Seven Basic Quality tools documents
Definition of Quality Management -- it is a method for ensuring that all the activities necessary to design, develop and implement a product or service are effective and efficient with respect to the system and its performance. It is also a principle set by the company to endure the continuous advocacy of quality services and products, or the further improvement of it.
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Original Text on www.freequality.org
Benchmarking
There are many methods used by
companies in an effort to improve quality in both their products and
services. In the fast paced environment
that surrounds industries today, they find themselves faced with the pressure
to discover fail proof ways to run their businesses. Techniques that do not turn out successful
can harm the company and also result in losses in costs and time.
A popular tool used today by many
companies is benchmarking. It is a process
that involves continuously comparing and measuring against other companies to
gain information and learn from their experiences, processes and
practices. It provides companies the
opportunity to assess their own procedures and helps them to understand their
industry better which leads to innovative thinking. It also helps them to identify what changes
are essential to improve performance.
Some benefits of benchmarking are a better understanding of customers
and competitors, reduction in waste, quality problems and reworking, quicker
awareness of important innovations, a stronger reputation within the market,
and increased profits and sales turnover.
Benchmarking is usually done with top
performing companies in both the service and the business sectors. Many of these companies are Fortune 500
companies such as Ford, Nissan, or Motorola.
However, others include smaller businesses that are only a fraction of
the size. These firms looking to
benchmark all recognize that success and advancement come from a clear
understanding of how the business is doing, not just against last year’s
performance, but against the best they can measure. There are two parties in the benchmarking
process. The initiator is the firm that
initiates contact and studies another company in an attempt to improve their
own processes. The target firm, or the
benchmarking partner, is the one being studied.
Of all the benchmarking tactics, the
two most popularly used are competitive benchmarking and process
benchmarking. Competitive benchmarking
compares the performance of one organization to that of its competitor. This method is useful for estimating a
company’s position in the industry.
Process benchmarking evaluates business processes or practices that are
vital to a firm’s performance. It
involves the identification of the best practices used by an organization,
regardless of what industry they are in.
The practices are then studied and implemented by the initiator
firm. The four most common types of
benchmarking are process, performance, strategic, and internal
benchmarking. Process benchmarking
focuses on work processes and operation systems and tries to identify the most
effective approaches used by other firms that perform similar work or deliver
similar services. Performance
benchmarking is competitive benchmarking and allows assessment of a company’s
competitive position through the comparison of products and services and the
analysis of statistics. Strategic
benchmarking observes how others compete and usually moves outside of a
company’s industry to look for best practices.
This method is widely used by Japanese corporations. Internal benchmarking looks for internal
winning strategies and tries to establish them equally throughout the
company. Using this strategy, all the
functions of a business’s operations are compared and measured against the best
in class for competitiveness. The key
advantage of internal benchmarking is its ease of implementation and also the
minimal requirement of time and resources.
The benchmarking process is not an
easy one. It requires more time and
effort than most managers think. There
are a series of steps to follow to ensure that the process is successful. The first step is to identify what is to be
benchmarked and then determine what firm(s) to benchmark against. They should be a leader or “best in class” in
the area that is being benchmarked. The
next step is to establish how data will be collected and measured in order for
it to be a meaningful comparison. Then,
the company should analyze current performance levels and find the gaps between
them and the target firm. Future
performance levels should also be forecasted so that goals can be set. Next, the benchmark findings should be
communicated to everyone concerned in order for them to understand what
improvements need to be made. Specific
actions should be implemented and progress should be continually monitored to
determine whether or not the plan was really effective. The last step is to recalibrate benchmarks to
ensure that the firm can react to and keep up with others’ improvements.
One example where benchmarking is
used is Rank Xerox. Rank Xerox is part
of Xerox Corp. who found itself in trouble when its market share went down
fifty percent in 1980. Competitors were
moving into the market and beating them out in price and quality. Xerox decided to benchmark such things as how
their photocopiers were built, the cost of each state of production, selling
costs, and service quality against both competitors and any other firms that it
could learn from. Benchmarking is an
everyday activity for Xerox and Rank Xerox.
Their guiding principle is: “Anything anyone else can do better, we
should aim to at least do equally well”.
Their distribution was compared against such companies as 3M in
Dusseldorf, Ford in Cologne, Volvo in Gothenburg and IBM’s international
warehouse and French warehouse. By
comparing with these best in class firms, Xerox was able to discover that
warehouses were not efficient through a high level of automation but rather
through efficient manual routines. Among
many other findings, they also realized that they needed to update their
systems because they took one extra day in information flow between the field
and center. Through benchmarking, Xerox
was able to improve its financial position, stabilize its market share, and
increase customer satisfaction by forty percent in the past four years.
Xerox is just one example of the
many companies that have grown more successful from using benchmarks. They were able to use the information they
collected correctly and also keep the process a daily routine. Benchmarking is only a great tool for gaining
knowledge and experience if it is employed properly.
More information on benchmarking can
be found at the Department of Trade and Industry’s website: http://www.dti.gov.uk/support/index.htm. Information can also be found by reading Competitor Intelligence: How to Get It, How
to Use It by L.M. Fuld or Benchmarking
for Best Practices by Christopher E. Bogan.