Total Quality Management

Week # 1

Benchmarking

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 Benchmarking
 Benchmarking is the process of continually searching for the best
methods, practices and processes, and either adopting or adapting
their good features and implementing them to become the “best of
the best.”
 Measuring your performance against that of the best-in-class
companies, determining how the best-in-class achieve those
performance levels, and using the information as a basis for your own
company’s targets, strategies, and implementation.
• Compare performance of an existing process against other
companies’ best-in-class practices
• Determine how those companies achieve their performance
levels
• Improve internal performance levels
Total Quality Management - Spring 2010 - IUG 2
Why Benchmark?
 To Obtain an External Perspective of What Is Possible
 To Assist in Setting Strategic Targets
 To Promote Improvements in Performance
 To Establish a Competitive Edge
 To Enhance Customer Satisfaction
 To Reduce Costs
 To Improve Employee Morale
 To Achieve Quality Awards
 To Survive

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Benchmarking in the Context of TQM

TQM Key principles include:

 Comparisons with best practice
 A Strong emphasis on meeting the needs of
the customer (internal and external)
 The importance of efficient, effective
business processes
 The need for continuous improvement
 Enhances a TQM program

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 Benchmarking Methodology
Best Practice
Overlap Competitive
• Industry leaders
• Top performers with
similar operating
characteristics

Functional Internal
• Top performers • Top performers
regardless of industry within company
• Aggressive innovators • Top facilities
utilizing new within company
technology

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 Benchmarking Framework

Change

Measurement Review

Benchmarking Framework

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Benchmarking processes or activities, which do not support any of these
statements, should be disregarded, as the benefits will be limited compared to
those that could be achieved by deploying resources to other areas.

Mission

Benchmarking
Critical
Processes

Critical Success
Factors

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Types of Benchmarking

 Comparison: (Partner Selection)

 Internal – Best in Firm
 Competitive – Best in Industry
 Functional
 Generic
 Form:
 Performance Benchmarking
 Process Benchmarking
 Strategic Benchmarking

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 Selecting Benchmarking Partners

Benchmarking
Type
Potential Benchmarking Partners

Comparable sites, branches, sections, departments

Internal within the business

Competitor Within the same industry sector

Functional Same function across all industry fields

Generic All industry fields

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 Performance Benchmarking

• Performance benchmarking enables managers to assess

their competitive positions through product and service
comparisons.
• Performance benchmarking usually focuses on elements
of price, technical quality, product or service features, speed,
reliability, and other performance characteristics.
• Reverse engineering, direct product or service comparisons,
and analysis of operating statistics are the primary techniques
applied during performance benchmarking.

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 Process Benchmarking

• Process benchmarking focuses on discrete work processes

and operating systems, such as the customer complaint
process, the order-and-fulfillment process, or the strategic
planning process.
• Process benchmarking seeks to identify the most effective
operating practices from many companies that perform
similar work functions.
• Its power lies in its ability to produce bottom-line results. If
an organization improves a core process, for instance, it can
then quickly deliver process improvement

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Critical Success Factors

Critical Success Factors (CSFs) Are the Key Indicators

That Inform Us That a Particular Task, Activity, Process,
Event, Function, Service or Endeavour Is Successful

CSF’s Are a Feature of All Levels of Business Activity;

From the Company As a Whole Down to the Activities of
Individuals in It

How Will Success Feel?

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Benchmarking Critical Success Factors

Adopt, Adapt, and Advance: A well-designed

performance measurement and benchmark system is
essential, but there are other critical success factors:
 Senior management support;
 Benchmarking training for the project team;
 Useful information technology systems;
 Cultural practices that encourage learning;
 Resource dedication - especially in the form of time,
funding, and useful equipment.

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 Strategic Benchmarking

• Strategic benchmarking examines how

companies compete and is seldom industry-
focused. It roves across industries seeking to
identify the winning strategies that have enable
high-performing companies to be successful in their
marketplaces.
• Strategic benchmarking influences the longer-
term competitive patterns of a company.
Consequently, the benefits may accrue slowly.

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Planning a Benchmarking Exercise

Principal Requirements for Success

 Strong Commitment From Senior Management
 Willingness to Act on Any Major Opportunities for
Improvement Revealed by Benchmarking
 Resources
 Staff Capable of Running a Benchmarking Project
 Time for Employees to Spend on Benchmarking
Activities

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THE BENEFITS OF BENCHMARKING

Cultural Change
Benchmarking allows organizations to set
realistic, rigorous new performance targets,
and this process helps convince people of
the credibility of these targets.

This tends to overcome the “not invented

here” syndrome and the “we’re different”
justification for the status quo.

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THE BENEFITS OF BENCHMARKING

Performance Improvement
 Benchmarking allows the organization to define
specific gaps in performance and to select the
processes to improve.
 It provides a vehicle whereby products and services
are redesigned to achieve outcomes that meet or
exceed customer expectations.
 The gaps in performance that are discovered can
provide objectives and action plans for improvement
at all levels of the organization and promote
improved performance for individual and group
participants.

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THE BENEFITS OF BENCHMARKING

Human Resources
 Benchmarking provides a basis for training.
Employees begin to see the gap between what they
are doing and what best-in-class are doing.

 Closing the gap points out the need for personnel

to be involved in techniques of problem solving and
process improvement.

 Moreover, the synergy between organization

activities is improved through cross-functional
cooperation.

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AT&T Benchmarking Process

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Xerox 12-Step Benchmarking Process

 Phase 1: Planning
 1. Identify what to benchmark;
 2. Identify comparative companies;
 3. Determine data collection method & collect data.
 Phase 2: Analysis
 4. Determine current performance gap;
 5. Project future performance levels.
 Phase 3: Integration
 6. Communicate finding and gain acceptance;
 7. Establish functional goals.
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The Xerox 12-Step Benchmarking Process
(continued)

Phase 4: Action
 8. Develop action plans;
 9. Implement specific actions & monitor progress;
10. Recalibrate benchmarks.

Phase 5: Maturity
11. Attain leadership position ;
12. Fully integrate practices into processes.

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 Attributes of Benchmarking Studies:
Success vs. Failure

Success Failure
Process Owner Involvement Sponsorship Uncertain
Customer Driven Objectives Amorphous Objectives
Linked to Strategic Plan No Strategic Integration
Best Practices & Enablers Performance Metrics Only
Consider Cultural Attributes “Hard” Data Only
Disciplined Methodology Arbitrary / Casual Approach
Quantum Change Incremental / No Change
Clear Project Life Cycle Keep Going and Going and …..
Integrated with Existing A la carte Program
Quality Efforts

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Management’s Benchmarking Challenge
Commit required resources to key projects;
Provide focused training / facilitation to project
participants;
Proactively manage the direction and momentum of
benchmarking within the organization;
Create visibility of the benchmarking process;
Recognize benchmarking team efforts.
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Additional Information
 Answer all questions on p.g 518 and
519.
 Submit during the next class typed and
printed. No late submissions.
 Individual work.

Total Quality Management