Bench Marking in TQM

BENCH MARKING

By:Anurag Gupta

IBS Kochi

“Benchmarking is the search for industry best practices that lead to superior performance”

by Robert Camp

The Evolution of Benchmarking

Evolved in the early 1950s, when W. Edward Deming taught the Japanese the idea of quality control.

ExampleToyota Motor Corporation’s following the footsteps of Ford Motor Corporation with the adaptation of the Ford’s Just-in-case System into Toyota’s Just-in-Time System.

Term “Benchmarking” emerged in 1980s by ROBERT CAMP, logistics engineer who initiated Xerox’s benchmarking program.Use of benchmarking worldwide continues to grow since Robert Camp wrote the first book on benchmarking in 1989.

Benchmarking

Valuable TQM tool which accomplishes objectives of customer satisfaction and continuous improvement.Motivates an organization & fosters a new in-depth understanding about the functioning of the organization.Reduces cycle time as small or big tasks get done faster.Constantly redefines standards which must be achieved to remain competitive.Increases productivity.

Benchmarking process

Benchmark Practices

How to close the Gap►Improved Knowledge►Improved Practices►Improved Process

Employee participation

Organization Communication

Management Commitment

Benchmark Gap► How much► Where► When

Benchmarking Standards

Benchmarking Process Model

Search

Observe

Analyze

Adapt Plan

Steps in Bench Marking Process

1. Plan

• Select the process

• Form Team

• Understand & document process

• Establish performance measure

2. Search

• Listing Criteria for partner selection

• Conduct general / secondary research

• Decide the level to Benchmark

• Identify potential partners & contact

3. Observe

• Questionnaire sent to partner

• Telephone contact

• Direct observation / site visit

4. Analyze

• Sort information & data

• Quality control information & data

• Normalize data if necessary

• Identify gaps in performance Level

• Identify causes for gaps

5. Adapt

• Identify improvement opportunities

• Set target for improvement

• Develop implementation plan, monitor the progress

• Write final report

Types Of Benchmarking

InternalExternalPerformance or CompetitiveFunctionalGenericStrategicProcess

Internal Benchmarking

Comparison of similar functions in different operating units within the organization

Example

• Tata Steel’s Colliery divisions benchmarking their maintenance practices with that of the Maintenance division inside the Steel Works at Jamshedpur.

External Benchmarking

Comparison of organization functions and key processes against external good practice organization.

Performance or Competitive

Organizations using performance measures to compare themselves against similar organizations

Example• FMCG’s comparing with each other for Market share,

Retention rates, profits, costs.

Functional Benchmarking

Comparison of similar functions against external best in any industry

Example

• Hindustan Max – GB Ltd , a pharmaceutical company, benchmarking their maintenance function with that of Tata Steel.

Generic Benchmarking

Comparison of functions which are generic in nature in any industry

Examples

• Hospital in the U.S. routinely benchmark their patient management against hotel’s guest management.

• Airlines benchmark their customers service with 5 star hotels.

Strategic Benchmarking

Used where organizations seek to improve their overall performance by focusing on specific strategies or processes

Example• Benchmarking against organizations which have won

awards or some other distinctions

Process Benchmarking

Focus on specific operations or processes

Examples• In higher education - Enquiry Management, Enrolment• In Logistics - Delivery, Safety.• In hotels - Housekeeping, Customer Care.

Issues in Benchmarking

Finding suitable partners.Difficulties in comparing data (50% of organizations found this)Resource constraints (Time, Finance and Expertise)Staff resistance.

XEROX Case

• Invented photocopier in 1959 • 1981, the company’s market shrank to 35% • IBM, Kodak developed high-end machines• Canon, Richo, and Savin dominated the low-end

segment • Company was suffering from the “not invented here”

syndrome

XEROX Case

Results included:• Suppliers were reduced from 5000 to 300.• “Concurrent engineering” were practiced.• Hierarchical organization structure was reduced• Quality problems cut by two-thirds• Manufacturing costs cut in half• Development time cut by two-thirds• Direct labor cut by 50 percent and corporate staff cut

by 35 percent while increasing volume

Thanks…