BENCHMARKING

IN
TQM
Presentation by:

2013103615,
Monisha Prakash.
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 What is Benchmarking?
Benchmarking is the process of
measuring an organizations internal processes
then identifying, understanding, and adapting outstanding practices from other
organizations considered to be best-in-class.

Definition
measuring our performance against that of best-in- class companies,
determining how the best-in-class achieve those performance levels
and using the information as a basis for our own companys targets,
strategies and implementation .

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 The Essence of Benchmarking

moving from where we are to where we want to be

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 Why Benchmarking?

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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 When is Benchmarking Done?
If the companys QMS is not properly developed, documented and
implemented.

If companys great strength areas are not measured.

If companys great weakness areas are not measured.

If companys great opportunities are not measured.

If customer needs are not assessed and rectified .

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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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 Levels Of Benchmarking In Competitive
Environment
Internal benchmarking - Within ones org.

Competitive benchmarking - Analysis the performance and

practices of best in class companies.

Non-competitive benchmarking - Is learning something about a

process a company wants to improve by benchmarking.

World class benchmarking - Ambitious and looking towards

recognized leader.

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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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 Types Of Benchmarking

Performance or operational benchmarking:

It involves pricing, technical quality, features and other quality.

Process or functional benchmarking:

It involves processes such as billing, order entry or employee training.

Strategic benchmarking:
Examines how companies compute and seeks the winning strategies that have
led to competitive advantage and market success.

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 Areas Of Benchmarking

Operational Strategies: Supply chain management:

Inventory management Warehousing and distribution

Inventory control Transportation

Marketing management: H.R. Practices:

Customer service levels Talent Acquisition / Search

Purchasing Training and Development
Billing and collection Compensation management etc.
Purchasing practices

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 Guidelines to Benchmarking

Do not go on a fishing expedition.

Use company people.

Exchange Information.

Legal Concerns.

Confidentiality.

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 Five Phases Of Benchmarking
Planning: Identify the product, service or process to be benchmarked

Analysis: Determine the gap between the firms current performance and that of
the firms benchmarked and identify the causes of significant gaps.

Integration: Establish goals and obtain the support of managers who must
provide the resources for accomplishing the goals

Action: Develop action plans, and team assignment, implement the plans,
monitor progress and recalibrate benchmark as improvements are made.

Maturity: Leadership position attended, best practices fully integrated into

process.

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 Benchmarking Strategy

Decide what to benchmark.

Select companies to benchmark.

Obtain data and collect information.

Analyze data and forms action plans.

Recalibrate and start the process again.

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 The Seven Step Benchmarking Model
Activity What is included
Step 1: Identify what to benchmark Clarify the benchmark objectives
Decide whom to involve
Define the process
Consider the scope
Set the boundaries
Agree on what happens in the process
Flowchart the process

Step 2: Determine what to measure Examine the flow chart

Establishes the process measures
Verify that measures match objectives

Step 3: Identify who to benchmark Conduct general research

Choose level to benchmark

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 The Seven Step Benchmarking Model
Step 4: Collect data Use a questionnaire
Conduct a benchmark site visit

Step 5: Analyze data and determine the gap Quantitative data

Qualitative analysis

Step 6: Set goals and develop an Action Set performance goals

Plan Develop an action plan

Step 7: Monitor the process Track the changes

Make benchmarking a habit

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 Factors For Success Of Benchmarking
Benchmarking must have the full support of senior management
and they should actively involve with this process.

For Benchmarking, team and process training is very imp.

Benchmarking should be a team activity.

Benchmarking is an ongoing process.

Benchmarking efforts must be organized, planned, and carefully

managed.

Correct use of benchmarking can lead you to the competitive

edge in todays business market place.
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BENCH MARKING EXAMPLES:

A firm interested in improving theircustomer

servicepracticesmight compare their own processes and metrics
against those of their most successful competitor.

If they identify negative discrepancies or differences in measures,

they may embark upon process improvement to strengthen their
performance.

