Total Quality Management

Student Notes

Abstract
This document contains the important points discussed in the pre-recorded courseware. It will help in revising the
important concepts related to Electrical and Electronics Technology course.

This Student Note is authorized for use only by Birla Institute of Technology and Science (BITS) - Pilani students. Copying or
posting of its content is an infringement of copyright.
 Total Quality Management

_____________________________________________________________________________________

Lecture 8 Notes
Focus Topics:
 Introduction Benchmarking
 Types of Benchmarking
 Steps in Benchmarking
 Cultural Implications
1. Introduction to Benchmarking
 “If you know your enemy and know yourself, you need not fear the result of a
hundred battles” Sun Tzu- Chinese General, 500 B.C.
 “Fool you are …. to say you learn by your experience ….. I prefer to profit by
others’ mistakes , and avoid the price of my own” Prince Otto Von Bismarck
 “Keep on the lookout for novel and interesting ideas that others have used
successfully. Your idea has to be original only in its adaptation to the problem
you’re currently working on” Thomas Edison
 “The continuous process of measuring our products, services and practices
against our toughest competitors or those companies renowned as leaders”
David Kearns, Chairman, Xerox Corporation (1982-1990).
 Why Benchmark?
 Current competitive marketplace
 Larger number of global players
 More access to information globally
 It is becoming difficult to retain a particular edge for long. Change is
occurring very fast.
 Growing awareness among people and industries
 Today’s problems are very complex
 It is not possible to solve all the problems by oneself
 It is becoming acceptable to borrow good ideas
 What Benchmarking Is and Isn’t
 Isn’t
 A way to reduce resource usage
 A quick fix to a recurring problem
 Something that can be done purely with the help of consultants
 A program or special project
 A specific cookbook approach or recipe
 Is
 A way to understand the competitive position of a company
 An ongoing process
_____________________________________________________________________________________________
This Student Note is authorized for use only by Birla Institute of Technology and Science (BITS) – Pilani
Students. Copying or posting of its content is an infringement of copyright. 1
 Total Quality Management

_____________________________________________________________________________________

 Part of top management responsibility

 Strategically important to a company
 Benefits of Benchmarking
 Improves organizational quality
 Helps in achieving competitive costs
 Creates buy-in for change
 Exposes people to new ideas
 Creates avenue for learning
 Creates an external business view
 Overcomes employee’s belief that better performance is possible
2. Types of Benchmarking
 Based on Outcomes/Targets
 Competitive Benchmarking
 Process Benchmarking
 Strategic Benchmarking
 Based on Levels
 Internal
 External
 Global/Best-in-class
 Competitive Benchmarking
 Usually compares products or services with competitors
 Reverse engineering
 Focus on attributes such as technical quality, reliability, speed, etc.
 Used to understand a company’s competitive position
 Process Benchmarking
 A specific process or work activity is selected for comparison
 The process should be critical to the company’s success
 Either an internal or an external benchmark is researched
 Examples could be the order fulfillment process, billing process, recruitment
process, complaint handling process, etc.
 Strategic Benchmarking
 High level business strategies are targeted for benchmarking
 Focus on things such as core competencies, markets, etc.
 Implementation can take a long time
 Japanese have excelled in strategic benchmarking

 Internal Benchmarking
 Look for best practices within the company
_____________________________________________________________________________________________
This Student Note is authorized for use only by Birla Institute of Technology and Science (BITS) – Pilani
Students. Copying or posting of its content is an infringement of copyright. 2
 Total Quality Management

_____________________________________________________________________________________

 Diverse company divisions and locations may be unaware of practices

elsewhere
 Several times, one can also get a wealth of information from looking at past
successes
 Is relatively cheap and has fewer hurdles to cross
 External Benchmarking
 Looking for best practices outside the company, often in the same industry
 Could be either competitive or process benchmarking
 Requires more effort, cost, and preparation
 Gives a better view of the competitive stand of the company
 Best-in-class Benchmarking
 External companies, not necessarily in the same industry are selected, based
on who does an activity the best
 Typically used for process benchmarking
 Examples are Xerox benchmarking L.L. Bean’s logistics and distribution
function, Japanese borrowing the Kan Ban system from grocery stores, etc.
3. Basic Steps in Benchmarking
 Understand what you want to study
 Gather data
 Define gaps with your current system/process
 Take innovative action to cover the gaps and gain superiority
 Continuously innovate
 What is a Process?

