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 Benchmarking: An International Journal
Benchmarking in QFD for quality improvement
X.X. Shen K.C. Tan M. Xie
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BIJ
7,4
282
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Benchmarking: An International
Journal, Vol. 7 No. 4, 2000,
pp. 282-291. # MCB University
Press, 1463-5771
The current issue and full text archive of this journal is available at
http://www.emerald-library.com
Benchmarking in QFD for
quality improvement
X.X. Shen, K.C. Tan and M. Xie
National University of Singapore, Singapore
Keywords Benchmarking, Customer satisfaction, Kaizen, Quality function deployment
Abstract Through listening to the voice of the customer, quality function deployment (QFD) is a
systematic methodology for quality improvement and product development. The quality of a
product or service is ultimately judged in terms of customer satisfaction. Customer satisfaction
benchmarking can help decision makers identify areas for improvement, make strategic decisions,
and set targets on desired satisfaction performance. The main purpose of this paper is to study
procedures and methods for successful benchmarking in QFD for quality improvement. It
discussed the customer satisfaction benchmarking process in QFD and proposed the use of
hierarchical benchmarks for strategic competitor selection and decision making. A case study was
presented to illustrate the use of this method. This paper may provide a road map to achieve
world-class performance through benchmarking in QFD, especially for small to medium-sized
enterprises or companies in developing countries.
Introduction
Total quality excellence is now recognized as the key to world-wide
competitiveness. Total quality management (TQM) is a total, company-wide
effort through full involvement of the entire workforce and a focus on
continuous improvement that companies use to achieve customer satisfaction
(Evans and Lindsay, 1999). It is a philosophy whose main objective is to meet
or exceed the needs of internal and external customers (Youssef et al., 1996). It
has emerged as an important aspect of overall quality improvement programs
in many organizations. For example, those companies that adopted and
implemented TQM tended to experience improvement in customer satisfaction,
employee relations, productivity, market share, and financial performance
(Stratton, 1991; Zairi et al., 1994). Quality function deployment (QFD), one
of TQM's primary activities, is a systematic methodology for quality
management and product development. Focusing on listening to the voice of
the customer, it ensures that quality can be built into new products or new
versions of existing products at an early design stage. QFD can be viewed as a
main pillar for successful TQM and a main ingredient of forward management
(Zairi and Youssef, 1995; 1998).
Benchmarking, as another part of total quality process, is the search for
industry best practices that lead to superior performance (Camp, 1989). It is a
productivity improvement tool that has received considerable attention among
companies. It helps them achieve and maintain competitive advantages by
striving for world-class performance. By obtaining the information needed to
support continuous improvement and gain competitive advantage,
benchmarking can help QFD users make strategic decisions both from the
marketing and technical viewpoints, i.e. customer satisfaction benchmarking
 and technical benchmarking. The integration of benchmarking and QFD Benchmarking
process provides opportunities to identify key areas for improvement. in QFD
In the literature, some research has been done along this line. For example,
Vaziri (1992) suggested using competitive benchmarking to set goals and to
achieve superior customer satisfaction. Swanson (1993) proposed quality
benchmark deployment technique, a variation of QFD, to help organizations
logically select critical areas to benchmark and understand the relationship 283
between customers' expectations and performance drivers. Lu et al. (1994)
developed an integrative approach for strategic marketing by using QFD,
analytic hierarchy process (AHP), and benchmarking. Nevertheless, the
strategic selection of benchmarks and goals based on the benchmarking
information requires further research effort. Hence, the purpose of this paper is
to study and develop procedures that can be used in benchmark selection and
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information utilization for successful benchmarking.

Focusing on customer satisfaction benchmarking in QFD for quality
improvement, this paper begins with background information of the QFD
methodology and benchmarking. The customer satisfaction benchmarking
process in QFD is presented in the next section. The concept of hierarchical
benchmark is then proposed and its usage in QFD is discussed. An application
of benchmarking and QFD using the proposed method is also given.

