What exactly is a gap analysis example? The difference between a gap analysis and a gap indicator is that the former analyzes gaps in resources and the latter will indicate the availability of the gap. Gap analysis takes into account what goes on within the gap between the available resources and the actual results achieved within the gap.
A gap analysis example usually begins with a back-of-the-envelope calculation. It begins with finding the maximum possible outcome and then concludes that the outcome is neither too limited nor too broad. For example, a manufacturing company might develop a three dimensional model and measure its three resource outputs: gross profit, cost of goods sold and net income.
Resource modelers usually begin by making an “upper bound” on their resources. They measure the potential in the upper limit and then seek to be as close to the upper limit as possible. In this example, the resource modeler finds the maximum possible gross profit level and then adjusts his or her resources so that he or she is also as close to the maximum possible gross profit level as possible.
The next step is to gather sufficient data about the resource combinations that would most effectively supply the resources in the upper limit. In this example, the resource combination that is most effective is an investment in capital goods. The inventory modeler wants to know how much capital he or she needs to buy raw materials and in order to maximize capital investment, which makes the number of inventory cells increase. The inventory modeler then seeks to maximize what he or she has already invested and what he or she can add.
The final step is to actually define the upper and lower bounds of the three resource combinations that are the result of this first step. In this example, the two bounds are equivalent. For example, the product developed will have just enough capital investment to minimize the input costs and produce the maximum possible output.
Making the right comparison in the first place is very important because the modeler must determine the most realistic set of assumptions in order to be able to provide the most accurate results. He or she needs to be able to measure his or her assumptions against the information available.
The modeler should also measure the resources that he or she thinks might be within the usable range. This involves evaluating the available resources against the resources that would create the most satisfying outcome. In this example, the modeler first thinks about the space that would be available for production and then compares this space with the actual space available to produce the product.
Using a gap analysis example can help identify where resources can be wasted by focusing on the right areas of the company’s resources. It can also point out where there are large gaps in the resource range and indicate how an improvement in one area can make the difference between failure and success.