Benchmarking - the need of the day

Benchmarking - the need of the day

By

Regu Krishnan
Deputy Manager
Ford India

Benchmarking - the need of the day:-

Indian organizations are becoming world class both in terms of size and performance. Therefore, there is a greater need to become superior in performance consistently. Quality is becoming the hallmark for both products and services. Indian and multinational organizations are increasingly becoming quality conscious and try to deliver high quality products and services to customers.

Quality delivery which was the property of General Electric, Ford, General motors, Xerox and AT&T had become the buzzword in many corporate circles in India as well. From Software major Infosys to Automobile giant Mahindra are adopting best in class technologies, borrows and adopt best ideas, incubate and implement them as part of their corporate strategy.

Benchmarking logical process flow:

Why companies benchmark?

As individuals do swot analysis, companies have to do swot analysis for their competitive advantage and for long term survival. The external competitive pressure on the system had made its absolutely necessary to benchmark with similar organizations or organizations of different breed.

However, benchmarking cannot cure all diseases of the company. Why the companies benchmark? Instead of being inward looking companies, large corporations are more outward looking nowadays. Liberalization and globalization had made the industries very competitive. Equally the transfer and adoption of technologies are more easier nowadays.

The other advantage of benchmarking is the lowest cost associated with the process. The companies do not invest sizeable investments in research and development and there is no threat of any sunk cost. The process or practice or technology are readily available and easily be plagiarized.

Have you decided on benchmarking?

Benchmarking can be implemented in manufacturing, services or quality related processes. The ultimate aim of any organization is to adopt Best in class technology for greater customer satisfaction and thereby better financial muscle.

However, the scope for benchmarking is not limited to above. It is much wider in scope and application.

1) For example a banking company can benchmark on loan processing time from the competitor's practices.

2) A call center can benchmark on the reduction of Number of dropped calls from one of its competitor.

3) An auto ancillary industry can benchmark on reducing the number of defects from the quality practices adopted from the competitor.

Implementation is the key:-

The process benchmarked have to be implemented effectively considering the various factors affecting the organization internally and externally. The kind of importance given to change management is also to be given to the benchmark implementation.

A specialist team may have to be formed for this purpose under the watchful eye of the top management. Otherwise, the success of the process may not be assured. The assurance out of the process may have to be consistently be scoped and monitored so that, last minute hiccups would be avoided.

Key to success factors on Benchmarking:-

Benchmarking not a myth but a reality:-

Even though many companies benchmark on performance standards based on other companies and from the competitors, not many of them would come out and say openly that, they adopted the best practices of the 'X' company.

This is the reality of the day. The other element on benchmarking is that diverse and unrelated fields can be picked up and their practices can be adopted as the best in class practice. For example, the signaling system of the Indian Railways can be adopted by Airlines major Boeing or the regimentary practices of the Indian army can be adopted by a large multinational corporation for their time office.

The other element for observation and discussion is about the benefits of benchmarking are not available for common consumption. The research area is limited and it is not widely spoken about. This is because organizations do not share the information with others and keeping the stand that, there is no official about it. Therefore, it is the need of the hour to generate enough case studies and research in this area and share the best practices of organizations across sectors and across geographic boundaries.

Quality tools for benchmarking:-

Organizations nowadays rely more and more on quality tools to analyze the suitability of benchmarking processes and imitate them or inherit them into their organizations.

The pareto analysis is one of the best ways to analyze wider data. Ishikawa diagram or C&E analysis is the other quality tool that is widely used.

Apart from these, organizations use flow diagrams and bar charts to capture critical factors that led to the success of the other organization.

Greater reliance on quality tools and lesser dependence on manual processes will improve the effectiveness of the inheritance of the processes into the new environment of the organizations.

The usage of metrics in productivity, quality, timeliness of delivery and other success factors are more and more required to carryout a scientific study of the process and take an appropriate decision.

Conclusion:-

The process of benchmarking is not as simple as imitating a process per se. The process may require greater degree of systematic process review and constant control apart from the following.,

a) Flexible planning
b) Detailed analysis
c) Qualitative implementation
d) Constant review
e) Progressive change management.

Regu Krishnan
Deputy Manager
Ford India

Source: E-mail November 20, 2006

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