Total Quality

Management
Naga Vamsi Krishna Jasti
BITS Pilani Asst. Professor
Mechanical Engineering Department
Hyderabad Campus
 BITS Pilani
Hyderabad Campus

Chapter 8: Benchmarking
 Topics to be covered

 Introduction
 Some definitions of Benchmarking
 Types of Benchmarking
 Process
 Advantages

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 Introduction
Benchmarking can be said as a management-tool for
improving performance by learning from best practices
and understanding the processes by which they are
achieved
It does not mean copying or stealing someone’s
superiority, but more likely adapting the best practices
into one’s own circumstances in the way most valuable
for the company and its customers.

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 Introduction – contd..
When the lessons learnt from a benchmarking exercise are
applied appropriately, they facilitate improved performance
in critical functions within an organization or in key areas of
the business environment
In recent years, organizations such as government
agencies, hospitals and universities have also discovered the
value of benchmarking and are applying it to improve their
processes and systems.
It is used extensively by organizations like Xerox, AT&T,
Motorola, Ford, Toyota and many more.

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 Introduction – contd..
Benchmarking is a common element of quality standards,
such as Chrysler, Ford and General Motors quality system
requirements
What is Benchmarking and What is Not?
– It is not a mechanism for determining resource
reductions, but redeployment of resources to the most
effective way of supporting customer requirements.
– It is not a program rather an ongoing management
process
– It is not a cookbook process that requires only looking
up ingredients and using them for success, rather it is a
discovery process and a learning experience.
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 Some definitions of Benchmarking

“The search for industry best practices that lead to

superior performance” (Camp, 1989)
“Benchmarking is a continuous process of measuring your
current business operations and comparing them to best-in-
class operations. Application of the knowledge gained from
benchmarking study provides a foundation for building
operational plan to meet and surpass industry-best
practices” [Bemowski, 1991].
“Benchmarking is emulating the best by continuously
implementing change and measuring performance” [Zairi,
1995].

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 Some definitions of Benchmarking – contd..

“Benchmarking is a continuous, systematic process for

evaluating the products, services and work processes of
organizations that are recognized as representing best
practices for the purpose of organizational improvement”.
(Spendolini, 1992)
“Benchmarking is the process of improving performance
by continuously identifying, understanding and adapting
outstanding practices and process found inside and outside
the organization anywhere in the world and implementing it
to achieve the desired results”. (APQC)

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 Objective of Benchmarking
The main objective of any benchmarking activity is:
– To identify key performance measures for each function
of a company’s operations
– To measure the internal performance levels of the
company as well as that of competitors
– To ensure that its business process goals are set to
exceed the best quantitative results achieved by leading
organizations
– To incorporate best practices throughout the
organization business process
– To reach a level of maturity where benchmarking is an
ongoing part of management system in all areas of the
company
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 Types of Benchmarking
Some authors classify into two:
– Internal Benchmarking
– External Benchmarking
Except the inter-departmental or inter-company
benchmarking, all other benchmarking activities are
considered under external benchmarking.
But some other researchers have classified benchmarking
in the following ways:
– Based on organization chosen
– Based on goals

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 Types of Benchmarking – contd..

Based on organization chosen for benchmarking

– Internal Benchmarking:
• Benchmarking against internal operations
• In most large companies there are similar functions
in different business units. One of the simplest
benchmarking exercises is to compare these internal
operations.
• The objective of internal benchmarking is to identify
the internal performance standards of an
organization

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 Types of Benchmarking – contd..

Based on organization chosen for benchmarking – contd..

– Competitive Benchmarking
• Benchmarking against external direct product
competitors
• Direct competitors are the most obvious to benchmark
against.
• The objective is to compare companies in the same
markets that have competing products or services or
work processes.
• E.g. Xerox Vs Canon

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 Types of Benchmarking – contd..

Based on organization chosen for benchmarking – contd..

– Industry or Functional Benchmarking: Benchmarking
against external functional best operations of industry
leaders
– It can be done with others in the same industry, which
may have the same products or services but are not
competitors in the same market.
– It tends to involve comparisons between firms that
share some common technological and market
characteristics and to concentrate on specific functions.
– For example, BSNL might benchmark its billing process
against the billing process of British Telecom.
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 Types of Benchmarking – contd..

Based on organization chosen for benchmarking – contd..

– Generic or Process Benchmarking:
• Benchmarking a process in one or several unlike
organizations
• This type of benchmarking focuses on excellent
work processes rather than on the business
practices of a particular organization or industry
because some business functions or processes are
the same regardless of dissimilarities of the
industries

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 Types of Benchmarking – contd..

Based on organization chosen for benchmarking – contd..

