Benchmarking Code of Conduct

1. Keep it legal.
2. Be willing to give any information you get.
3. Respect confidentiality.
4. Keep the information internal.
5. Use benchmarking contacts.
6. Don’t refer without permission.
7. Be prepared from the start.
8. Understand your expectations.
9. Act in accordance with your expectations.
10. Be honest.
11. Follow through with commitments.

While this list of suggestions for the code of conduct may seem to be common sense, it is surprising the number of companies that fail to apply them. This results in everything from minor disagreements between individuals to major legal battles. Recognizing that the other companies are your partners and treating them as such is key to successful benchmarking relationships.

Traps to Benchmarking

When benchmarking is used properly, it can make a major contribution to the continuous improvement process. However, it can also be completely devastating to a company’s competitive position when used improperly. Some of the improper uses of benchmarking include:

1. Using benchmarking data as a performance goal. When companies benchmark their core competencies, they can easily fall into the trap of thinking a benchmark should be a performance indicator. For example, they focus all of their efforts on cutting costs to reach a certain financial indicator, losing focus on the real goal.

A company receives greater benefits when the tools and techniques used by a partner to achieve a level of performance are understood. This understanding allows the company not only to reach a certain number, but also to develop a vision of how to achieve an even more advanced goal.

By focusing on reaching a certain number, some companies may have changed their organizations negatively (e.g., by downsizing or cutting expenses). However, they may have also removed the infrastructure (people or information systems) and soon find they are not able to sustain or improve the benchmark. In such cases, benchmarking becomes a curse.

2. Premature benchmarking. When a company attempts to benchmark before the organization is ready, it may not have the data to compare with its partners. Therefore, someone makes a “guesstimate” that does the company no good.

The process of collecting data gives an organization an understanding of its core competencies and how it currently functions. Premature benchmarking will lead back to the first trap--just wanting to reach a number. Companies that step into this trap become “industrial tourists.” They go to plants and see interesting things, but don’t have enough of an understanding to apply what they see to their own businesses. The end results, then, are reports that sit on shelves and never contribute to improved business processes.

3. Copycat benchmarking. Imitation benchmarking occurs when a company visits its partners and, rather than learning how the partners changed their businesses, concentrates on how to copy the partners’ current activities. This practice may be detrimental to a company because it may not have the same business drivers as its benchmarking partners. Also, there may be major constraints to implementing the partner’s processes. Such constraints might include incompatible operations (7 days @ 24 hr/day versus 5 days @ 12 hr/day), different skill levels of the work force, differences in union agreements, different organizational structures, and different market conditions.

4. Unethical benchmarking. Sometimes a company will agree to benchmark with a competitor and then try to uncover proprietary information while on the site visit or by use of the questionnaire. Clearly, this kind of behavior will lead to problems between the companies and virtually ruin any chance of conducting a successful benchmarking exercise at a later date.

A second type of unethical benchmarking entails referring to or using the benchmarking partners’ names or data in public without receiving prior permission. This, too, will damage any chance for ongoing benchmarking between the companies. Even worse, the bad experience may prevent management from ever commissioning further benchmarking exercises

with other partners.

Other Pitfalls

Not every company is ready for benchmarking. However, companies

should not avoid benchmarking just because of a previous bad experience

or because they have the attitude of “We are already the best” or “We are

different than everyone else.” Companies in which responsible individuals

have such a mindset will have little chance of improving.

Benchmarking is valuable because trying to reinvent the wheel is an expensive

way to try to make improvements. Once a company has the proper

view of the benchmarking process, and disciplined guidelines are established

and followed, desired improvements should follow. However, if the

company does not benchmark for the right reasons, benchmarking efforts

will become a curse.

Procedural Review

Benchmarking opportunities are uncovered when a company conducts an analysis of its current policies and practices. Benefits are gained by following a disciplined process, composed of ten steps:

1. Conduct an internal audit of a process or processes.

a. Education of key personnel in benchmarking processes is crucial at this point. They must fully understand and support the process.

2. Highlight potential areas for improvement.

a. This requires understanding the cost of benchmarking compared to the financial benefits that will be derived. This should be presented in a return-on-investment business case.

3. Do research to find three or four companies with superior processes in the areas identified for improvement.

4. Contact those companies and obtain their cooperation for bench marking.

5. Develop a “pre-visit” questionnaire highlighting the identified areas for improvement. (See step 2.)

a. This step requires a carefully planned approach to benchmarking. You then will need the discipline to adhere to the plan.

6. Perform the site visits to your three or four partners. (See step 3)

a. An interim report should be prepared after each visit and presented to the executive sponsor.

7. Perform a gap analysis on the data gathered compared to your company’s current performance.

8. Develop a plan for implementing the improvements.

a. The plan should include the changes required, personnel involved, and the timeline

9. Facilitate the improvement plan.

a. One or more members of the benchmarking project team should oversee the implementation of the plan to insure the changes are properly implemented.

10. Start the benchmarking process over again. Benchmarking helps companies find the opportunities for improvement that will give them a competitive advantage in their marketplaces. However, the real benefits from benchmarking do not occur until the findings from the benchmarking project are implemented and improvements are realized.

Final Points

1. It is necessary to explore the tangible and intangible factors that combine to produce a superior performance and involve those people most directly concerned in the activity being examined.

2. Benchmarks are not the end-all. A benchmark performance does not remain a standard for long. Continuous improvement must be the goal.

After having examined the benchmarking process, it is necessary to clearly understand the process being benchmarked. Chapters 3 though 11 will examine all aspects of the maintenance management function. These chapters will further highlight the methodology behind the survey that was included in Chapter 1. Chapter 12 will then present some current industry benchmarks for maintenance. With the understanding of both the benchmarking and maintenance processes, any company should be able to conduct a successful benchmarking project.

Copyright 2004, Industrial Press, Inc., New York, NY