VTU MBA-TQM 12MBA42 Module 3


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VTU MBA-TQM 12MBA42 Module 3

  1. 1. Total Quality Management Module 3 By Raghavendran Venugopal 1 Prof. Raghavendran V, MBA TQM 12MBA42
  2. 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. 2 Prof. Raghavendran V, MBA TQM 12MBA42
  3. 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. 3 Prof. Raghavendran V, MBA TQM 12MBA42
  4. 4. Continuous and Breakthrough Improvement 4 Time Prof. Raghavendran V, MBA TQM 12MBA42
  5. 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 5 Prof. Raghavendran V, MBA TQM 12MBA42
  6. 6. Why Benchmarking Performance Improvement Meeting Quality Standards Benchmarkin g Innovation In Management Methods Cope with Competitive Markets 6 Prof. Raghavendran V, MBA TQM 12MBA42 Creative Thinking Keep Pace with Science and Technology Changes Meeting Customers Expectations
  7. 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 7 Strategic Performance Prof. Raghavendran V, MBA TQM 12MBA42
  8. 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 8 Prof. Raghavendran V, MBA TQM 12MBA42 International Best of the Best
  9. 9. WHAT BASIS of BENCH MARKING 9 Prof. Raghavendran V, MBA TQM 12MBA42
  10. 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. 10 Prof. Raghavendran V, MBA TQM 12MBA42
  11. 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. 11 Prof. Raghavendran V, MBA TQM 12MBA42
  12. 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). 12 Prof. Raghavendran V, MBA TQM 12MBA42
  13. 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. 13 Prof. Raghavendran V, MBA TQM 12MBA42
  14. 14. WHY BASIS BENCH MARKING 14 Prof. Raghavendran V, MBA TQM 12MBA42
  15. 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 15 Prof. Raghavendran V, MBA TQM 12MBA42
  16. 16. 1-Competitive Benchmarking  Competitive benchmarking is the most difficult 16 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. 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. 17 Prof. Raghavendran V, MBA TQM 12MBA42
  18. 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. 18 Prof. Raghavendran V, MBA TQM 12MBA42
  19. 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 19 Prof. Raghavendran V, MBA TQM 12MBA42 Advantage: Discovering innovative practices Disadvantage: Not suitable for every organization or every function
  20. 20. 3-Collaborative Benchmarking  Benchmarking, originally described as a formal 20 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. 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." 21 Prof. Raghavendran V, MBA TQM 12MBA42
  22. 22. 4-Financial Benchmarking  Performing a financial analysis and comparing the results in an effort to assess your overall competitiveness and productivity. 22 Prof. Raghavendran V, MBA TQM 12MBA42
  23. 23. Six Principles of Benchmarking  Any acceptable benchmarking should have these six features:  Comprehensive  Credible  Comparative  Performance-oriented  Confidential  Continuous assessment 23 Prof. Raghavendran V, MBA TQM 12MBA42
  24. 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. 24 Prof. Raghavendran V, MBA TQM 12MBA42
  25. 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? 25 Prof. Raghavendran V, MBA TQM 12MBA42
  26. 26. Xerox Model of Bench Marking 26 Prof. Raghavendran V, MBA TQM 12MBA42
  27. 27. 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.
  28. 28. 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.
  29. 29. 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.
  30. 30. 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. 32 Prof. Raghavendran V, MBA TQM 12MBA42
  31. 31. 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.
  32. 32. 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. 34 Prof. Raghavendran V, MBA TQM 12MBA42
  33. 33. 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.
  34. 34. • 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.
  35. 35. 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. 37 Prof. Raghavendran V
  36. 36. Kaizen 38 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
  37. 37. 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 39 Prof. Raghavendran V
  38. 38. 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. 40 Prof. Raghavendran V
  39. 39. KAIZEN 41 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
  40. 40. 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: 42 Prof. Raghavendran V
  41. 41. Kaizen • Manpower • Facilities • Techniques • Jigs & Tools • Method • Materials • Time • Production 43 Prof. Raghavendran V Volume • Inventory • Place • Way of Thinking
  42. 42. 44 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 &
  43. 43. KAIZEN 45 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
  44. 44. Module 3 Completed By Prof. Raghavendran Venugopal 46 Prof. Raghavendran V, MBA TQM 12MBA42