Total Quality ManagementWeek # 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 2010 - IUG 1 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 2010 - IUG 2 IUG 3 .Why Benchmark? To To To To To To To To To Obtain an External Perspective of What Is Possible Assist in Setting Strategic Targets Promote Improvements in Performance Establish a Competitive Edge Enhance Customer Satisfaction Reduce Costs Improve Employee Morale Achieve Quality Awards Survive Total Quality Management .Spring 2010 . 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.Spring 2010 . effective business processes The need for continuous improvement Enhances a TQM program Total Quality Management .IUG 4 . Spring 2010 .IUG 5 .Benchmarking Methodology Best Practice Overlap 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 Total Quality Management . IUG 6 .Spring 2010 .Benchmarking Framework Change Measurement Review Benchmarking Framework Total Quality Management . Mission Benchmarking Critical Processes Critical Success Factors Total Quality Management . as the benefits will be limited compared to those that could be achieved by deploying resources to other areas.Benchmarking processes or activities.IUG 7 .Spring 2010 . should be disregarded. which do not support any of these statements. Spring 2010 .IUG 8 .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 . IUG 9 . branches.Selecting Benchmarking Partners Benchmarking Type Potential Benchmarking Partners Internal Comparable sites. sections. departments within the business Competitor Within the same industry sector Functional Same function across all industry fields Generic All industry fields Total Quality Management .Spring 2010 . Performance Benchmarking • Performance benchmarking enables managers to assess their competitive positions through product and service comparisons. speed. direct product or service comparisons. and analysis of operating statistics are the primary techniques applied during performance benchmarking.IUG 10 .Spring 2010 . • Performance benchmarking usually focuses on elements of price. technical quality. • Reverse engineering. Total Quality Management . product or service features. and other performance characteristics. reliability. for instance.Spring 2010 .IUG 11 . the order-and-fulfillment process. • Its power lies in its ability to produce bottom-line results. such as the customer complaint process.Process Benchmarking • Process benchmarking focuses on discrete work processes and operating systems. or the strategic planning process. If an organization improves a core process. it can then quickly deliver process improvement Total Quality Management . • Process benchmarking seeks to identify the most effective operating practices from many companies that perform similar work functions. IUG 15 . Process.Critical Success Factors Critical Success Factors (CSFs) Are the Key Indicators That Inform Us That a Particular Task. Activity. Service or Endeavour Is Successful CSF’s Are a Feature of All Levels of Business Activity. Function. Event.Spring 2010 . From the Company As a Whole Down to the Activities of Individuals in It How Will Success Feel? Total Quality Management . Benchmarking training for the project team. but there are other critical success factors: Senior management support.especially in the form of time. and Advance: A well-designed performance measurement and benchmark system is essential. and useful equipment.IUG 16 .Benchmarking Critical Success Factors Adopt. funding. Resource dedication . Adapt.Spring 2010 . Useful information technology systems. Cultural practices that encourage learning. Total Quality Management . Strategic Benchmarking • Strategic benchmarking examines how companies compete and is seldom industryfocused.IUG 17 . Consequently. Total Quality Management . • Strategic benchmarking influences the longerterm competitive patterns of a company. It roves across industries seeking to identify the winning strategies that have enable high-performing companies to be successful in their marketplaces. the benefits may accrue slowly.Spring 2010 . Spring 2010 .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 . THE BENEFITS OF BENCHMARKING Cultural Change Benchmarking allows organizations to set realistic. This tends to overcome the “not invented here” syndrome and the “we’re different” justification for the status quo.IUG 19 . and this process helps convince people of the credibility of these targets. Total Quality Management . rigorous new performance targets.Spring 2010 . Total Quality Management .IUG 20 . It provides a vehicle whereby products and services are redesigned to achieve outcomes that meet or exceed customer expectations.Spring 2010 .THE BENEFITS OF BENCHMARKING Performance Improvement Benchmarking allows the organization to define specific gaps in performance and to select the processes to improve. 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. Closing the gap points out the need for personnel to be involved in techniques of problem solving and process improvement. Moreover. Total Quality Management . the synergy between organization activities is improved through cross-functional cooperation.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.IUG 21 .Spring 2010 . IUG 22 .AT&T Benchmarking Process Total Quality Management .Spring 2010 . 3. Determine current performance gap. Establish functional goals. Phase 2: Analysis 4. Phase 3: Integration 6.Xerox 12-Step Benchmarking Process Phase 1: Planning 1.IUG 23 . Identify what to benchmark. Total Quality Management . Identify comparative companies. 2.Spring 2010 . Communicate finding and gain acceptance. 5. Project future performance levels. 7. Determine data collection method & collect data. Phase 5: Maturity 11. Recalibrate benchmarks. Total Quality Management . Attain leadership position .IUG 24 . Develop action plans.The Xerox 12-Step Benchmarking Process (continued) Phase 4: Action 8. 10. Fully integrate practices into processes. 9. Implement specific actions & monitor progress.Spring 2010 . 12. Attributes of Benchmarking Studies: Success vs.IUG 25 ..Spring 2010 . Failure Success Process Owner Involvement Customer Driven Objectives Linked to Strategic Plan Failure 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 Best Practices & Enablers Consider Cultural Attributes Disciplined Methodology Quantum Change Clear Project Life Cycle Integrated with Existing Quality Efforts Total Quality Management . Recognize benchmarking team efforts.Management’s Benchmarking Challenge Commit required resources to key projects.IUG 26 . Create visibility of the benchmarking process. Provide focused training / facilitation to project participants. Total Quality Management . Proactively manage the direction and momentum of benchmarking within the organization.Spring 2010 .