VTU MBA-TQM 12MBA42 Module 3

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VTU MBA-TQM 12MBA42 Module 3

Transcript of VTU MBA-TQM 12MBA42 Module 3

Total Quality Management Module 3

By Raghavendran VenugopalTotal Quality ManagementModule 31Prof. Raghavendran V, MBA TQM 12MBA42Bench MarkingIt is defined as systematic search for the best practices, innovative ideas, and highly effective operating procedures. It consider experience of others and uses it.

Benchmarking is the process of improving performance by continuously identifying, understanding, and adapting outstanding practices found inside and outside the organization.Prof. Raghavendran V, MBA TQM 12MBA422What is Benchmarking? (J. McEvilly-2008)Benchmarking has three main features:

Prof. Raghavendran V, MBA TQM 12MBA423Continuous and Breakthrough ImprovementTimeImprovementContinuousImprovementBreakthroughImprovementContinuousImprovementHighly Competitive SituationBenchmarkingAcceleratesInnovationand ChangeProf. Raghavendran V, MBA TQM 12MBA424Why Benchmarking?Benchmarking gives us the chance of gaining:Better Awareness of Ourselves (Us)What we are doingHow we are doing itHow well we are doing itBetter Awareness of the Best (Them)What they are doingHow they are doing itHow well they are doing it

Prof. Raghavendran V, MBA TQM 12MBA425Why BenchmarkingProf. Raghavendran V, MBA TQM 12MBA426Types of BenchmarkingOn the basis of What is being compared with other organizations we have four main types. These four major types of benchmarking are evolutionary beginning with product, through to functional (performance), process and strategic benchmarking. ProductPerformanceProcessStrategicProf. Raghavendran V, MBA TQM 12MBA427Types of BenchmarkingOn the basis of Who is being compared with our organization, we have these categories:Internal vs. ExternalGenericInternationalBest in ClassBest of the BestProf. Raghavendran V, MBA TQM 12MBA428WHAT BASIS of BENCH MARKINGProf. Raghavendran V, MBA TQM 12MBA429Many firms perform product benchmarking when designing new products or upgrades to current products. Providing an external perspective on opportunities to improve products, technology, manufacturing and support processes, the product development process, and engineering practices are core activities of product benchmarking.

1-Product BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4210Performance benchmarking focuses on assessing competitive positions through comparing the products and services of other competitors. When dealing with performance benchmarking, organizations want to look at where their product or services are in relation to competitors on the basis of things such as reliability, quality, speed, and other product or service characteristics. 2-Performance BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4211Process benchmarking focuses on the day-to-day operations of the organization. It is the task of improving the way processes performed every day. Some examples of work processes that could utilize process benchmarking are the customer complaint process, the billing process, the order fulfillment process, and the recruitment process (Bogan, 1994).3-Process BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4212Strategic benchmarking deals with top management. It deals with long term results. Strategic benchmarking focuses on how companies compete. This form of benchmarking looks at what strategies the organizations are using to make them successful. This is the type of benchmarking technique that most Japanese firms use (Bogan, 1994). This is due to the fact that the Japanese focus on long term results.4-Strategic BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4213WHY BASIS BENCH MARKINGProf. Raghavendran V, MBA TQM 12MBA4214Types of BenchmarkingThere are several other classifications for benchmarking, based on partner type, adoption level and target process, etc. Following are the most used types:InternalExternalCompetitiveFunctional GenericProf. Raghavendran V, MBA TQM 12MBA4215Competitive benchmarking is the most difficult type of benchmarking to practice. For obvious reasons, organizations are not interested in helping a competitor by sharing information. This form of benchmarking is measuring the performance, products, and services of an organization against its direct or indirect competitors in its own industry. Competitive benchmarking starts as basic reverse engineering and then expands into benchmarking.

1-Competitive BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4216Competitive benchmarking is an analysis of strategies, processes and practices with competitors and companies in the same industry. Therefore, it is industry or business type specific. It is especially beneficial to organizations managing a specialized type of operation.

1-Competitive BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4217Functional benchmarking - a company will focus its benchmarking on a single function to improve the operation of that particular function. Complex functions such as Human Resources, Finance and Accounting and Information and Communication Technology are unlikely to be directly comparable in cost and efficiency terms and may need to be disaggregated into processes to make valid comparison.