– Relationship Benchmarking:
• This is a special type of benchmarking, highlighted
by Nandi (2000).
• A new type of benchmarking in which if a
comparison is made with another company with
which the company already has relationship like
customer-supplier relations, joint venture
arrangements etc, then it is called as relationship
benchmarking

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 Types of Benchmarking – contd..
Based on goals of benchmarking
Performance Benchmarking
– Refers to comparison of indicators related to a business
as a whole or to the group of critical activities or
processes which are critical to the implementation of
business strategy.
– It is also called as “Result Benchmarking” in which, all
kinds of system performance variables like efficiency,
effectiveness, productivity, quality, flexibility,
innovativeness and profitability could be measured and
compared
– It is necessary that measurements and comparisons be
made at tactical levels
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 Types of Benchmarking – contd..
Based on goals of benchmarking
Product Benchmarking / Customer Satisfaction
Benchmarking
– Refers to either engineering or qualitative comparison of
products and services among competing offerings.
– Many of the manufacturing organizations have been
implementing several kinds of reverse engineering to
benchmark various features of their products.
– It helps in identifying activities where improvement
could be done and it leads to redesign of existing
products

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 Types of Benchmarking – contd..

Based on goals of benchmarking

– Product Benchmarking – contd..
– Involves comparison of different features and
attributes of competing products and services either
through engineering analysis or through analysis of
perception of customers.
– Example : Ford Motor Company did during the
development of their “Taurus” model of automobile.
– Product benchmarking should be done by an inter-
disciplinary group instead of marketing departments
alone, to provide maximum benefits.

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 Types of Benchmarking – contd..
Based on goals of benchmarking
Strategic Benchmarking
– Refers to a study of corporate level or business level
strategies perused by some of the selected companies
reputed for reformulation of strategies or policies in
recent times.
– In strategic benchmarking the focus goes beyond
performance leadership to examine non-industry
leaders in an attempt to identify significant trends that
may provide insight into potential improvement
opportunities.
– Usually done by establishing benchmarking alliances
with a limited number of non-competing businesses.
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 Types of Benchmarking – contd..

Based on goals of benchmarking

Diagnostic Benchmarking
– Differs from performance benchmarking in a sense that
the former encompasses a set of interrelated practices
along with performance measures, which alone are
covered in the latter.
– Applications vary primarily with frameworks that
determine the criteria and assessment features
procedures for those pre-defined practices.
– For example, the “Quality Control Diagnosis Reports”
provided by Deming Prize award committee to
participating Japanese manufactures, may be cited as
the perfect example of diagnostic benchmarking.
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 Types of Benchmarking – contd..

Based on goals of benchmarking

Global Benchmarking
– Involves applying and learning globally;
– It must bridge international trade issues
– It acts as a means to cross cultural barriers and do
away with business process distinctions.

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 Process
 Six steps to bench mark
– Decide what to benchmark
– Understand current performance
– Plan
– Study others
– Learn form the data
– Use the findings

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 Process– contd.,
Decide what to benchmark:
Thinking about the mission and critical success factors.
Answer the following questions:
1. Which processes are causing the most trouble?
2. Which processes contribute most to customer
satisfaction and which not performing up to
expectations?
3. What are the competitive pressure impacting the
organization the most?
4. What processes or functions have the most potential
for differentiating our organization from others?
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 Process– contd.,
Understanding current performance:
 Understand and document the current process.
 Attention to be paid to inputs and outputs.
 Quantifying the documentation process.
 Special care to be taken while accounting information is
dealt.
Planning:
 Decisions to be made as how to conduct the study.
 Timetables to be prepared and mutually agreed upon.
 Identifying as which type of benchmarking has to be used.

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 Process– contd.,
Studying Others:
 Studies are of two types: description of how best in class
processes are practiced and the measurable results of these
practices.
 Conducting original research through site visits,
questionnaire, focus groups, interviews etc.,
Learning from the data:
 Is there any gap between the organization’s performance and
that of the best in class organizations?
 What is the gap and how much is it?
 Why is there a gap? What does the best in class do differently
that is better and if adopted, will results improve?
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 Process– contd.,
Using the findings:
 In case of negative findings, the objective is to change the
process to close the gap.
 Mutual agreement between the top management and the
workers.
 New goals and objectives to be set.
 Follow a generic process:
– Specify the task
– Sequence tasks
– Determine resource needs
– Establish task schedule
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 Process– contd.,
Using the findings: contd.,
 Follow a generic process:
– Assign responsibility for each task
– Describe expected results
– Specify methods for monitoring results
 Goals and objectives should be consistent with the
execution of the action plan.
 Next step is to repeat the benchmarking process.

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 Advantages

Satisfying customers' needs and expectations. It helps to identify

what is important to your customers and what will meet their
expectations
It helps to discuss and understand the methods and practices
needed to reach new goals
It provides a means to achieve superior performance
It helps to adapt best practices
It provides the opportunity to develop and stimulate strategic
goals/planning
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 Advantages– contd..

It helps to stay informed on the state-of-the-art business

practices
It encourages creative thinking while performing this study you
will discover different creative ideas used by other organizations
It helps in reviewing / studying competitive comparisons
It accelerates process improvement. Performing a study will
provide information/results from others so that changes can be
implemented quicker

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 Recap

 Introduction
 Some definitions of Benchmarking
 Types of Benchmarking
 Advantages
 Process

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