TQM Module III
Transcript of TQM Module III
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Module III
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Benchmarking - Definition Reasons for benchmarking Types of benchmarking Process of benchmarking what to benchmark, understanding current
performance, planning, studying others
Using findings Xerox model of benchmarking Advantages and pitfalls of benchmarking Concept of Kaizen and its applications
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Systematic search for best practices, innovativeideas, and highly effective operating procedures
Powerful tool and extremely effective when usedfor the right reasons and aligned withorganization strategy
Considers the experience of others and uses it
Benchmarking measures performance againstthat of best-in-class organizations, determineshow the best in class achieve those performance
levels
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What is ourperformance level?How do we do it?
What are othersperformance levels?
How did they get there?
Creative
Adaptation
Breakthrough Performance
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To achieve business and competitive objectives Help organizations develop strengths and
reduce weaknesses An external outlook through benchmarking
greatly reduces the chance of being caughtunaware by competition
Benchmarking can notify the organization if ithas fallen behind the competition or failed totake advantage of important operating
improvements developed elsewhere
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Can inspire managers to compete Allows goals to be set objectively, based on
external information Is time and cost efficient because the process
involves imitation and adoption rather thanpure invention
Reduces planning, testing and prototypingeffort
Why reinvent the wheel?
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Three major types1. Performance benchmarking or operational
benchmarking2. Process benchmarking or functional
benchmarking and3. Strategic Benchmarking
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Involves pricing, technical quality, featuresand other quality or performancecharacteristics of products and services
Usually performed by direct comparisons or“reverse engineering” in which competitor’sproducts are taken apart and analyzed
Also called as “competitive benchmarking”which involves studying of products andprocesses of competitors in the sameindustry
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Centers on work processes such as billing,order entry or employee training
Identifies the most effective practices incompanies that perform similar functions, nomatter in what industry
For example, The warehousing anddistribution practices of L.L. Bean wereadapted by Xerox for its spare partsdistribution system
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Examines how companies compute and seeksthe winning strategies that have lead to
competitive advantage and market success One way to determines how well a company
is prepared to compete in a segment and tohelp define a best-in-class competitor is toconstruct a key success factor (KSF) matrix
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Key Successfactor
Weight Ourcompany
Competitor A Competitor B Competitor C
Sales force
Distribution
Suppliers
R&D
Service
Cost structure
Competitive Analysis – Computer Industry … Segment Performance Rating
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Customer Service levels Inventory management
Inventory control (extent of automation) Purchasing Billing and collection Purchasing practices Quality process Warehousing and distribution and Transportation
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Six steps contain the core techniques1. Decide what to benchmark
2. Understand current performance3. Plan4. Study others5.
Learn from the data6. Use the findings
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1. Which processes are causing the mosttrouble?
2. Which processes contribute most tocustomer satisfaction and which are notperforming up to expectations?
3. What are the competitive pressures
impacting the organizations the most?4. What processes or functions have the mostpotential for differentiating our organizationfrom the competition?
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Techniques like flow diagrams and cause-and-effect diagrams and understanding
Attention must be paid to inputs and outputs Careful questioning is necessary to identify
circumstances Benchmarking tam should be comprised of
those who won or work in the process toensure suggested change are actuallyimplemented
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Documenting the process and quantify thesame
Units of measure must be determined Key metrics like unit costs, hourly rates, asset
measures and quality measures Special care should be taken when using
accounting information
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Once internal processes are understood aredocumented, it possible to make decisionsabout how to conduct the study
A benchmarking team, candidates should bechosen
Timetables should be agreed upon for each
benchmarking tasks and desired output fromthe study
Planning process should result in a “Short
list” of possible benchmark partners
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The scope of study and the type ofbenchmarking may require examination ofseveral outside organizations
When a process is broken into sub-processes,it is common to discover that a singleorganization is not best-in-class for all sub-
processes In such case, Study multiple organizations
ensures that the best practices are discovered
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Three techniques for conducting originalresearch are questionnaires, site visits and
focus groups (people brought together todiscuss areas of mutual interest)
Questionnaires useful to ensure respondent
confidentiality
Mail survey, telephone survey, checklist can besued
Face-to-face interviews with best-in-class people
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Is there a gap between the organization’sperformance and the performance of the
best-in-class organizations? What is the gap? How much is it? Why is there a gap? What does the best-in-
class do differently that is better? If best-in-class practices were adopted, what
would be the resulting improvement?
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Benchmarking studies can reveal threedifferent categories External processes may be significantly better
than internal processes (a negative gap)
Process performance may be approximately equal(parity)
Or the internal processes may be better than thatfound in the external organizations (positive gap)
Negative gap all for the major improvement effort
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There are two ways to prove that onepractice is superior to other
1. Analyzing quantitatively – return on assets,defect rates, customer satisfaction levels
2. Market analysis – Consumers of products and
services give their feedback, how may
customers will we have if we deliver our productin 24 hrs instead of five days, Price outside
services
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The generic steps involved in developmentand execution of the plan are:
1. Specify tasks2. Sequence tasks
3. Determine resource needs
4. Establish task schedule5. Assign responsibility for each task
6. Describe expected results
7. Specify methods for monitoring results
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1. Determine who the clients are – who willused the information to improve theirprocesses
2. Advance the clients from the literacy stageto the champion stage
3. Test the environment. Make sure the clients
can and will follow through withbenchmarking findings4. Determine urgency. Panic or disinterest
indicate little change for success
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5. Determine scope and type of benchmarkingneeded
6. Select and prepare the team7. Overlay the benchmarking process onto the
business planning process8. Develop the benchmarking plan
9. Analyze the data10. Integrate the recommended action11. Take action12. Continue improvement
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1. Identify what is to be benchmarked2. Identify comparative organizations
3. Determine data-collection method andcollect data4. Determine current performance gap5. Project future performance levels6. Communicate benchmarking findings and
gain acceptance
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7. Establish functional goals8. Develop action plans
9. Implement specific actions and monitorprogress
10. Recalibrate benchmarks
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It promotes a through understanding of thecompany’s own processes, strengths and
weaknesses
Involves limitation and adaptation of the practices
of superior competitors rather than inventions,
thereby saving time and money
Intensive studies of existing practices often lead to
identification of non-value-added activities an d
plans for process improvement
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Enables comparison of performance measures indifferent dimensions like assets, percentage of on-timedelivery, proportion of defects etc.
Focuses on performance measures and processes andnot on products, thus not restricting to which thecompany belongs
Allows organizations to set realistic, rigorous newperformance targets and helps convince people of thecredibility of these targets. Tends to overcome “notinvented here”, “we are different”
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Helps organizations to define specific gaps inperformance and to select the processes to
improve. Helps company to redesign its products
and services
Provides a basis for training human resources
Synergy between organizational activities isimproved through cross-functional cooperation
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Best-in-class performance is not a static but amoving target
Benchmarking may not be successful ifproper infrastructure of a total qualityprogram is not in place
Copying of others instead of innovating It do not work if the owners or managers feel
threatened or do not accept and act onfindings
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The potential pitfalls of benchmarking includethe failure to do the following:
Involve the employees who will ultimately use the
information and improve the process Relate process improvement to strategy and
competitive positioning Define the firm’s process before gathering data for
the purpose of comparison Perceive benchmarking as an ongoing process and
not as an one-time project with start andcompletion dates
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Set goals for closing the gap between theexisting performance (what is) and the
benchmark (what can be) Empower employees to achieve
improvements that they identify and forwhich they solve problems and developaction plans