1. Total Quality Management
Week # 10
Benchmarking
Prepared by: Khalid Dahleez
Faculty of Commerce – the Islamic University of Gaza
This material was collected from different sources
Total Quality Management - Spring IUG 1

2. Total Quality Management - Spring 2010 - IUG
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 IUG

3. Total Quality Management - Spring 2010 - IUG
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
Total Quality Management - Spring IUG

4. 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
Total Quality Management - Spring IUG

5. Benchmarking Methodology
Competitive
• Industry leaders
• Top performers with similar operating characteristics
Functional
• Top performers regardless of industry
• Aggressive innovators utilizing new technology
Internal
• Top performers within company
• Top facilities within company
Best Practice
Overlap
Total Quality Management - Spring IUG

6. Benchmarking Framework Benchmarking Framework
Change
Measurement
Review
Benchmarking Framework
Total Quality Management - Spring IUG

7. 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.
Mission
Benchmarking
Critical Processes
Critical Success Factors
Total Quality Management - Spring IUG

8. Total Quality Management - Spring 2010 - IUG
Types of Benchmarking
Comparison: (Partner Selection)
Internal – Best in Firm
Competitive – Best in Industry
Functional
Generic
Form:
Performance Benchmarking
Process Benchmarking
Strategic Benchmarking
Total Quality Management - Spring IUG

9. All industry fields Selecting Benchmarking Partners Internal Generic
Benchmarking Type
Potential Benchmarking Partners
Internal
Comparable sites, branches, sections, departments within the business
Competitor
Within the same industry sector
Functional
Same function across all industry fields
Generic
All industry fields
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10. Total Quality Management - Spring 2010 - IUG
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.
Total Quality Management - Spring IUG

11. Total Quality Management - Spring 2010 - IUG
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
Total Quality Management - Spring IUG

12. Business Process Performance Measures
A simple process analysis model can help identify your organization’s most important workflows. This model reveals that all work can be viewed in
four sequential stages:
1. Inputs (including those from both employees & suppliers);
2. Processes (including internal operations & support services);
3. Outputs (your organization’s products, services, and documentation); and
4. Customer Satisfaction.
In the following graphic (the input-output process model) we begin with inputs that can be tangible (such as supplies, raw materials, and component products) or intangible (such as information) which are delivered to the work process, which transforms them into some final output which might be a product or service. The goal of the output is to create satisfied and loyal customers.
Total Quality Management - Spring IUG

13. Input-Output Process Model
Inputs Processing Outputs Customers
People
Raw Materials
Components
Customer
Requirements
Capital
Design of
Products/
Services
Production of
Products
Performance
of Services
Delivery of
Products
Services
Documentation
Results
Customer
Needs
Satisfied
Problems
Solved
Requirements
Met
Input-Output Process Model
Total Quality Management - Spring IUG

14. Common Performance Measures of the Input-Output Process Analysis Model
Enhanced customer value - often observed through added product features or reduced costs;
Production costs, frequently described as cost per hundred, thousand, or million;
Responsiveness and/or process cycle time;
Defect, error, waste, problem, or failure rates, often formatted as defects per 1000 or million output units;
Productivity & resource utilization, often reflected in transactions per person, inventory turn rates, or projects operating within budget;
Public safety and / or legal responsibilities, sometimes observed in accident rates, employee absentee rates, regulatory citations, or litigation rates.
Total Quality Management - Spring IUG

15. 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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16. 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.
Total Quality Management - Spring IUG

18. 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
Total Quality Management - Spring IUG

19. 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.
Total Quality Management - Spring IUG

20. 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.
Total Quality Management - Spring IUG

21. 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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22. 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.
Total Quality Management - Spring IUG

25. Total Quality Management - Spring 2010 - IUG
Attributes of Benchmarking Studies: Success vs. Failure
Success Failure
Process 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 Existing
Quality 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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26. Total Quality Management - Spring 2010 - IUG
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.
Total Quality Management - Spring IUG