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9/17/2010 Benchmarking Improvements Helps Companies to Achieve Continuous Performance

By: Piyush Dewangan and Rajabahadur V. Arcot. Benchmarking is a collaborative learning process among a group of companies and it involves relative comparison of identified operating practices, metrics and such others. Comparison can help companies to improve processes and practices that will ultimately lead to productivity enhancements, reduction of wastages, and such others. Benchmarking can be across enterprises or among different entities within an enterprise. Benchmarking performance against peers provides opportunities for business improvement initiatives in different areas. Benchmarking helps companies to think laterally about new methods and tools to continually improve their operational efficiencies and effectiveness of resource deployment. It is an effective way to empower people to discover new ways of solving problems and to address the natural resistance to change. Benchmarking analysis helps to understand how a company compares with others. It also helps to determine whether a plant is achieving the needed ROI and identifies where and how to improve strategies and investments. Benchmarking can be of several types, such as process performance benchmarking, strategic benchmarking (for e.g. changes in maintenance strategy), plant & equipment benchmarking, and work force benchmarking. For the effective deployment of benchmarking, developing a meaningful set of metrics is as essential as linking them to intended improvement programs. It is also necessary to link metrics to best practices. The success of the benchmarking approach will be determined by the cooperation and collaboration throughout a manufacturing company's hierarchy. Yet another criterion is the enterprise’s deep commitment to achieve business transformation. ARC launched its benchmarking service in January 2005, comprising of a consortium of manufacturing companies from process industries, including pharmaceutical industry. The program’s intent is to give interested companies a platform to benchmark performance. The consortium members mutually agree upon the common metrics for benchmarking the performance and practices for automation, control, and related maintenance assets and resources. To cater to diversity of interests, Special Interest Groups (SIGs) were formed to develop metrics for specific areas of interest within the consortium. Several companies are actively involved in benchmarking their performance by becoming members of ARC’s benchmarking consortium. Through the diligent efforts of several working groups, they have selected and approved metrics for benchmarking. Equipment performance, energy utilization, operator performance, process management, use of automation tools, effectiveness of electronic batch record systems, security patch management, and others are some of the performance metrics. Members of the consortium believe that these metrics give a clear understanding of the plant’s status and help them to identify various performance gaps. If the Indian manufacturing industry has to be globally competitive it must identify and bridge performance gaps. The ARC benchmarking analytical tool (BAT), while maintaining the participating company’s confidentiality, allows filtering of the data by metric type, industry region, and plant type. It allows companies to select the specific report type for the analysis and creates the most comparable benchmark for company’s plant metric data. It also provides a wide variety of report types, enabling critical analysis of the data, which could highlight important

performance gaps that require immediate attention. Hence the benchmarking analysis of performance can help companies to formulate the best strategies in achieving global competitiveness and to carry out their continuous improvement programs effectively. The expanding Indian economy provides impetus for the growth of the manufacturing industry in the country. The country’s manufacturing industry has acquired the threshold size and it is at the point of inflexion. While the growing affluence would spur the demand for manufactured goods, the industry will have to become globally competitive to emerge a winner in the market. Linear growth model of investing to expand production capacities will not suffice. Companies must make investments in areas which would result in productivity improvements. They must focus on improving supply chain efficiencies and deploy energy conservation measures. Benchmarking is one of the ways by which manufacturing companies can develop key performance indicators for pursuing the goal of continuous improvements. Some industries in India, such as cement, pharmaceutical, and steel can immensely benefit from benchmarking. These industries are already mature and boast of global sized operations. While in the case of cement, India is already the second largest producer of cement in the world, India occupies the fifth position in the steel industry and soon it is likely to emerge as the third largest. In the case of pharmaceutical industry, India now accounts for almost 10 percent of world’s total pharmaceutical output in terms of volume and ranks third globally. Another industry which can gain from performance benchmarking is the electric power generating industry. The demand for electric power outstrips the installed generating capacity in the country and significant opportunity exists for improving the operations and maintenance management in generating companies. ARC will be happy to initiate the necessary dialogue with manufacturing companies in the country to benchmark their performance. ARC invites cement, electric power plant including captive power plants, pharmaceutical, and steel companies to write to raja@arcweb.com or venkat@arcweb.com to join our benchmarking consortium.