VTU MBA-TQM 12MBA42 Module 3

1. Total Quality Management
Module 3
By Raghavendran Venugopal
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Prof. Raghavendran V, MBA TQM 12MBA42

2. Bench Marking
It 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.
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Prof. Raghavendran V, MBA TQM 12MBA42

3. What is Benchmarking? (J. McEvilly-2008)
 Benchmarking has three main features:
Continuous method of measuring and
comparing a firm’s business processes against
those of another firm.
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Prof. Raghavendran V, MBA TQM 12MBA42

4. Continuous and Breakthrough Improvement
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Time
Prof. Raghavendran V, MBA TQM 12MBA42

5. Why Benchmarking?
 Benchmarking gives us the chance of gaining:
 Better Awareness of Ourselves (Us)
 What we are doing
 How we are doing it
 How well we are doing it
 Better Awareness of the Best (Them)
 What they are doing
 How they are doing it
 How well they are doing it
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Prof. Raghavendran V, MBA TQM 12MBA42

6. Why Benchmarking
Performance
Improvement
Meeting
Quality
Standards
Benchmarkin
g
Innovation
In
Management
Methods
Cope with
Competitive
Markets
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Prof. Raghavendran V, MBA TQM 12MBA42
Creative
Thinking
Keep Pace
with
Science and
Technology
Changes
Meeting
Customers
Expectations

7. Types of Benchmarking
 On 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.
Process
Product
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Strategic
Performance
Prof. Raghavendran V, MBA TQM 12MBA42

8. Types of Benchmarking
 On the basis of “Who” is being compared with
our organization, we have these categories:
Best in Class
Generic
Internal vs. External
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Prof. Raghavendran V, MBA TQM 12MBA42
International
Best of the Best

9. WHAT BASIS of BENCH MARKING
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Prof. Raghavendran V, MBA TQM 12MBA42

10. 1-Product Benchmarking
 Many 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.
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Prof. Raghavendran V, MBA TQM 12MBA42

11. 2-Performance Benchmarking
 Performance 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.
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Prof. Raghavendran V, MBA TQM 12MBA42

12. 3-Process Benchmarking
 Process 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).
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Prof. Raghavendran V, MBA TQM 12MBA42

13. 4-Strategic Benchmarking
 Strategic 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.
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Prof. Raghavendran V, MBA TQM 12MBA42

14. WHY BASIS BENCH MARKING
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Prof. Raghavendran V, MBA TQM 12MBA42

15. Types of Benchmarking
 There are several other classifications for
benchmarking, based on partner type, adoption
level and target process, etc. Following are the
most used types:
 Internal
 External
 Competitive
 Functional
 Generic
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Prof. Raghavendran V, MBA TQM 12MBA42

16. 1-Competitive Benchmarking
 Competitive benchmarking is the most difficult
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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
Prof. Raghavendran V, MBA TQM 12MBA42
and then expands into benchmarking.

17. 1-Competitive Benchmarking
 Competitive 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.
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Prof. Raghavendran V, MBA TQM 12MBA42

18. 2-Functional Benchmarking
 Functional 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.
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Prof. Raghavendran V, MBA TQM 12MBA42

19. 2-Functional Benchmarking
 Comparative 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.
Comparing functions
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Prof. Raghavendran V, MBA TQM 12MBA42
Advantage:
Discovering innovative
practices
Disadvantage:
Not suitable for every
organization or every function

20. 3-Collaborative Benchmarking
 Benchmarking, originally described as a formal
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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
Prof. Raghavendran V, MBA TQM 12MBA42
through their industry association.