Background information
QFD
As an approach to design, QFD is a concept introduced by Akao (1990) in Japan
in 1966. It was first put into use at Mitsubishi's Kobe shipyard site in 1972.
Later in 1983, it was introduced to the USA and it has since spread quickly to
many other countries (e.g. Cohen, 1995; Prasad, 1998).
QFD can be defined as converting consumers' demands into ``quality
characteristics'' and developing a design quality for the finished product by
systematically deploying the relationships between the demands and the
characteristics, starting with the quality of each functional component and
extending the deployment to the quality of each part and process (Akao, 1990).
There are four key documents commonly used in carrying out QFD, namely,
the overall customer requirement planning matrix, the final product
characteristic development matrix, the process plan and quality control charts,
and operating instructions (Sullivan, 1986).
As the most commonly used part in QFD, the house of quality (HOQ) is a
matrix style chart that correlates the identified customer attributes called the
``whats'' with the technical characteristics called the ``Hows.'' The HOQ is a kind
of conceptual map that provides a means for interfunctional planning and
communications (Hauser and Clausing, 1988). It usually has six sub-matrices
including customer attributes, planning matrix, technical characteristics,
relationship matrix, technical correlations, and technical matrix (see Figure 1).
When used correctly, QFD is viewed as an effective way to get the voice of
the customer deeply embedded into the new product and process design (Ettlie,
 BIJ
7,4

284

Figure 1.
A simple house of
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quality

1993). Because of its numerous benefits, QFD has been successfully used in
various fields besides manufacturing, e.g. education, policy management,
software development, and the tourist industry.

Benchmarking
In the year 500 BC, Sun Tzu, a Chinese general, wrote the following words: ``If
you know your enemy and know yourself, you need not fear the result of a
hundred battles'' (Sun Tzu, The Art of War). Modern benchmarking practice
and theory in business did not appear until the pioneering work of Robert C.
Camp and his team at Xerox in the early 1980s. After that, as a business
improvement and quality tool, benchmarking has become widely covered in the
literature and broadly applied in practice.
Benchmarking helps organizations identify current best-in-class designs
and identify the strengths and weaknesses. It can thus be used to identify the
areas on which to focus the company's efforts for obtaining a competitive
advantage and it may lead to creative, cost-effective innovations in product
design. Benchmarking processes with various steps have been developed and
put into use, e.g. the Spendolini (1992) five-step process, the six-step
benchmarking (Bemowski, 1991; GOAL/QPC, 1991), the seven-step process
(Filer et al., 1988), the Xerox ten-step process (Camp, 1989), and the IBM five-
phase/14-step process (Eyrich, 1991).
It is recognized that there are four types of benchmarking: internal,
competitive, functional, and generic (Camp, 1989). Internal benchmarking
studies the best performers in an organization, competitive benchmarking deals
with the best competitors in an industry, functional benchmarking investigates
competitors or industry lead firms in similar functions, and generic
benchmarking studies the best business practices in the world.
Some benefits from benchmarking include meeting customer requirements,
establishing goals, measuring true productivity, becoming competitive,
 ensuring that best industry practices are included in work processes, and Benchmarking
generate broadly-based change in organizational thinking and action (e.g. in QFD
Camp, 1989; Drew, 1997). For some recent benchmarking literature surveys, see
for example, Jackson et al. (1994) and Czuchry et al. (1995).

Customer satisfaction benchmarking in QFD

To a large extent, the quality of product or service is ultimately judged in terms 285
of customer satisfaction. There are direct linkages between providing customer
satisfaction and a superior financial and competitive position (Zairi, 1996).
Understanding and meeting customer satisfaction is one of the pillars of
achieving speed-to-market for manufacturers (Youssef, 1992). The cost of
customer dissatisfaction could be very high. For example, recent work shows
that 8.5 per cent of revenue is at risk from customer dissatisfaction (Hepworth,
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1997). Thus, customer satisfaction is considered as an important goal of an

organization, and the satisfied customer is one of its key assets.
Customer satisfaction level is one of the critical success factors that are
candidates for benchmarking (Camp, 1989). QFD can incorporate benchmarking
information by extending the traditional matrix. It utilizes benchmarking
information primarily in the form of customer satisfaction benchmarking in the
planning matrix and technical performance benchmarking in the technical
matrix (refer to Figure 1). A typical form of customer satisfaction benchmarking
is shown in Figure 2.
Understanding customer perceptions is essential to remain competitive
nowadays. To do this, a company should not only know the customer
satisfaction degree to its current product or service, but also know the customer
satisfaction degree to the competitors'. Customer satisfaction degree to the
current product is the customer perception showing how well it meets the
customer's wants and needs. For example, consider the situation when new
students arrive at a university. As far as the customer requirement ``good
orientation program'' is concerned, students may perceive the current service as
``two'' when using a one-to-five scale (Figure 2). Similarly, customer satisfaction