The firm will observe and measure the competitor's operations, and
in some industries, they will send in employees as customers to
gain direct experience.

A quick service restaurant chaindependent upon speedy,

accurate service in the drive-thru to maximize efficiency, cut costs
and increase profits will study the drive-thru practices of key
competitors. 17
 Every second gained without sacrificing customer quality allows
the firm to increase profits.

Over the years, competitors have consistently innovated in

their drive-thru operations with configuration, number of
windows, menu and speaker boards and ordering approaches in
an attempt to improve in this area.

They are constantly watching and benchmarking against each

other.

One firm, Pal's Sudden Service, a small hamburger and hot dog
chain and a Baldrige Quality Award winner, is so successful at
achieving best-in-class performance for drive-thru and overall
restaurant operations, that it opened an educational institute to
train other organizations.

Many companies in the fast food market use Pal's as a best-in-

class benchmark for their own firms.
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Benchmarki
ng Process
In
Motorola

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 Motorola is one of the companies that successfully implement
benchmark.

Motorola has tried to benchmark from Dominos Pizza and Federal

Express in order to improve their delivery process.

At the mid-1980s, Motorola found that the largest number of

customers' complaint about doing business with Motorola was
related time issues.

These complaints ranged from very long promised delivery time

and frequent delinquencies to find the correct person in Motorola
to answer questions and the length of time to get phone calls
returned.

In short, Motorola was perceived as being a difficult and

unresponsive company with which to do business.
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 After they took a benchmark from Domino's Pizza and Federal
Express, they have come to a concept of Total Cycle Time, which
was defined as the total time elapsed between the expressions of
an interest by a customer and receipt of a product or service by that
customer.

This highlighted that functions in addition to manufacturing is

important to meet the expectation of customers.

To customers, delays in purchasing parts from suppliers are equal to

delay in production line. In the concept of Total Cycle Time, Motorola
tend to eliminate the unnecessary work, concentrating only on the
essential work.

More important, the determination of what is and is not value-

added work must come from the customer of the product or service,
not the performer of work.

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 After Motorola has implemented the Total Cycle Time, the
cycle time for their manufacturing and engineering process
has reduced for typically 60%-70%.

This means that a process that usually takes three weeks can
be reduced to one week. Besides, for the administrative or
service processes, the reduction of cycle time is in a range of
90%-95%.

he cycle time is equivalent to a cycle of learning. If, on the

other hand, the cycle time was reduced to one week, learning
could occur every week. Reduced cycle time reduces the time
for a cycle of learning. If the effort is taken to improve the
process based on examining the most recent results, shorter
learning cycles can result in more rapid quality improvement.

As such, reducing cycle time can be the single most potent

quality tool available to an organization.

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 Advantages
Benchmarking is a systematic method by which organizations can measure themselves
against the best Industry practices.

It promotes superior performance by providing an organized framework through which

organization learn how the best in class do things.

Intensive studies of existing practices often lead to identification of non-value added

activities and plans for process improvement.

It helps for continuous improvement.

Benchmarking inspire managers (and organization) to compete.

Through Benchmark process organization can borrow ideas, adopt and refine them to gain
competitive advantages.

Benchmarking provides a basis for training human resources.

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 Disadvantages

The most resistant criticism of Benchmarking comes from the idea of copying
others.

It is not a strategy nor is it intended to be a business philosophy. Therefore, it is

a time taking technique.

Benchmarking is not instant pudding. It will not improve performance if

proper infrastructure of Total Quality Management is not in place.

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 Conclusion

As per current industrial standards, more than 60% of the companies

in the world uses this technique for fixing their target for continuous
improvement. It is an important performance evaluation tool. But to
be effective it must be used properly. It breaks down (waste of
money, time and energy and some times morale too) if process
owners and managers feel threatened or do not accept and act on the
findings. Finally, benchmarking is not a substitute for innovation;
however, it is a source of ideas from outside the organization.

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