Tqm ch 08

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Tqm ch 08

  1. 1. Chapter 8BENCHMARKING 1
  2. 2. BenchmarkingThe continuous process ofcomparing a companys strategy,products, and process with those ofworld leaders and best-in-classorganization in order to learn howthey achieved excellence andsetting out to match and evensurpass it. 2
  3. 3. The Essence Of BenchmarkingIt is the Method of identifying new ideas and newways of improving processes and hence meetingcustomer expectations. Cycle time reduction andcost cutting and both process improvement thatcan result. The traditional approach of measuringdefect rate is not enough. The ultimate objective isprocess improvement that meet the attribute ofcustomer expectation. This improvement, ofcourse, should meet both strategic and operationneeds – product design, demand forecasting,product planning, and fulfillment. 3
  4. 4. Benchmarking And The Bottom Line There are two basic points of view: 1. Maintains an initial action plan that tries to match the techniques used by world-class performance may actually make things worse by doing too much too soon. 2. Measure existing financial performance by two key measures return on assets and value added (sales minus material cost, supplies, and work done by outside contractors. The bottom line: the basic objective is satisfying the customer, so that is the limiter. 4
  5. 5. The Benefits of Benchmarking• Cultural Change: set realistic, rigorous new performance targets, and this process helps convince people of the credibility of these targets.• Performance Improvement: define specific gaps in performance and to select the processes to improve.• Human Resources: employees begin to see the gap between what they are doing and what best-in-class are doing (through training). 5
  6. 6. Strategic BenchmarkingConcerned with the macro analysis of the environment, the industry, and the competitors. Key business drivers Strategies and (key success factors) action plans Measures and indicators (measure market differentiation criteria against competitors) 6
  7. 7. Operational BenchmarkingMeasure everything. Then… prioritize whatprocesses are key to the company.”Most data collection systems are automated,making it fast and easy.Seeks internal measures that are predictors forexternal measures. Most of the focus is on costand differentiation, because the customerpurchasing decision (PD) is the function of priceand differentiation,it is necessary to differentiatethrough quality PD = F ( P × Q) and improve pricethrough cost reduction. 7
  8. 8. The Benchmarking ProcessThe following steps involve in benchmarking:1. Measuring the performance of the best-in- class relative to critical performance variable2. Determining how the levels of performance are achieve3. Using the information to develop and implement the plan for improvement. 8
  9. 9. Identify The Best-In-ClassFollowing sources are use to identify the best- in-class company:• Databases are an expanding source of comparison information.• Cooperative sharing agreements between companies.• Out-of-industry 9
  10. 10. Measure Your Own Performance Determine the your own performance form best- in-class. The trickiest part of the process is to compare internal and external data on an equivalent basis. This is does not mean that both sets of data must be comparable in the same exact form. Performing a “gap analysis” of the variation with benchmarked process the problem- solving process will reveal:1. The extent, the size, and frequency of the gap2. Causes of the gap; why it exists3. Available methods for closing the gap and reaching the performance level of the benchmarked process 10
  11. 11. Actions To Close The GapOnce the cause(s) of the gap is determined,alternative courses of action becomeevident. Selecting the right alternativeamong the criteria for evaluating time, cost,technical specifications, and quality. 11

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