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Benchmarking: international clearinghouse plays matchmaker for companies that want to improve.

The United States is the world leader in terms of gross domestic product. About $46,000 in products is produced per employee in the United States each year.

That's the good news.

The bad news is that if current trends continue, seven countries will surpass the United States by the year 2010.

France will lead the world, according to information compiled by the American Productivity and Quality Center, a non-profit, Houston-based organization founded in 1977 to improve the quality of U.S. products and the competitiveness of U.S. companies.

Japan will be third and the United States will have dropped to eighth, according to the center's predictions.

APQC is determined to alter America's fate.

In February, the center launched the International Benchmarking Clearinghouse. IBC is designed to help companies learn from other companies.

"We are on the verge of an explosion," says Bill Krenek, IBC's technology coordinator. "It can destroy the U.S. economy or involve quantum leaps in product quality improvement."

Krenek says benchmarking provides the "quantum leaps" needed to keep the United States on top.

APQC defines benchmarking as "a process in which companies target key improvement areas within their firms, identify and study best practices by others in these areas and implement new processes and systems to enhance their productivity and quality."

Benchmarking is an essential part of a total quality management program.

Although the practice of total quality management has gained momentum in recent years, many companies have struggled with organizing benchmarking projects in a way that will produce tangible results.

IBC provides training, networking assistance and data so companies can outline their plans of action.

"We act as a matchmaker for companies so they can essentially go on a date and learn about each other," says Bob Dale, IBC's manager.

To date, IBC has attracted 68 companies. The membership list includes Hewlett-Packard Co., McDonnell Douglas Corp., AT&T and International Business Machines Corp.

IBC In Arkansas

Krenek and Dale visited Arkansas this spring to promote the clearinghouse.

Representatives from companies across the state attended a breakfast seminar. A small conference room in downtown Little Rock's Excelsior Hotel was filled with business owners and managers eager to learn how their companies could benefit from benchmarking.

"The clearinghouse doesn't spoon-feed you the benchmarking process," Dale says. "Benchmarking is not easy. A large part of it involves scrutinizing your own company's processes ... Don't get the idea that benchmarking is just organized tourism."

According to Dale, there are five common steps in the benchmarking process. They are:

* Preparing to benchmark. Study and understand your company's processes. Then identify the process that would most benefit from benchmarking.

"Look at what will make a difference in the company," Krenek says. "Single out individual processes within large areas that will benefit and cause a trickle-down effect, keeping in mind that customer satisfaction is your bottom line."

* Conducting research. Find out which companies have the best processes in the area you have chosen. Dale says benchmarking with companies in other industries and countries is important. Within an industry, certain processes become fairly standard. By rubbing elbows with outside industries, stagnation can be avoided.

In one case, an ammunitions manufacturer in need of a better process for polishing its bullets benchmarked with a lipstick manufacturer. The company polished its lipstick cases by tumbling them with nut shells. The ammunition company adopted the process, producing shinier bullets and increasing customer satisfaction.

* Selecting who to benchmark. Establish a relationship with a benchmarking partner and plan to collect and share information.

"Benchmarking involves both giving and taking," Krenek says.

In most cases, both companies gain from the experience. The IBC's code of conduct, which every member must sign, ensures confidentiality.

* Collecting and sharing information. Conduct surveys and visit the partner's site. By knowing which process you plan to study, time and money can be saved.

* Analyzing, adapting and improving. Compare data, implement new or improved processes and monitor their progress. True benchmarking involves the actual implementation of studied processes. "Quantum leaps" occur at this stage.

"After a company has benchmarked for a while, it will actually create and tailor its own steps," Krenek says.

Key To Competitiveness

It sometimes is difficult to convince company officials to benchmark, according to Krenek.

"When a company is doing well financially, it has a tendency to resist change and not worry about what the competition is doing," he says. "Complacency is an organizational poison."

"The world of business is constantly changing," Dale says. "What is effective today won't be in a decade. Benchmarking is the way in which you can speed up processes. That, in turn, speeds up product development and helps you compete."

Dale points to a case involving the Xerox Corp. The company benchmarked its design-to-market cycle time with a Japanese corporation. Xerox found the Japanese company had a turnaround time of two years compared with its own cycle of six years.

"It wasn't a case of should they change, it was a case of they had to change in order to survive," Dale says.

Arkansas Power & Light Co. and AT&T, co-sponsors of the Little Rock seminar, are active in benchmarking.

AP&L has been conducting a benchmarking study through its parent company, Entergy Corp., in cooperation with eight other utilities.

AT&T was a member of IBC's design steering committee, a group of 87 companies that organized the format for clearinghouse operations.

"Small companies and large companies alike can benefit tremendously from benchmarking," Dale says. "These practices will be essential to Arkansas companies that want to thrive in coming years."

A one-time fee to join IBC is based on a company's size. Fees range from $3,000 to $12,000. Members also pay an annual fee for the service package they choose.

"This stuff is really alive, it's really real and it really works," Krenek says of the benchmarking concept. "Companies wouldn't put this kind of money into benchmarking if it were just a flavor of the month. It's here to stay."

Common Steps in Benchmarking Models

Preparing To Benchmark

Decide What to Benchmark Form Team Understand Your Process

Conducting Research

Collect Information "Who's Best?" "What to Ask?"

Selecting Who to Benchmark

Establish Relationship Plan to Collect and Share Information

Collecting and Sharing Information

Surveys Site Visits Third Party

Analyzing, Adapting and Improving

Compare Data Plan to Surpass Implement and Monitor

Continuous Improvement
COPYRIGHT 1992 Journal Publishing, Inc.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:American Productivity and Quality Center launches the International Benchmarking Clearinghouse
Author:Harper, Kim
Publication:Arkansas Business
Date:Jul 6, 1992
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