Benchmarking has become a "top management issue" as it provides objectively developed information that helps executives to know "where they stand" vis-a-vis competitors or other leading companies.

Most companies want to be a step higher than where they are - and always fear that they may actually be a step lower. Benchmarking can be the vehicle to better understand differences in performance, 'Best Practices', and trends as well as to convince and commit management to action. Hence, to help understand this topic better, ELCINA organised a one–day workshop titled `Benchmarking' for the electronics industry. The workshop involved a good mix of people from the industry and the bureaucracy.

In his keynote address, Vinay Deshpande, Chairman & CEO, Encore Software Limited and president, MAIT, spoke on “why he considers benchmarking a must”. Benchmarking is a process of determining who is the best, who sets the standards and what those standards are, he defined. “Benchmarking is the tool to success,”  he said. According to Deshpande, to achieve success, we should set the benchmark at productivity, persistence and sheer presence.

Talking about the change in the definition and application of benchmarking over the years, he said, “Manufacturing was the only area where benchmarking practices were applied earlier, but now it is a management tool applied just anywhere like CRM, branding, in government administration etc to achieve overall success.”

“Our aim should be to understand and learn the Best Practices of different countries like Japan, US, China & Taiwan and then try to implement those sets of practices which are suitable for our conditions,” he said. Citing Taiwan's instance, he said the manufacturer there does not pay taxes and duties till the proceeds of the sale gets credited to his accounts. This enables a good monetary position for the company, he observed.

Deshpande said the industry commits what he thinks is a big mistake, when they interpret benchmarking as a tool to benchmark against the competitor. “What if the competitor is worse than you?” he questioned. Hence, benchmarking ideally should be undertaken with someone who is known in the industry for his/her Best Processes, he said. Deshpande ended his address with a thought: “Goals for success should always be seen greater as to what you have already attained.”

Sanjay Handu, Senior Manager, Tyco Electronics, then declared the ELCINA Benchmarking Survey results. In total, 40 companies responded to the questionnaire send out. The findings of the survey are: -

• Most of the 40 companies are `Limited' companies with turnover exceeding Rs 50 crore
• 80 per cent of those surveyed already have ISO 9000 certification
• Exports form 5-10 per cent of the total turnover for most companies
• Rs 10–25 Lakh are spent on maintaining quality
• Customer satisfaction levels are around 90 per cent.
• The companies, on an average, carry a 60-day inventory
• The respondents have achieved 10–12 per cent Return on Investment
• The response time to customer complaints or RFQ (request for quotation) is 2 days
• The lead time for order execution is 21-30 days
• While lead time for export clearances stand at more than 3 days, lead time for import clearances take anywhere between 2 to 3 days
• Delivery Conformance to commitment and to request are as high as 90 per cent
• At an attrition rate of 1 to 5 per cent, the time spent on training employees is 3 – 7 days
• On a productivity grade of Rs 2500, the value addition per employee is around Rs 1000 – 1500

Case studies on 'Corporate Branding' and 'Customer satisfaction & CRM' were also presented. Speaking on the topic of Corporate Branding, Anand Narasimha, (GM, Corporate Branding) BPL Limited, discussed the key five brand marketing mantras depicting the shift in strategy from the conventional way to the new age way.

• Product proposition-led to Brand vision-led
• Positioning/ Differentiation based on Experience/ Involvement-based
• Constant Repetition to Constant Surprise
• Focus on Transactions to Building relationships
• One-way relationship to an Interactive session

In his speech, Vasudev Rao, Branch Head, Regional Collection Centre, Citibank said, “We all are in the business of creating value. How we deliver it is the question to be answered.” Benchmarking in CRM with the major players who have been able to retain customers and increase the satisfaction level are the ones to be studied. In CRM, the important factors are the ability of a company to have a data bank of its customers behavior, purchase patterns etc and the easy recoverability of the same for making a logical interpretation of the same. This calls for effective data warehousing and data mining to manage and keep record of customer behavior that can be utilised for customised mailers, to ascertain customer value and/or one-to-one contact.