Figure 2.
Customer satisfaction
benchmarking in the
planning matrix
 BIJ degree to competitors' products is the customer perception showing how well
7,4 the products or services of competitors meet the customer's wants and needs.
Taking the same example, students may view competitors' services as ``three''
and ``four'', which suggests that customers are more satisfied with competitors'
services when considering the feature ``good orientation program''. It is clear
that comparison with the competition can identify opportunities for
286 improvement.
Based on the customer satisfaction degree to both the company and
competitors' products, a goal is to be decided to show the target for meeting
each customer attribute. The goal combines the data describing the customers'
perception of the competitive position of the product or service relative to its
competitors. The customer satisfaction degree is the customers' rating
according to the current product, while the goal is the future-state rating to be
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reached. The goal is to put customer satisfaction benchmarking to work for the
company to achieve world-class competitive capability. Setting the goal is a
crucial strategic step in QFD. Due to the limited resources, trade-offs must be
made in almost every case. It is reasonable to pay more attention to those more
important customer attributes when deciding the goal. As Figure 2 shows, for
requirement ``good orientation program'', the customer satisfaction level for the
future service is set as ``four'' after considering the customer satisfaction
benchmarking information and the degree of importance.
Customer satisfaction benchmarking is a continuous process of evaluating
current performance, setting goals for the future, and identifying areas for
improvement. The customer satisfaction benchmarking process in QFD is
shown in Figure 3. The main components involved in this process are similar to
those various benchmarking processes mentioned in the previous section. It is a
rather straightforward process and can be naturally incorporated into
traditional QFD processes. It should be particularly noted that customer
satisfaction benchmarking in QFD is a never-ending process. Through this
never-ending benchmarking, continuous quality improvement can be achieved.

Figure 3.
Customer satisfaction
benchmarking process
in QFD
 It is important to determine if performance improvement really happens after Benchmarking
implementing customer satisfaction benchmarking. The effectiveness of the in QFD
benchmarking process in changing customers' perceptions can be measured
through customer satisfaction questionnaires. By comparing the difference
between customer satisfaction before and after benchmarking is implemented,
it is easy to identify whether the target has been achieved.
287
Use of hierarchical benchmarks
Benchmarking is a useful tool when products with the best-in-class features are
used for comparison purposes. Best-in-class refers to the best product or service
in a similar price classification and market segment. On the other hand, it is
never easy to achieve world-class performance. Although in the long run to be
world-class is the goal and should be included in a company's vision statement,
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it may be unrealistic for a product or service to achieve the same level of

performance by merely comparing against world-class companies, especially
for most small to medium-sized enterprises (SMEs).
The use of hierarchical benchmarks proposed in this paper may provide a
step-by-step method to approach/realize the eventual goal of becoming best-in-
class. Using this method, different benchmarks can be selected from various
categories, each of which belongs to a different hierarchy. For example,
benchmarks can be based on local-class, regional-class, and world-class
categories. When measuring customer satisfaction, customers are likely to be
more satisfied with products or services provided by world-class than local-
class companies.
By using hierarchical benchmarks in customer satisfaction benchmarking,
one company can easily locate its corresponding position in terms of customer
satisfaction performance, e.g. local-class, regional-class, or world-class. It can
also help identify a company's strengths and weaknesses compared to
competitors in each hierarchy; that is, the company can have a clear idea on the
customer satisfaction gap between its own and local-class, regional-class, or
world-class. Furthermore, being able to reach one target class and set another
higher class as its next goal can help the company gain more confidence that it
is moving correctly towards world-class performance. Hence, this method
should help the company identify areas for improvement from both short-term
and long-run perspectives and provide a road map to world-class performance.
Under different circumstances, a company will focus more on certain
benchmarks from various hierarchies for customer satisfaction benchmarking.
That is, the weights given to different hierarchical benchmarks will be
different. For example, if customers perceive one company's product
somewhere between local-class and regional-class, then it may consider
regional-class as the most important benchmark. However, when it performs
worse than local-class in terms of customer satisfaction, it may focus more on
the local-class benchmark. Here suppose that the weights of each hierarchy are
determined. Let Wl, Wr, and Ww denote the weights given to local-class,
 BIJ regional-class, and world-class respectively, and Sown, Sl, Sr, and Sw represent
7,4 the customer satisfaction levels to the product provided by the company itself,
local-class, regional-class, and world-class respectively (see Table I).
Two methods can be adopted for utilizing benchmarking information based
on hierarchical benchmarks, namely aggregate benchmark and principal
benchmark. When using aggregate benchmark method, all the information
288 from different hierarchies will be taken into consideration. For target setting,
decision-makers should consider both customer satisfaction degrees to the
company's product Sown and the overall customer satisfaction performance,
which can be computed as Sagg = SlWl + SrWr + SwWw. This is provided that
sufficient resources are given, as customer satisfaction performance in each
hierarchy needs to be evaluated. Under principal benchmark method, decision
makers usually only consider the competitor in a particular hierarchy which
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receives the highest weightage, i.e. Spri = max{Sl Sr Sw}. For example, if the
company decides to focus more on regional-class benchmarks, that is Wr is
much greater than Wl and Ww, only Sown and Sr should be obtained from
customer satisfaction survey. They will be taken into consideration when
setting the future customer satisfaction performance. The first method will
provide more information, but the second one requires less time and effort.