21. 3-Collaborative Benchmarking
 With 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."
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Prof. Raghavendran V, MBA TQM 12MBA42

22. 4-Financial Benchmarking
 Performing a financial analysis and comparing
the results in an effort to assess your overall
competitiveness and productivity.
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Prof. Raghavendran V, MBA TQM 12MBA42

23. Six Principles of Benchmarking
 Any acceptable benchmarking should have these
six features:
 Comprehensive
 Credible
 Comparative
 Performance-oriented
 Confidential
 Continuous assessment
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Prof. Raghavendran V, MBA TQM 12MBA42

24. Benchmarking Pitfalls
 Benchmarking is NOT:
 Tour visits to other competitors or organizations.
 Performance measurement, it’s part of
benchmarking process. i.e. competitive analysis.
 A cost-cutting exercise.
 Imitating others’ practices or processes, it’s “How
to” not “What is”.
 A public relations exercise.
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Prof. Raghavendran V, MBA TQM 12MBA42

25. Benchmarking Pitfalls
 Failure 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?
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Prof. Raghavendran V, MBA TQM 12MBA42

26. Xerox Model of Bench Marking
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Prof. Raghavendran V, MBA TQM 12MBA42

29. Benchmarking at Xerox
Benchmarking 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.
Xerox’s products had over 30,000 defective parts per million—about 30
times more than its competitors.

30. 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 Xerox’s
performance with competitors.
• Integration: Establish necessary goals and integrate these goals into the
company’s 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.

31. Supplier management system
Japanese Companies
•It has 1000 suppliers
•They trained Vendor’s Employee in Quality Control , manufacturing automation.
•Just-in-time i.e. Delivery in small quantities, as per customer’s 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.

32. Inventory Management
•
•
Inventory holding Time reduction
Xerox asked Branch managers to match the Stocking Policy with Customer’s
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.
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Prof. Raghavendran V, MBA TQM 12MBA42

33. Manufacturing System
Managers 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 Competitor’s performance.
Those Competitors who have scored higher, Xerox benchmark itself against it.

34. Quality
As a part of “Leadership Through Quality” program, Xerox started providing its
customers( External & Internal) innovative products & services.
Total Quality Management
Team consists of Senior managers & Consultants from McKinsey help to make
TQM.
Under which New three SBUs were introduced:
Enterprise Service Business
Office Copiers
Home Copiers
All these have autonomy in Engineering, marketing & pricing.
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Prof. Raghavendran V, MBA TQM 12MBA42

35. 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.

36. • 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.

37. Kaizen
KAIZEN 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:
 Consistently
 Every time
 Every Step
 Every Place, leading to self development.
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Prof. Raghavendran V

38. Kaizen
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To 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 V

39. Kaizen
Kaizen 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 others
 Start with easy area.
 Improvement is a part of daily routine
 Collect group wisdom
 Never accept status quo
 Never reject any idea before trying
 Highlight the problem, don’t hide them
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Prof. Raghavendran V

40. Kaizen
There 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 Flexibility
 Lower costs and less waste.
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Prof. Raghavendran V

41. KAIZEN
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In Kaizen technique, the members of workforce should be
viewed as associates.
The following factors are to be considered for employee
involvement:
1. Discretion– to avoid behavior that could damage
company culture.
2. Commitment– The basic power behind the success of
an organization
3. Freedom– To allow the experience of failure.
4. Fairness– to control and eliminate destructive conflict
and to develop team spirit in the organization.
Prof. Raghavendran V

42. KAIZEN
Kaizen involves in removal of 3M’s and application of
5S’s for the improvement.
3M’s helps in reducing waste and losses.
The Japanese’s MU’s are:
 MUDA
( Means Waste)
 MURI
(Means Strain)
 MURA
(Means Discrepancy) and
these should be gradually removed at different levels:
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Prof. Raghavendran V

43. Kaizen
• Manpower
• Facilities
• Techniques
• Jigs & Tools
• Method
• Materials
• Time
• Production
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Prof. Raghavendran V
Volume
• Inventory
• Place
• Way of Thinking

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5S’s involves in improvement and they are
1. Seri,
2. Seiton,
3. Seiso,
4. Seiketsu and
5. 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,
Prof. Raghavendran V, MBA TQM 12MBA42
Defective Products, Systems Flaws and Paper &

45. KAIZEN
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Seiton (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.
Prof. Raghavendran V

46. Module 3 Completed
By Prof. Raghavendran Venugopal
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Prof. Raghavendran V, MBA TQM 12MBA42