
Once you’ve identified the reasons for the gap, you begin to make informed decisions when implementing your solution.
Now that you have identified and accurately quantified your gap, it is time to develop and implement a strategy to close it.
Developing a strategy requires 4 essential phases. And just like our previous steps, everything needs to be accurately defined and measurable through quantitative and qualitative data.
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