A case study
To clearly illustrate customer satisfaction benchmarking and the use of
hierarchical benchmarks in QFD, a case study is presented in this section. It
was intended to show how QFD could be used to identify and meet the needs of
foreign graduate students at a university. They were considered as one portion
of the customers of the university in this particular situation.
As the backbone of QFD, the voice of the customer is the basis for product
and service design. It is important to collect the accurate voice of the customer
because a poor job defining it up front will create problems throughout the rest
of the stages. In this case study, four steps were adopted for successful
collection of the voice of the customer, namely, identifying customer needs,
sorting and structuring needs, preparing questionnaire, and surveying the
students.
Two types of methods have been used to identify foreign graduate students'
wants and needs. One is electronic method including e-mail, newsgroup and
Web page, while another one is interview. It was found that there were many
similar customer needs among those collected by two methods. After removing

Table I. Class
Weights and customer Local Regional World
satisfaction performance
for hierarchical Weightage Wl Wr Ww
benchmarks Customer satisfaction performance Sl Sr Sw
 some repeated statements, more than 30 customer requirements were Benchmarking
identified. These requirements were further sorted and structured into four in QFD
categories, i.e. research, teaching, campus facilities, and other services.
Customer satisfaction benchmarking was conducted in this case study to
identify opportunities for quality improvement. Using the proposed
hierarchical benchmark method, four different categories were identified,
namely, world-class universities, regional universities, local universities, and 289
local educational institutions. Suppose that the weights given to these four
hierarchies are 0.1, 0.2, 0.6, and 0.1. In addition, due to the time and effort
constraints, the principal benchmark method is adopted; that is, the most
important hierarchy is selected for benchmarking. In this case, a local
university was chosen for benchmarking purpose.
Based on the identified customer needs and competitor, a customer
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satisfaction questionnaire was designed. Foreign graduate students were

surveyed by asking their perceptions on both universities in terms of
satisfaction degree. A total of 109 survey forms were returned. For simplicity,
only the five most important customer needs are presented in Table II. The
customer satisfaction benchmarking results are also shown in Table II.
Table II shows that the university does quite well in terms of ``availability of
related research materials'' and ``access privileges for using library materials''
when compared to the local university. However, it should improve in some
aspects, especially for customer need ``provide university-arranged
accommodation when initially arrived.'' Based on the benchmarking
information, the university is able to grasp how students perceive it versus
other universities from different aspects. The university can thus make
appropriate decisions in the QFD analysis to focus its efforts for improving
weak areas and maintaining strengths.
A further implication from this hierarchical benchmark analysis is that the
university should consider regional-class universities as future benchmarks.
From Table II, we can see that the overall customer satisfaction level to the
university is higher than the local university although it needs to improve in
certain areas. Therefore, the use of hierarchical benchmark can help us
understand the strengths and weaknesses; furthermore, it can also indicate a
way of achieving world-class university through continuous improvement.

Customer satisfaction
Local
No. Customer needs Own university

1 Availablity of related research materials (e.g. journal

papers in library) 3.74 2.83
2 Access to computing facilities (e.g. computers) 3.84 3.94
3 Availability of laboratory facilities 3.59 3.51 Table II.
4 Provide university-arranged accommodation on arrival 3.21 3.67 Customer satisfaction
5 Sufficient access privileges for using library materials 3.66 3.36 benchmarking results
 BIJ Conclusions
7,4 To achieve customer satisfaction, QFD ensures that all activities and
operations of a company are driven by the voice of the customer. Through
customer satisfaction benchmarking, QFD practitioners can understand how
customers perceive their products or services versus competitors', and they
may further identify areas for quality improvement and competitive
290 advantage. For successful customer satisfaction benchmarking in QFD, this
paper discussed the benchmarking process and suggested the use of
hierarchical benchmark method. A benchmarking example was presented to
illustrate the use of this method. It is hoped that this paper would provide a
road map to world-class performance through benchmarking in QFD,
especially for SMEs and companies in developing countries.
For future research, the determination of weight for each different
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benchmarking hierarchy needs to be further studied. The benchmarking

process in QFD and the use of hierarchical benchmarks also need to be
reinforced in practical use. It would be beneficial to extend the hierarchical
benchmark method to the technical performance benchmarking in QFD.
Research effort should also be put to experiment this method in other
benchmarking process besides QFD.

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