Learning from the Other Guy: Benchmarking and Best Practices

How does your company respond to competitive pressure and the need for change? Does your company utilize standards and documented best practices to respond to changes with minimum impact to operations, or does every change invoke panic? In today's fast-paced business environment, how a company responds to outside influences can mean corporate life or death.

01/01/2003


KEY WORDS

 

  • Information systems

  • Standards and regulations

  • Business

  • Quality assurance

  • Process and advanced control

 


Click here to read the exclusive online extra companion piece: ''Remember People when Benchmarking and Applying Best Practices''

How does your company respond to competitive pressure and the need for change? Does your company utilize standards and documented best practices to respond to changes with minimum impact to operations, or does every change invoke panic?

In today's fast-paced business environment, how a company responds to outside influences can mean corporate life or death.

Consider the toy or fashion industries where product lifecycle is often measured in weeks. The same can be true in parts of the specialty chemicals businesses, where there are increasing requirements for ''designer chemicals,'' many of which support short lifecycle consumer products.

The companies that survive in this marketplace can make rapid changes with minimum impact and do so time and again.

Use of standards and best practices provides a good basis for handling rapid change, not as a one-time solution, but as part of the company's culture.

At Millennium Specialty Chemicals (Jacksonville, FL), we found a rapidly changing market and the entrance of new and more responsive competition required us to become more competitive.

Unsure where Millennium stood in respect to its competitors, we decided to benchmark ourselves against our competition and against recognized ''best-in-class'' companies. We learned that a key area for success would be to focus on a strategic, pay-as-you-go use of automation.

Millennium conducted initial benchmarking studies in late 1999 and has continued to use benchmarking and best practices to develop, update, and achieve its automation strategic vision.


Participation in organizations or consortiums allows a company to assess how effective its use of a best practice is against other companies applying the same best practice.

Fill key gaps

Benchmarking helped identify and fill key gaps in our automation strategy but also it helped us learn from those who previously had ''traveled'' this automation path.

Like many small companies, Millennium cannot afford to make many mistakes, especially in the fast-paced and changing high-tech area of modern process control systems and related instrumentation.

To minimize risk, Millennium applied a methodology provided by Breakthrough Process Consulting (Wimborne, UK).

Breakthrough's methodology applies proven standards and best practices from a number of successful sites within a cross section of process industries. Combined with a benchmarking procedure designed to identify gaps in automation technology and infrastructure, the methodology produces a focused improvement plan that has helped Millennium reduce costs and focus investments to best deliver value.

The standards and best practices Millennium has applied aren't ''rocket science,'' rather they are time-proven practices adapted to fit Millennium's business plan.

Identify standards

Standards come in two flavors, mandatory and voluntary, and vary according to such factors as industry, region, and/or application.

Mandatory standards are backed by legislation and penalties for non-compliance, and almost always include a safety consideration element.

It seems the more ''civilized'' the population, the greater the number of mandatory standards we encounter-drive on only one side of the road, obey speed limits, do not cross on red lights, etc.

In process industries, mandatory standards come from government organizations, such as the Occupational Safety and Health Agency, Food and Drug Administration, and the Environmental Protection Agency.

Voluntary standards are, as the term implies, voluntary in their use-VHS videotapes, CD sizes, etc.

In the world of control and instrumentation, voluntary standards include industry, company, and/or site specific standards. For example, local site, and sometimes company standards would include graphic designs and tag naming schemes. Voluntary industry standards also include many ISA standards, such as the symbols used to develop piping and instrumentation diagrams.


A company's overall effectiveness doesn't hinge on the use of a single best practice,but on the benefits gained applying several best practices.

Define best practices, codes

Practices are processes that have evolved into efficient ways of doing things. In fact, many standards are really best practices, ISA's highly successful S88 batch definition standard and the still emerging S95 enterprise information exchange standard are really examples of good practices.

For example, ISA S88 batch standard documents a uniform methodology for defining and talking about batch processes. Despite an almost universal acceptance of ISA S88 by control system vendors, no two-vendor implementations are exactly the same. Thus, the ISA S88 standard actually represents a very good ''industry best practice,'' not a mandatory standard.

Other best practices commonly found throughout industry include ISO and Six Sigma processes; both force adoption of applying best practices; neither is applied exactly the same across an industry or company.

Many sites avoid using the term ''best practices,'' preferring instead to use ''good practice'' as a way of being more realistic in thinking that what makes sense today does not prevent them from doing something better tomorrow.

A best practice is a generally accepted best way of doing something, for instance, setting minimum education requirements for employment, certifying operator proficiency at a site, or ensuring all control systems are at a common revision level could be regarded as best practices.

In the end, what makes a best or good practice useful is its ability to be adapted and tweaked to help improve a particular situation.

Codes are practices with some legal ramification. They generally set minimum expectations and requirements. You don't have to follow a code, but if you don't and a catastrophe occurs, you (or your company) could be held liable. The National Electrical Code is a prime example.

Adapt what works

By their very nature, humans constantly attempt to 'improve' a standard.

Herein lies the dilemma faced by many companies, ''Will a company or site gain more by adopting and adapting the efficiencies of a standard approach or by continually 'improving' the individual work practices already in place?''

At Millennium, we've learned that adapting best practices already proven in use by other companies works well.

Of course, Millennium continues to seek ''improvements,'' but these are being added as controlled revisions to the standards and practices, then propagated back into those instances already in use.

Millennium chose to focus on automation as part of its strategic vision because it impacts everything Millennium does.

Apply this to automation

We began by adopting and measuring ourselves against a set of best practices-with some surprising results.

