Total Quality Management - Spring 2010 - IUG 1

Total Quality ManagementTotal Quality Management

Week # 10Week # 10

BenchmarkingBenchmarking

Prepared by: Khalid DahleezPrepared by: Khalid Dahleez

Faculty of Commerce – the Islamic Faculty of Commerce – the Islamic University of GazaUniversity of Gaza

This material was collected from different sourcesThis material was collected from different sources

Total Quality Management - Spring 2010 - IUG 2

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

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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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Competitive

• Industry leaders• Top performers with

similar operatingcharacteristics

Functional

• Top performersregardless of industry

• Aggressive innovatorsutilizing newtechnology

Internal

• Top performers within company

• Top facilities within company

Best PracticeOverlap

Benchmarking Methodology

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Benchmarking Framework

Measurement

Change

Review

Benchmarking Framework

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MissionMission

Critical ProcessesCritical

Processes

Critical Success Factors

Critical Success Factors

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.

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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

Benchmarking Type

InternalInternal

CompetitorCompetitor

FunctionalFunctional

GenericGeneric

Potential Benchmarking Partners

Comparable sites, branches, sections, departments within the business

Within the same industry sector

Same function across all industry fields

All industry fields

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• 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.

Performance Benchmarking

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• 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

Process Benchmarking

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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 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.

Strategic Benchmarking

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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 coop eration.

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AT&T Benchmarking Process

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Xerox 12-Step Benchmarking

Process

Phase 1: Planning1. Identify what to benchmark;2. Identify comparative companies;3. Determine data collection method & collect

data.

Phase 2: Analysis4. Determine current performance gap;5. Project future performance levels.

Phase 3: Integration6. 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: Maturity11. Attain leadership position ;12. Fully integrate practices into processes.

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Attributes of Benchmarking Studies:Success vs. Failure

Success FailureProcess Owner Involvement

Customer Driven Objectives

Linked to Strategic Plan

Best Practices & Enablers

Consider Cultural Attributes

Disciplined Methodology

Quantum Change

Clear Project Life Cycle

Integrated with ExistingQuality Efforts

Sponsorship Uncertain

Amorphous Objectives

No Strategic Integration

Performance Metrics Only

“Hard” Data Only

Arbitrary / Casual Approach

Incremental / No Change

Keep Going and Going and …..

A la carte Program

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Management’s

Benchmarking ChallengeCommit 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.