BENCHMARKING

Courtesy: Professor Satish Ailawadi
( can be contacted at ailawadi24@yahoo.com)

Definitions of benchmarking

(1)“A continuous systematic process for evaluating the products, services and work of organizations that are recognized as representing best practices for the purpose of organizational improvement.”

(2)“ A continuous search for, and application of , significantly better practices that lead to superior competitive performance.”

(3)“A disciplined process that begins with a thorough search to identify best-practice-organizations, continues with the careful study of one’s own practices and performance, progresses through systematic site visits and interviews, and concludes with an analysis of results, development of recommendations and implementation”.

(4) “Benchmarking is an external focus on internal activities, functions, or operations in order to achieve continuous improvement.”

(5) “Benchmarking is systematic and continuous measurement process – a process of continuously measuring and comparing an organizations business processes against process leaders anywhere in the world to gain information which will help the organizations to take action to improve performance.”

Why Benchmarking ?

•Successful companies in every industry engage in a variety of practices, which lead to achievement of high level of performance.

•Benchmarking has become one of the most important tools of business management in corporate that attempts to gain and maintain competitive advantage.

•The central essence of benchmarking is about learning how to improve business activity, processes, and management.

The Benchmarking Process

•Benchmarking involves looking outside a particular business, organization, industry, region or country to examine how others achieve their performance levels and to understand the processes they use.

•Thus, benchmarking helps explain the processes behind excellent performance.When lessons learnt from benchmarking exercise are applied appropriately, they facilitate improved performance in critical functions within an organization or in key areas of the business environment



Types of Benchmarking

Supply Chain in Diwali - Ops funda!

Oye, to all.... here's my take on Diwali :) yenjoy.... learn Ops fundas aswell !!!

Give and Take - Inventory Management Mom Style!!!


Operations Managament is the essence of life. It's all encompassing as well as it permeates everything! Take for instance this mail. The inputs are my weird thoughts, the output is the mail and the process of typing it, the value add ---------- yeah right :)!!!!

Diwali - the festival of light, is also the season where Mom's all across the globe face up to the big challenge of Inventory control. It's the time for the deluge, the give and take and the smooth maneuvering of gifts from one hand to the other.

Take my home for example. In Diwali, my Kitchen plays the role of a warehouse and MOM the part of the Inventory controller. Her job is not only to procure - gifts for people; but also find the right suitors for the parcels that are received from other people! Its not as simple as it sounds.

The thing about Gifts (mostly sweets and things to eat) is that , you need to do an ABC analysis of the inventory at all times and match the inflow value with the outflow value. If the outgoing value to the source is not atleast approximately equal to the incoming one from that source, it leads to supplier dissatisfaction. Whereas, if the outgoing value is greater than the incoming one, it leads to dissatisfaction of the inventory manager - my MOM .


The second challenge lies in the fact that at all times, the average space utilization of the gifts kept in the kitchen remains the same. So no matter how much MOM tries, the replenishment is always ready. Whenever she is absolutely ecstatic that the final gift was delivered, fresh stock arrives uninvited, with the additional burden of replenishing stock of equal value in order to send a return gift.

The third challenge is how to minimize the spend on gifts, by tactfully directing gift from A to Z and B to H and J to R and so on. At all times, the value of the interaction i.e. A to Home and Home to A should remain approximately equal. And its no easy task, mind it! MOM's through years of experience - recieve, evaluate, procure, inspect, handle, store and deliver gifts with such precision that each and every relationship becomes stronger and not one person is dissatified. It becomes almost second nature, involuntary to them. The challenge also lies in inspecting the gift, without spoiling the wrapper , in order to ensure that the gift has not been customised and codified to our name!

Also, the biggest challenge lies in the security of this inventory from a certain "ME" who has his eyes on the stock at all times. Pilferage - being a threat, stock counting is done twice a day and as it is inevitable, fresh order is placed in order to reach the minumum stock level, to prevent loss of dignity!!! The quantity ordered is instinctively calculated at "Economical" Order Quantities!!!

Finally, having a huge closing stock also creates health hazards for "ME" - because I generally recycle everything by eating it !! I generally END PRODUCT, i.e. I generally make "Finished product" a reality - I finish it alright !!! So the challenge is to have minimal to zero inventory at end of season. At this time, the tit-for-tat theory goes for a toss, and generosity comes to the fore. Even though obsolescence of stock is impossible (thanks to ME) , the stock is handed out in charity to the underprivileged. Not that I am complaining, but one person that is not satisfied is me :) Insatiable is my Nick name anyways.

If you come to think of it, JIT, lean supply chain -minimizing waste are fundas that are so astutely used during Diwali, the festival of light. Salute to MOM's and at some places Dads who manage this festival of give and take with such aplomb. As for my Mom, as I said, she has an addtional task at hand during this season, because for me personally - Diwali isn't the festival of " LIGHT ", my funda is Diwali - the festival of getting "HEAVY " :) hehehehehehehehe. So, a salute to her :)

Fundamentor...

Why I like the IIMA style of learning

Here at the Univ of Koeln, as a part of my course I am doing what is called a Business Project with a leading German company (to avoid any issues later let me call it Company C). It is a live consulting assignment where C wants to evaluate the strategy it adopts for process P and evaluate whether the money spent on department D (which is a profit center) is worth it. Now the structure of the team is such that there is an academician (lets call him Mr X), who on the behalf of the prof has to act like a guide and there is a representative from C who liaisons with us on behalf of C. As is evident, the grades we get will be governed by what the TA thinks of our work and whether C is happy or not depends on the results we give them. Now the nature of the problem is that, the German system is a bit skewed in the sense that when you submit a report or use something you have to support it with adequate literature. The attitude is “I am not a researcher; some researcher has done work and shown that this works so I will use his/her work”. The work we do for C is consulting and hence there are so many things which work in the principle of prototyping. You collect data from the company, study it, make a hypothesis, and decide whether the results support your data. Now for work like this the probability that someone else has done exactly the same thing is very less because each company is different. And here is the fun part. Company C is happy with us because we are on the right track and am giving them useful insights, but Mr X is not because we don’t have literature to support what we are doing. Cost-benefit analysis is a tool that has been used since ages, asking me to find some thesis paper or literature where cost-benefit analysis has been used is like asking me to give supporting literature to show that 2 + 2 = 4. If some company is spending money on A and wants to see whether the benefits B it gets are commensurate logically implies that some kind of cost benefit analysis needs to be done. And Mr X simply wouldn’t understand. It’s so frustrating. Let’s hope that this person is an exception and not a representative sample.

Now contrast this with the way we study at IIMA. Whenever we use someone else’s work we have to reference it. Even if it is just a few words and there is a strict checking of whether what we write is copied from somewhere. You can borrow ideas, give credit to the person and use it to suit your needs. There is credit given to application of the theory and commonsense logic above all ! Infact, this strictness has somehow ingrained in most of us a quality where none of us would even inadvertently use work directly from the net. We research, we read, we google, we search, then we understand, we digest it, we apply it and then produce the output. So no matter what we do, whether its some case we are solving, some assignment or some project report, unless there is something we put of our own, we don’t feel we have done something worthwhile. Contrast this with the pedantic approach of Mr X. This is not the only example. There are few more cases. Profs insisting that you learn definitions by rote, if a model has x components that you should name the x components in the order in which the original author of the model has mentioned it, in your thesis paper you have to have a bibliography with atleast 15-20 references to well known journals…. Well what do I say, the freedom that the system gives, which I mentioned in my previous post, is more or less nullified by such approach to learning. But as they say, you gain some, you loose some.