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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 competitorsin the expedited small package industry for their on-time delivery and
package tracking services.
Microsoft, the computer software developer, is cited as being innovativeand 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
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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 successfactor 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 individualanalytic 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 provideimmediate 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
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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 Alto-
based 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 thedevelopment 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
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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 perhour, 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.
ConclusionTo 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.com2. Strategic Management Concepts and Cases by Thompson/Strickland.3. www.transtutor.com
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