INDUSTRY BEST PRACTICES

Manoj S G Senior Lecturer

A Best Practice is a process, technique, or innovative use of resources that has a proven record of success in providing significant improvement in cost, schedule, quality, performance, safety, environment, or other measurable factors which impact the health of an organization. Service and manufacturing firms often evaluate their performance in relation to the performance of industry competitors. The term "benchmarking" is often used to describe this process of comparing practices or strategies to other companies. Benchmarking is a systematic and continuous measurement process: a process of continuously measuring and comparing an organizations business process against business leaders anywhere in the world to gain information which will help the organization to take action to improve its performance. The benchmarking process sometimes helps a firm find documented strategies and tactics employed by highly admired companies. Such practices are often referred to as "best practices." Typically the best practices result in a higher profit for the firm, and these more competitive business practices ensure a firm's survival or limit entry by new competitors. Example: Best Practice of few companies Federal Express is often cited as having best practices among competitors in the expedited small package industry for their on-time delivery and package tracking services. Microsoft, the computer software developer, is cited as being innovative and creative. Maruti Automotive Industry is lauded for their customer service practices. Toyota Toyota Production System

BEST PRACTICE AWARD WINNING COMPANIES

Arthur Anderson sponsors a Best Practices awards program to help businesses learn the innovative practices of small and mid-sized companies from different

parts of the world. Some of the award winning companies and their practices are: THE AMALGAMETED SUGAR COMPANY Amalgamateds business is converting sugar beets into sugar. A key success factor is how much sugar can be extracted from the beets before it is lost to molasses. Since sugar sells for $550 per ton versus $75 per ton for molasses, the incentive to improve sugar yield is high. Amalgamated engineers developed and patented a computer-optimised separator system based on stimulated moving bed chromatography that has enabled the company to recover more than 80% of the sugar ordinarily lost to molasses by-product. Amalgamated also developed a computer technology to perform 1500 individual analytic tests daily at each of its four plants to maximize plant performance. Company representatives also developed software that helped the companys sugar beet growers to set standards and use sophisticated agronomic practices in producing sugar beets. Amalgamateds management believes the companys constant innovation and use of advanced technology has enabled it to become the most efficient sugar beet processor in the world. GREAT PLAINS Great Plains, based in Fargo, South Dakota, is a leading provider of enterprise business management software for mid-sized companies. The company has annual revenues of about $135 million and nearly 1000 employees; it was rated 15th on the 1999 list of the 100 best companies to work for in America. It won awards for best practices in exceeding customer expectations and in motivating and retaining employees. Great Plains management believes superior customer service is a key success factor in the enterprise software business. In 1987, in an effort to provide immediate solutions to customers problems, Great Plains established guaranteed response times to set customer expectations for prompt service and technical support. Although Great Plains customer support teams handle more than 20,000 cases each month (most of them involving how to questions and productivity issues), they have met the companys guaranteed response times more than 99% of the time. In 1998, the company broke its own record by serving more than 250,000 consecutive customer support calls without missing a single guarantee. Among the key employee-oriented practices are an automated performance management process, company-wide and team-based recognition events, stock

ownership opportunities for all employees, on-site services for employees such as dry cleaning, discounts for health clubs and retail stores, flexible work hours, and paid sabbaticals. Theres also a no-layoff policy. Employees have strong feelings of belonging to a family; according to one employee, Work feels a whole lot more like hanging out with your friends than going to work. VARIAN ASSOCIATES In 1997, VSLI Research, Inc, a marketing research company, named Palo Altobased Varian Associates the top company in customer satisfaction among semiconductor manufacturers and suppliers worldwide. How did Varian win so many satisfied customers? In planning and developing some of its most sophisticated spectroscopy products, the company initiated focus groups in North America, Europe and Australia that comprised competitors customer as well as Varians own clients. Varian integrates those customer insights into the development of its new products, thereby making the products easier to use and better suited to customer needs. ROBERT BOSCH The worlds leading manufacturer of electronic automobile components such as antilock brakes, fuel injection systems and airbags, Robert Bosch sets a high priority on creating faultless products. How does the company do it? It creates cross-functional teams of employees who own all manufacturing and distribution processes, overseeing every detail during the production process and along the supply chain. HOLY CROSS HOSPITAL In t period 1991-94, Chicagos Holy Cross Hospital went from being ranked in the bottom 5% of hospitals in the United States to a ranking in the top 5. How? It created nine Commando Teams made up of employees from throughout the hospital to identify and correct any problem its customers experience. One team is responsible solely for identifying barriers to prompt customer service, such as unwarranted wait time in any department. As a rule, in the hospitals imaging department, no patient can be kept waiting for more than ten minutes. CLOUD 9 SHUTTLE Cloud 9 Shuttle, San Diegos largest share ride airport ground transportation company, was created in 1994 out of the ashes of a predecessor company whose dispatchers used magnets on a map to track the location of company vehicles. The predecessor stored customer service information in rarely used file

folders and put customers through a lengthy procedure when they called to make reservations. The new owners had a good vision of where they wanted to take the company, recognizing that service standards had to be increased and costs lowered. But resources were limited. They opted to use technology in very pragmatic ways. One innovation was to use a cellular telephone technology called cellular triangularization that allows reservationists and dispatchers to see the location of any Cloud 9 vehicle in San Diego County on a computer screen around the clock; the system identifies each vehicles speed and direction as well as the street and nearest cross street. New information systems were installed that permitted the integration of reservations, dispatch and cashiering functions, both to provide better customer service and to provide key operating data to management passengers per hour, revenue per hour per driver, passengers per gallon of fuel, and so on. This information is used to control costs and schedule drivers driver hours were reduced by 11% while their income rose 7%. The systems and practices coupled with employee empowerment, tranining, and a progressive company culture have allowed Cloud 9 to deploy a flet of more than 100 vehicles (the predecessor company could only handle 60 vehicles with its operating practices), triple revenues and operate profitably.

Conclusion
To get the most from benchmarking and best practices, for enhancing organisational competence in executing strategy, managers have to start with a clear fix on the indicators of successful strategy execution. Examples of such performance indicators include minimal manufacturing defects, on-time delivery percentages, low overall costs relative to rivals, few customer complaints and survey data indicating high percentage of revenues coming from recently introduced products.

Reference
1. www.arthurandersen.com 2. Strategic Management Concepts and Cases by Thompson/Strickland. 3. www.transtutor.com