Gap Analysis

Gap analysis is a concept used in management strategies to compare the difference between the desired performance and the actual performance. Looking specifically at the area between these two levels will help managers to try to find ways to narrow this gap. In many process improvement methodologies, the gap area will be considered a form of waste, which should be eliminated to the extent possible. Some people say that the term GAP is also an acronym for “Good, Average, Poor” that can be used for rating the performance of an area.

Performing a Gap Analysis

When performing a gap analysis, managers are looking to measure the amount of time, money, and resources that are put into making a product. For example, if a facility is making widgets and it is determined that a perfect employee working on a perfect machine with a perfect supply line could create 1000 widgets per hour, but the average employee is only making 850 per hour, the gap is 150. Analyzing what could be done better to push that 850 up can help to improve output and eliminate waste.

Various Types of Gaps

Gap analysis can be used in almost any situation, not just manufacturing. For example, a company may run a gap analysis on a new product they are selling. Looking at their potential market compared to the people or businesses that are actually buying it, they can analyze the gap in their marketing efforts.

Another example would be a product gap. This is where there is a need in the market, but no product or service to meet that need. A company can analyze this gap to see if the costs associated with producing the product or service would be worth doing in order to fill the gap. They would have to also run a theoretical gap analysis to make sure they are getting an accurate picture of their actual production costs for the potential new product, not the costs that would be if it were run perfectly. Any area where there is a difference between potential and actual performance can benefit from this type of analytics.