Total Quality Management

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 2010 - IUG

2. 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

3. 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 2010 - 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 2010 - IUG

5. Best Practice Overlap Competitive • Industry leaders • Top performers withsimilar operatingcharacteristics Functional Internal • Top performersregardless of industry • Aggressive innovatorsutilizing newtechnology • Top performers within company • Top facilities within company Benchmarking Methodology Total Quality Management - Spring 2010 - IUG

6. Benchmarking Framework Change Measurement Review Benchmarking Framework Total Quality Management - Spring 2010 - IUG

7. 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 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 - Spring 2010 - IUG

9. Selecting Benchmarking Partners 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 Total Quality Management - Spring 2010 - IUG

10. Performance Benchmarking • Performancebenchmarking enables managers to assess their competitive positions through product and service comparisons. • Performancebenchmarking 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 2010 - IUG

11. Process Benchmarking • Processbenchmarking focuses on discrete work processes and operating systems, such as the customer complaint process, the order-and-fulfillment process, or the strategic planning process. • Processbenchmarking 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 2010 - IUG

12. 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? Total Quality Management - Spring 2010 - IUG

13. 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. Total Quality Management - Spring 2010 - IUG

14. Strategic Benchmarking • Strategicbenchmarking 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. • Strategicbenchmarking influences the longer-term competitive patterns of a company. Consequently, the benefits may accrue slowly. Total Quality Management - Spring 2010 - IUG

15. 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 2010 - IUG

16. 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 2010 - IUG

17. THE BENEFITS OF BENCHMARKING Performance Improvement • Benchmarking allows the organization to definespecific 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 2010 - IUG

18. 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. Total Quality Management - Spring 2010 - IUG

19. AT&T Benchmarking Process Total Quality Management - Spring 2010 - IUG

20. Xerox12-StepBenchmarkingProcess • 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. Total Quality Management - Spring 2010 - IUG

21. 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 2010 - IUG

22. Attributes of Benchmarking Studies:Success vs. Failure SuccessFailure 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 Total Quality Management - Spring 2010 - IUG

23. 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 2010 - IUG