Part III Other types of audit
D. Adebanjo. Leatherhead Food Research Association
9.6 Analysis and improvement
The analysis and improvement action stages of the benchmarking process focus on the internal exploitation of information and data from the external visit. The scope of this book implies that none of these issues can be fully described here;
however, the most important attributes will be discussed.
9.6.1 Gap analysis
The benchmarking team requires tools both to analyse data and to identify the root causes for the ‘gap’. In depicting the gap in performance, it is also important to consider the rate of improvement.
Some of the tools that can be used for the presentation of data include bar charts, histograms, scatter diagrams, pie charts, Pareto diagrams and maturity indexes. Tools that may be used for root cause analysis include flowcharts, fishbone diagrams, force-field diagrams, SWOT analysis, control charts, brainstorming, quality function deployment and affinity diagrams.
The differential in performance between the company and its benchmarking partner may be classified in one of the following ways:
• Negative gap – this implies that the partner’s practices and performance are superior and a change of internal practices will be required for superior performance to be attained.
• Parity gap – the two organisations have similar levels of performance even if methods differ slightly. Effort should be made to ensure that the company does not slip but strives for a better rate of improvement.
• Positive gap – the company’s performance is superior to the partner’s. The focus should be on maintaining or improving performance while also searching for new benchmarking partners who may add more value.
To analyse the differences between the two organisations fully, it may be necessary to take many measures and put these measures in the context of any differences between the organisations’ operations. The ‘gap’ or differences between process performance can then be described quantitatively, qualitatively, or using a combination of the two methods. For example, a benchmarking visit may reveal a difference in management style and attitudes and, consequently, a higher level of employee involvement and motivation. Such a qualitative gap can be verified/quantified by examining the levels of staff absenteeism, sickness, efficiency, etc.
In an effort to benchmark its supply chain operations, Rank Xerox identified leaders in integrated supply chain management (including IBM, Hewlett-Packard, Apple and Siemens) as potential partners for benchmarking. One of the important findings from the survey was the benefits of changing from a forecast-led shipping and stockpiling of warehouses to a customer order-led shipping of products. This meant that orders would be delivered straight to the customer from a central warehouse rather than from stockpiled warehouses in different locations.
9.6.2 Detailing best practice and preparing recommendations
Following from the analysis, the team should detail the best practice ideas and methods identified from the visit and subsequent analysis. Such detail may include the use of process maps. These practices should then be matched with the performance gaps determined and subsequently viewed against the background of the organisation’s internal practices.
The team then needs to finalise its recommendations on the benchmarking exercise. This may include a comparison of both companies and the reasons for performance differential. Where possible, priority areas for change may be identified as well as a quantification of the possible end point after change. The team may also use the experiences of the benchmarking partner to suggest the resources needed and time that may be allowed for change.
Finally, the recommendations should be presented to the management team (or the sponsor of the benchmarking study). The team should ensure that management fully understands the reasons for change and the implications that change would have for the company’s people, processes and performance.
9.6.3 Developing and implementing action plans
Management may wish to prioritise the possible changes that may be made to the organisation. Tools that may be useful in doing this include a cost/benefit
analysis. Once priorities have been determined, responsibility for change management needs to be allocated. Some of the options include line management, project team and ‘process champion’ (especially for cross-functional development) implementation.
The party charged with implementing change must have active commitment and a strong degree of ownership. It is also important to have good process and change management skills as well as attention to detail. The implementation party needs to consider the following.
Plans and goal setting
From the outset, the goals to be attained should be set and the related measures defined. Goals should be bold and ambitious but also flexible enough to allow for adjustment if a change in circumstances occurs. Taking a look at best practice organisations or the benchmarking partner gives an insight into realistically achievable goals.
In formulating the set of actions that constitute the improvement or change plan, it is also important to determine the skills that would be needed and match these against what is currently available within the organisation. An extension of such resource planning is the specification of the financial, opportunity and time costs required to implement change. Other guidelines for improvement and change action planning include:
• Maintain a balance between short- and long-term goals.
• Divide the plan into manageable chunks.
• Specify individual action plans for people directly involved in imple-mentation.
• Determine a monitoring system.
• Have contingency plans.
Communicating plans
The implementation team needs to communicate its findings and plans to the wider organisation. The likelihood is that not everyone within the organisation will be aware of their work. However, commitment from the whole organisation will be needed if the change programme is to succeed, especially if the organisation aims to make benchmarking a part of its overall development strategy.
Effective communication will also help reduce resistance to change as there will be a better understanding of the need for improvement, the aspired end point and how the changes will affect processes and their owners. The implementation team might also wish to communicate the following:
• Why the organisation undertook benchmarking and the people involved.
• The timeframe for change and the processes to be changed.
• The benefits of change to the organisation as well as to individuals.
• Current accomplishments and the milestones to be attained.