2-Functional BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4218Comparative research to seek world-class excellence by comparing business performance not only against competitors but also against the best businesses operating in a different industry.

2-Functional BenchmarkingComparing functionsAdvantage:Discovering innovative practices

Disadvantage:Not suitable for every organization or every functionProf. Raghavendran V, MBA TQM 12MBA4219Benchmarking, originally described as a formal process by Rank Xerox, is usually carried out by individual companies. Sometimes it may be carried out collaboratively by groups of companies (e.g. subsidiaries of a multinational in different countries). One example is that of the Dutch municipally-owned water supply companies, which have carried out a voluntary collaborative benchmarking process since 1997 through their industry association. 3-Collaborative BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4220With collaborative benchmarking, information is shared between groups of firms. It is a brainstorming session among organizations. It is important to realize that not all collaborative efforts are considered benchmarking. It is sometimes called data sharing."3-Collaborative BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4221Performing a financial analysis and comparing the results in an effort to assess your overall competitiveness and productivity.

4-Financial BenchmarkingProf. Raghavendran V, MBA TQM 12MBA4222Six Principles of BenchmarkingAny acceptable benchmarking should have these six features:ComprehensiveCredibleComparativePerformance-orientedConfidentialContinuous assessmentProf. Raghavendran V, MBA TQM 12MBA4223Benchmarking PitfallsBenchmarking is NOT:Tour visits to other competitors or organizations.Performance measurement, its part of benchmarking process. i.e. competitive analysis.A cost-cutting exercise.Imitating others practices or processes, its How to not What is.A public relations exercise.Prof. Raghavendran V, MBA TQM 12MBA4224Benchmarking PitfallsFailure to consider organizational cultures or circumstances leads to a wrong direction.Insufficient preparation usually results in MBWAA (management by wandering around aimlessly!).What are you trying to learn about?Why do you want to learn it?What will you do with it to make your processes better once you have it?

Prof. Raghavendran V, MBA TQM 12MBA4225Xerox Model of Bench Marking26Prof. Raghavendran V, MBA TQM 12MBA42

Benchmarking at XeroxBenchmarking against Japanese: Xerox found that,They take twice as long as its Japanese competitors. Five times number of engineers. Four times the number of design change. Three times the design cost.

Company found that Japanese could produce, ship and sell units for about the same amount that it cost Xerox to manufacture them.

Xeroxs products had over 30,000 defective parts per millionabout 30 times more than its competitors.

Benchmarking Model at Xerox Planning: Determining the subject to be benchmarked, identify the relevant best practice and develop most appropriate data collection technique. Analysis: Assess the strengths of competitors and compare Xeroxs performance with competitors.

Integration: Establish necessary goals and integrate these goals into the companys formal planning processes.

Action: Implement action plans established and assess them periodically to determine whether the company is achieving its objectives.

Maturity: Determine whether the company has attained a superior performance level.Supplier management system Japanese Companies It has 1000 suppliersThey trained Vendors Employee in Quality Control , manufacturing automation.Just-in-time i.e. Delivery in small quantities, as per customers production Schedule.Xerox Reduced the vendors from 5000 to 400. Created a Vendor Certification Process in which suppliers were offered training & told their areas of improvement. Vendors were consulted for better Designs & Improved Customer service. Prof. Raghavendran V, MBA TQM 12MBA4232Inventory Management Inventory holding Time reductionXerox asked Branch managers to match the Stocking Policy with Customers installation Orders . As a result CCP ( Capital Cycle Period) was cut by 70% which leads to savings of $ 200 million. Minimize Inventory Carrying Cost was to delay the assembly of product into the final Configuration.Manufacturing SystemManagers were encouraged to identify its :Internal Customers ( i.e. Assembly Line Workers) & External Customers ( i.e. End users who load the papers) in order to meet their needs.

Marketing Company sent 55,000 questionnaires to monthly to customers to measure customer Satisfaction & record Competitors performance.Those Competitors who have scored higher, Xerox benchmark itself against it.

