Benchmarking

Although he didn't know it at the time, Shakespeare provided moldingcompanies with the first step in the benchmarking process: "Know thyself."In fact benchmarking, which is defined as "a continuous, systematic processfor evaluating the products, services, and work processes of organizationsthat are recognized as representing best practices for the purposes oforganizational improvement," can't begin until you first know your ownorganization. Or, to put it another way, you can't determine where you needto go until you know where you are.

There are two types of benchmarking, according to the ManufacturingMonitor, a quarterly newsletter published by Blackman Kallick, a businessconsulting and accounting firm in Chicago. Overall benchmarking looks atbusiness performance in general. Alternatively, process benchmarking"compares discrete business processes" such as quality, inventory control,productivity, and efficiencies.

Before benchmarking can begin, companies need to first look internally bymeasuring performance in specific areas, says Jeanne K. Elliott, directorof facilities engineering and maintenance, industrial control group forAllen-Bradley in Milwaukee. Before Elliott was in facilities management,she ran one of Allen-Bradley's molding operations, so she is familiar withwhat she is analyzing.

She suggests asking one or two of your key customers, who you know will behonest with you, what they like about doing business with you. Ask them,"Who of all your suppliers does the best job for you and why?" Elliottsuggests.

Once you have a measure of your present performance, you will be able todefine what performance improvements you need to implement. Second, saysElliott, look outside your company to your competitors to find out whatthey're doing to be more competitive, productive, or efficient.

This step is a tough one for molders, many of whom have head-in-the-press(HIP) syndrome. You get so busy with the day-to-day business of makingparts that you don't look up to see what's going on around you. Most peopleat the top of large, global custom molding operations are more than glad toshare with you some of the things they've learned along the way.

Blackman Kallick suggests looking outside your own industry for abenchmarking mentor. "If you're below average, it's a good idea to learnhow to meet the industry average, and to do what you need to benchmarkother companies in your industry. But if you want to excel, to becomesuperior to your peers, you should look outside your industry for ideas."

Elliott agrees that comparing and analyzing the practices of othercompanies outside the plastics industry can be extremely beneficial. Whatdoes Compaq Computer do, for example, that makes it the top-sellingcomputer in the world? How does Hewlett-Packard organize its globaloperations to be cost effective and efficient? Many of these large OEMs areyour customers. Ask them how they do what they do, then get advice on howsome of their practices, including financial, and procedures might helpyour business.

Elliott's study supports findings that benchmarking at many companies isinitiated as a response to organization crisis. She recommends that youdon't wait until your company is in a crisis situation to begin abenchmarking program. "Be proactive, rather than reactive," says Elliott.

The process steps of benchmarking include:

Planning: Identify what is to be benchmarked, e.g.,quality, molding production, secondary operations, downtime, etc.Identify comparative companies; that is, which companies are you goingto use to help you with benchmarking? Determine a method to collect data, then collect the data. Analysis: Determine current performance levels thenproject future performance levels. Integration: Communicate benchmark findings and gainacceptance.Establish functional goals. Action: Develop action plans for implementing yourfindings. Implement specific actions and monitor progress. Recalibrate benchmarks as necessary to reflect progress or slippage.

One key to successful benchmarking, says Elliott, is management'scommitment to the process, then implementing the resulting recommendations.And management must be willing to institute change in the organization ifthat's what the benchmarking study reveals is needed.

"A company can have such a high opinion of itself that it can't believethings can be that bad," says Elliott of the internal performanceevaluations. "Protecting the status quo is not allowed is not allowed ifyou want to be successful in benchmarking."

Blackman Kallick says that the final step - taking action - is the mostcritical one in the benchmarking process. Understanding that benchmarkingisn't the "silver bullet," but a "measurement element of a comprehensiveimprovement program" that is a long-term process is crucial to itsimplementation. For example, General Electric implemented an effort tochange based on benchmarking principles that continues 10 years later.

Says Blackman Kallick: "All too often, companies go through thebenchmarking exercise but don't take the actions needed to improve or theygive up when improvement is not seen in two or three years."