 Core Processes
 Core processes are those processes that are critical to the success of the
organization
 Examples of core processes could be order entry, order fulfillment,
training, recruitment, billing, customer service, etc.
 Each organization would need to define its own set of core processes.
 These core processes are what should be the focus of benchmarking
 Examples
 Xerox
o Market to collection
_____________________________________________________________________________________________
This Student Note is authorized for use only by Birla Institute of Technology and Science (BITS) – Pilani
Students. Copying or posting of its content is an infringement of copyright. 3
 Total Quality Management

_____________________________________________________________________________________

o Integrated supply chain

o Time to market
o Customer service
 General Electric
o Advanced technology
o Offerings development
o Service delivery
o Order-to-remittance
 Whom to Benchmark
 Own past experiences
 Internal sources
 Direct competitors
 Functional leaders
 Generic
Source Relevance Data Collection Innovative
Ease Ideas

Past Experience X X

Internal Sources X X

Direct X
Competitors

Functional X X
Leaders

Generic X X

 Sources of Data
 Internal sources
 External sources
 Original research
 Internal Sources
 Product analysis
o Reverse engineering reveals information about the product
o Ordering and shipping documents show methods and origin of
shipment
o Packing slips and other documents may reveal use of bar codes for
inventory control

_____________________________________________________________________________________________
This Student Note is authorized for use only by Birla Institute of Technology and Science (BITS) – Pilani
Students. Copying or posting of its content is an infringement of copyright. 4
 Total Quality Management

_____________________________________________________________________________________

o Repair and returns policy might also be indicated on service

documents
o Order catalogues have information on ordering methods
 Internal experts
o Functional experts are usually aware of current trends in their
respective areas
o There may be other people who are not functional experts, but whose
job keeps them on a lookout for developments in the markets, e.g.
marketing people
o There may be people who may not have information themselves, may
have indirect information that may help
o There are people who are active socially or professionally and this
brings them into contact with what is happening on the outside
 External sources
 Library Search/Internet Search
 Professional and Trade Associations
 Consultants
 External Experts and Studies
 Original Research
 Questionnaires
 Telephone Interviews
 Mail in surveys
 Direct site visits
 Data Analysis and Action
 Analyze current performance gaps
 Project future performance gaps
 Establ Examples
 Example: Ford
 500 employees worked in the accounts payable department. Ford
executives thought they could reduce the headcount by about 20% by
using computers.
 They visited Mazda, which employed only 5 people in A/P. How to use re-
engineering? You cannot re-engineer a department such as the A/P dept.
 They decided to re-engineer the procurement process is action plan
 Old process:
 Purchasing sends a P/O to the vendor, with a copy to A/P. When material
is received at receiving dock, receiving clerk completes a form regarding
the material and sends it to A/P. The vendor sends an invoice to A/P.

_____________________________________________________________________________________________
This Student Note is authorized for use only by Birla Institute of Technology and Science (BITS) – Pilani
Students. Copying or posting of its content is an infringement of copyright. 5
 Total Quality Management

_____________________________________________________________________________________

 A/P has 3 documents. If they matched, payment was sent to vendor. If not,
clerks in A/P spent hours to reconcile them. Lot of work and delay in
payment to the vendor.
 New Process
 Purchasing releases P/O to vendor and enters order in on-line data base.
When material is received, the receiving clerk checks physical material
with any on-line purchase order. If it does, the clerk Okays the receipt and
this automatically authorizes a check to be sent to the vendor.
 If the received material does not match any open P/O, the clerk refuses
the material and sends it back to the vendor.
 As a result of these changes, the A/P dept was reduced to 5% of its
original size in some parts of Ford.
4. Cultural Implications
 We have been brought up on the concept that it is wrong to steal, even ideas.
 However, there is nothing wrong in taking ideas from someone and improving
upon them
 Innovative adaptation of ideas has always been done in history and has
resulted in human progress
 We need to get away from the idea that learning from others is cheating
 We need to make sure, however, that nothing illegal is done, i.e., taking
patented or proprietary information or ideas
 Borrowing from others needs to build into our system to facilitate
organizational learning
 What Can Companies Do
 Invest in employee education that brings outside ideas into your
organization
 Create lending libraries that focus on competitors and other high
performance winning strategies and systems
 Encourage visits to outside facilities and seminars to learn from other
companies
 Make best practice information sharing and innovative adaptation skill
evaluated in performance review and promotion process
 Make benchmarking competitors and other excellent companies a
responsibility clearly described in job descriptions
 Engage high level executives directly in benchmarking and innovative
adaptation
 Regularly identify, study and celebrate internal successes with the goal of
repeating and improving on them

_____________________________________________________________________________________________
This Student Note is authorized for use only by Birla Institute of Technology and Science (BITS) – Pilani
Students. Copying or posting of its content is an infringement of copyright. 6