Q3. Glamour Glass Pty Ltd manufactures glass kitchenware at its Campbelltown factory. Its manufacturing equipment includes large machinery that was purchased 15 years ago.Glamour Glass uses small production runs, and although the machinery is old it is reliable.The company’s products are much sought after by speciality gift stores and up-market department stores such as David Jones. It also sells its products to Saks of Fifth Avenue, in NewYork. While Glamour Glass has many products, among the most popular is the Puchi salad bowl and servers, which competes very favourably with the latest Italian salad bowls.

Glamour Glass has just begun its first benchmarking activity. It has subscribed to an international benchmarking group that provides benchmarking data specifically tailored to different industries.The benchmarking data relating to the glass industry that is supplied by the agency includes product cost per kilogram of finished product, cycle time, reject rate, and direct labour and raw material costs per kilogram of product. The manufacturing manager, Paul Griswald, suspects that the benchmark data must relate to the famous Speedy Glass, renowned as the world’s best glass manufacturer. Speedy Glass mass-produces glass kitchenware products using high-speed computer-controlled machinery.

The management accountant of Glamour Glass, Brian Hill, has prepared a report comparing the performance of Glamour Glass with the benchmark data

Required:

1. Explain the concept of benchmarking and how it can be used to help a business improve its performance.

2. Should Griswald be concerned about the size of the performance gaps? In your answer, consider each performance measure separately.

3. Assuming that the benchmarking data relates to Speedy Glass, will it provide suitable benchmarks for Glamour Glass? If not, can you suggest what types of data may be more suitable?

Transcribed Image Text:

Performance measure Glamour Glass Benchmark data Product cost per kilogram of product $68 $53 Direct labour per kilogram of product $16 $ 8 Raw material cost per kilogram of product $36 $ 8 Cycle time per 100 units 60 minutes 15 minutes Reject rate 2% 3% Performance measure Glamour Glass Benchmark data Product cost per kilogram of product $68 $53 Direct labour per kilogram of product $16 $ 8 Raw material cost per kilogram of product $36 $ 8 Cycle time per 100 units 60 minutes 15 minutes Reject rate 2% 3%

Answer rating: 100% (QA)

1 Benchmarking is basically a practice in which companies measure their performance in some important parameters and compare the with the best in the industry In the process of bench marking first the ... View the full answer