The next step was to identify gaps between best-in-class companies and ourselves, followed by development of a detailed plan on how to address the deficiencies. Some issues Millennium faced were human-factor-related impacts to the organization, such as rolling out the plan too quickly or too slowly and, in some cases, the ability of areas of Millennium to ''make the leap.'' Other identified issues involved addressing too many best practice groups at one time. When the impact is positive, a common trait is to want to address lots of issues at once. However, recognizing and managing an organization's capacity to embrace change is key to its long-term success.

Based on our experience, it's best to address one set of issues at a time and gain acceptance of the changes before introducing a new set of issues.

We found the pace of change accelerates as successes begin making positive impact. That's the approach Millennium has continued to take-concentrating on automation, and related human-factors issues, and keeping a 'weather eye' on other issues, such as engineering, project management, maintenance, and reliability.

Locate best practices

One way to locate best practices is to hire an outside company with access to proven best practices and a successful follow on methodology in applying best practices. Having only one or the other is likely to lead to disappointing results.


Continuous improvement is the goal of every organization. However, unless consistent measures are applied, evaluated, and compared to peer companies over time, incremental improvements may not be sufficient to overcome competitor gains.

Companies offering both entities include Accenture (Philadelphia, PA) for business best practices and Fluor (Aliso Viejo, CA), Foster Wheeler (Clinton, NJ), and Bechtel (San Francisco, CA) for engineering and project management best practices.

Also, an Internet search will yield a great number of companies touting expertise in the application of best practices. Caution: choose wisely!

Another way is to join a benchmarking club, organization, or community where a number of companies with a common interest have agreed to share information to obtain access to and/or help develop practices for the good of the entire membership.

Joining likely involves a fee, but members openly share best practices and the general feeling is that payment adds value to the result. Paid membership also permits the group to ''employ'' outside facilitators and/or managers.

The Abnormal Situation Management consortium is an example of a joint industry group with objectives of developing, finding, and sharing best practices that prevent abnormal situations and/or enable a site to safely deal with abnormal situations when they occur.

Another is the Current Good Automation Practices web site focused on the control and instrumentation community, offering members the opportunity to participate in online benchmarking surveys, forums, and the sharing and development of best practices.

A third way to obtain best practices is through professional society affiliations such as the American Society of Mechanical Engineers , New York, NY), American Chemical Institute , New York, NY), International Society of Pharmaceutical Engineers , Tampa, FL), Instrumentation, Systems, and Automation Society , Research Triangle Park, NC), and World Batch Forum , Phoenix, AZ). Each organization offers interested parties opportunities for contributing toward the development of best practices.

Getting stared

To be successful, a ''best practice'' needs to be of value to the organization, something that could provide measurable results if properly applied and used. It needs to be a key success factor in the operation of the business, such as the adoption of operator training and certification using simulator ''what if'' scenarios and an outside testing body.

Regulation requirements often ''trigger'' best practice development activities. For example, the chemical industry is currently working through the implications of the International Electrotechnical Commission's IEC 61508 safety instrumented systems standard aimed at ensuring the highest safety for electronic, electrical, and programmable safety systems.

Another best practice possibility is an outgrowth of the FDA's 21CFR Part 11 electronic signatures and records requirement. Already receiving significant attention from FDA regulated industries, the use of electronic signatures and records offers improvement opportunities to other industries, but requires development of industry focused electronic signatures and records best practices.

To get started, begin by analyzing your company's and/or site's situation with respect to sister sites and others in your industry. This benchmarking can be accomplished using an outside company or internal resources.

Many outside companies provide this service, however most specialize in an industry sector. A good example is Solomon Associates (Dallas, TX). Solomon conducts benchmarking and best practice analysis for several industries, including refining and petrochemical. Solomon studies indicate where a site is with respect to its peers on technology, staffing, training, and production.

When conducted honestly, the result of self-examination clearly reveals where issues and improvement opportunities exist.

Armed with the opportunities, prioritize and develop detailed plans to address each deficiency. Among key elements to include in the strategic plan is establishing measurements for tracking improvement and identifying applicable best practices to be used.

Implementation begins with a ''change management'' team knowledgeable in introducing new processes designed to address identified deficiencies.

The actual best practice can be obtained from an outside company, your parent company may have some, an Internet search may be fruitful, and/or from an appropriate organization, society, or consortium. However, remember there are many claims out there. Best practices must have been proven in use. Trying to separate fact from fiction can be tricky and risky. Millennium chose to use an outside company with proven, well-accepted practices and a companion implementation methodology.

Where gaps likely exist

Frequently the tendency is to focus analysis and benchmarking on technology areas, while ignoring people-related areas.

Three (or more) times as often, gaps and deficiencies are found in ''the way we do things,'' rather than in the technology used, according to Millennium's experience and confirmed by consultants from Breakthrough Process Consulting.

Also, it's common to find the root cause of deficiencies of one area actually exist in an entirely different area. For example, hiring practices or inconsistent establishment and enforcement of job skill-sets may be identified as the root cause for deficiencies in operator training and certification.

Where gaps in ''the way we do things'' most frequently exist include:

  • People issues-evaluation, training, certification, retraining, empowerment, communication between management and workforce, accountability;

  • Management practices-leadership, team building, ability and tools to do the job; and

  • Project management-approach, roles and responsibilities, control, conflict resolution.

Areas where technology best practices often produce positive results include:

  • Reducing the proliferation of different system types and/or revisions;

  • Increased use of equipment purchasing standards;

  • Improved integration of automation, information, and instrumentation systems; and

  • Enhanced maintenance programs.

The benefits to a company from benchmarking and the aggressive use of best practices isn't fiction, it's actually a way to leapfrog competitors. The trick is finding the most appropriate best practices to fill the gaps

-Comments? E-mail dharrold@reedbusiness.com






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