Prof. Raghavendran V, MBA TQM 12MBA4234QualityAs a part of Leadership Through Quality program, Xerox started providing its customers( External & Internal) innovative products & services. Total Quality ManagementTeam consists of Senior managers & Consultants from McKinsey help to make TQM.Under which New three SBUs were introduced:Enterprise Service BusinessOffice CopiersHome CopiersAll these have autonomy in Engineering, marketing & pricing.Reaping The Benefits Number of defects reduced by 78 per 100 machines. Service response time reduced by 27%. Inspection of incoming components reduced to below 5%. Defects in incoming parts reduced to 150ppm. Inventory costs reduced by two-thirds. Marketing productivity increased by one-third. Distribution productivity increased by 8-10%. Increased product reliability on account of 40% reduction in unscheduled maintenance. Errors in billing reduced from 8.3% to 3.5% percent.

Became the leader in the high-volume copier-duplicator market segment. Country units improved sales from 152% to 328%. Xerox went to be only company to win three prestigious quality awards- Malcolm Baldridge National award, Deming award ,and European quality award . During 1990s, Xerox, along with companies like Ford, AT&T, IBM, Motorola created the International Benchmarking Clearinghouse (IBC) to promote Benchmarking and guide companies across the world in benchmarking efforts. KaizenKAIZEN means Japanese word, Which are KAI and ZEN. KAI means change and ZEN means better. So, therefore KAIZEN means change for better. It implies continuous improvement:ConsistentlyEvery timeEvery StepEvery Place, leading to self development.

Prof. Raghavendran V37KaizenTo say, it is Japanese way of life. International attention is being focused on the outstanding performance of Japanese economy & success of management practices being adopted in Japanese industries. The fact remains we need change for better and hence kaizen.It is continuous ongoing improvement in working life, personal life, home life and social life. It is constant and gradual improvement.Prof. Raghavendran V38KaizenKaizen is process oriented while, innovation is result oriented. These two systems are very essential for achieving and sustaining superior company performance.Fundamentals of Kaizen improvement:Start with small improvement.Start with your problem, not othersStart with easy area.Improvement is a part of daily routineCollect group wisdomNever accept status quoNever reject any idea before tryingHighlight the problem, dont hide them

Prof. Raghavendran V39KaizenThere are four general avenues for continuous improvement:

Improved and more consistent product and service quality.Faster cycle time (ranging from product development, order time, pay rolls)Greater FlexibilityLower costs and less waste.Prof. Raghavendran V40KAIZENIn Kaizen technique, the members of workforce should be viewed as associates.The following factors are to be considered for employee involvement:Discretion to avoid behavior that could damage company culture.Commitment The basic power behind the success of an organizationFreedom To allow the experience of failure.Fairness to control and eliminate destructive conflict and to develop team spirit in the organization.Prof. Raghavendran V41KAIZENKaizen involves in removal of 3Ms and application of 5Ss for the improvement.

3Ms helps in reducing waste and losses.The Japaneses MUs are:MUDA( Means Waste)MURI(Means Strain)MURA(Means Discrepancy) and these should be gradually removed at different levels:

Prof. Raghavendran V42KaizenManpowerTechniquesMethodTimeFacilitiesJigs & ToolsMaterialsProduction VolumeInventoryPlaceWay of ThinkingProf. Raghavendran V43Prof. Raghavendran V, MBA TQM 12MBA42445Ss involves in improvement and they are Seri, Seiton, Seiso, Seiketsu and Shitsuke.Seri (Means straighten up). It involves differentiation between the necessary and unnecessary and discarding the unnecessary. It is applicable to:Work in progress, un-used machinery, unnecessary waste, unnecessary tools, uncalled inspection, unused Skill, Defective Products, Systems Flaws and Paper & Documents.KAIZENSeiton (Means put things in order). It is applicable to place of work assign place for everything, put everything in order, keep proper documentation and entry and avoid searching things.Seiso (Means cleans up). It is applicable to place of work keep the workplace clean, Green and cosy look of workplace.Seiketsu (Means Personal Cleanliness). Make it a habit to be clean and tidy; starting with your own personal appearance.Shitsuke (Means discipline) Follow procedure in the system.Prof. Raghavendran V45By Prof. Raghavendran VenugopalProf. Raghavendran V, MBA TQM 12MBA4246Module 3 Completed