This blog is a summary of the chapter 'Why standardise anyway?' taken from the book 'A quest for excellence: Guidance for CRE & FM executives implementing a global IWMS'. Would you like to read more? Please click here to order a free copy of Planon’s IWMS implementation guide.
As Sir Sandford Fleming discovered in the nineteenth century with the introduction of increasingly faster steam trains, communication and travel would be difficult, if not impossible, without a standardized global time system. In his century, Sir Sandford introduced a standard time system, and since then, agreeing on standards has become more important than ever.
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Globalization appears to be an irrevocable phenomenon. What this means in a professional context is that a colleague may not always be in the same physical location – he could in fact work on the other side of the world. Meanwhile it’s not only a uniform time system which is important, but also the way in which information is stored and exchanged.
Globalization has created a growing need within organizations for more rigid definitions, Key Performance Indicators, and processes. A flexible organization focuses on its core competences, and asks for help from strategic partners when needed. Worldwide outsourcing of supplementary activities becomes much simpler and less risky if the information in organizations is standardized.
However, local customs, standards and processes are still sometimes an obstacle. The DIN (Deutsches Institut für Normung) is the German Institute for Standardization, and it has conducted research into the economic benefits of standardization in ten industrial sectors. Below is a summary of the five most important advantages:
1. Lower transaction costs
Both internal and external transaction costs are reduced when the same definitions and data models are used within organizations and between business partners. This benefit is apparent in every aspect of the transaction, from setting up the contract to final agreements based on performance.
2. Better availability of, and easy access to, information
Data standardization makes information more accessible to all the parties involved, especially when the same standard is used across the sector, making benchmarking possible. It also promotes transparency.
3. Avoiding any weak links across the chain
Standardization also requires a more general approach to specific situations. By standardizing processes and information, the dependence on individuals, departments or suppliers is reduced. This makes the organization less vulnerable to mistakes by these separate components in the overall chain.
4. Certainty in quality and processes
Organizations have more confidence when their departments and suppliers use recognized standards, because this makes processes and results more transparent, so that they can be compared more easily against those of other market players.
5. Promoting synergetic partnerships
Standards can be regarded by and large as codified knowledge. However, to achieve a standard, best practices need to be generally acknowledged by the sector specialists. Organizations can derive value from this synergy, because a reliable source of knowledge arises which can help them to enhance the maturity level of their organizations, and to make contact with partners more easily.
The first standard time was introduced in England in 1675: Greenwich Mean Time. The last country only joined three centuries later, and a world standard was finally a fact. It’s time to reset the clocks in your organization too!
Director Product Management