In a panel discussion on 'Benchmarking – does it deliver its promise?', dignitaries from the industry presented their views on the topic. Speaking first, Venkat Sheshan, Business Head, Philips Semiconductors, said, “Benchmarking leads to continuous improvement, but it has to be honestly undertaken.” He believes that benchmarking in today's context has to be more on soft issues like CRM and branding and customer interaction, while keeping focus on hard issues like production and manufacturing too.

According to Harikrishnan, Manager – QA, C – MAC Centum, benchmarking is a common sense proposition which starts from the time when we are in school to the time when we enter business. It involves asking a lot many questions to ourselves. For this, he believes that identification of correct parameters to benchmark upon are critical for the whole process to be a success. For example, in a heavy process industry, one can benchmark on the equipments used in the production line.

MS Reddy, Manager, Planning & Logistics of AT&S, was of the same opinion as of Harikrishnan. He added that apart from benchmarking with outside environment, one should also benchmark internally i.e. benchmark even the departments within the organisation.

Nagarjuna of Wipro ePeripherals took the example of North West Airlines which benchmarked its process with pit stop of Formula - I race to reduce the cycle time. Another example he cited was that of Dell which benchmarked with a daily vegetable grocery shop for reducing the cycle time. The point he was trying to make was that for benchmarking to improve systems and process, it is not necessary to compete with other companies in same field; one can take up best processes from any aspect of life.

Later after the panel discussion, Vivek Kulkarni, Secretary, IT, Government of Karnataka, informed the gathering about the strengths of Karnataka which can be leveraged by industry. “As the status of the industry is currently shifting from manufacturing to a focus on IT and IT-enabled services, Karnataka is the best location in India,” he said. Informing the gathering, he said, “Out of 26 companies classified under SEI CMM Level 5, 20 are in India of which, 13 are in Bangalore.”

Knowledge-based services provide endless opportunities. For example, in the medical transcription industry, the rates used to be 12 cents to a line; now with the entry of so many players, it has gone down to 3 cents a line. The growing transcription business has thrown open a number of privacy issues. Improper marketing in terms of not-well-organised offices across the continents has led to equipments worth Rs 350 crore lying idle. According to Kulkarni, India should benchmark itself with China’s Free Export Processing zone. Investment should be liberalised first and then the trade should be thrown open, followed by industry barriers. He invited knowledge-based companies to setup free trade processing zone in or near Bangalore.

'Benchmarking our Infrastructure, Procedures and Policies' was the topic of another panel discussion wherein speakers from the government departments spoke out their views. R C Chandra, Chief Commissioner – Customs & Excise, Karnataka commented that Central Excise is the biggest revenue earner but is heavily dependent on Indirect taxes for its revenues. According to him, this practice is very abnormal when compared with other countries.

BV Naidu, Director, STPI, commended the Indian government for the good and industry-friendly policies. In order to make STPI the friendliest organisation, Naidu said, “We didn’t carry any government legacy into our system, bureaucracy was removed and each and every step in the ladder was made accountable for its actions. The systems we have implemented have not been defined but we have incorporated it at our own initiative.” His idea is to make STPI the role model.

Samir Inamdar, Managing Director, Tyco Electronics, too concurred that transparency and accountability have to be brought into the government machinery. He feels that in the top level of bureaucracy, a paradigm change has already come in, but the same has to happen in the lower rung too to make it a success.

G Gurucharan, Commissioner for Industrial Development, Karnataka, firmly believes that the principle on which the Best Practices are driven are core competencies and to do what one is best at. It also involves a mindset driven by integrity, ethical practices and transparency. Benchmarking Karnataka with other states, Gurucharan said, "We have been an average state." He feels that there are a lot of opportunities in the areas of Garment, Textiles, Electronics & Telecommunications, Light Engg, Auto components and Food processing. This has to be tapped to the fullest to make Karnataka really progressive. On the policy front, we have to benchmark ourselves. In the formulation stage, policy inputs from industry and market have to be invited, which currently are minimal hence leading to a very different policy announcement from what exactly is desired by the market. He believes that on the front of policy implementation, The private sector should be the engine of growth and implementation. He ended the discussion with a very valid question “What about benchmarking in corporate governance?”  Probably a topic for another brainstorming session.