Quality management system

1. Quality Management Systems
Topic-: Benchmarking
PRESENTED BY: SAI BAPAT.
UNDER THE GUIDANCE OF : DR. SUDHIR PANDYA.
DEPARTMENT : QUALITY ASSURANCE

2. Introduction
The purpose of benchmarking is to improve products and processes in order to
meet customer needs better. It is tool that is used by many businesses.
The basic principles of benchmarking are maintaining quality, customer
satisfaction and continuous improvement.
Benchmarking as a tactical planning tool originated with Xerox Business
Systems in the late 1970s. Japanese affiliates were selling better quality copiers
for less than the manufacturing costs of similar products in the USA.

3. What is Benchmarking?
Benchmarking is a way of measuring your firm's strategies and performance
against "best-in-class" firms, both inside and outside your own industry.
The aim is to identify best practices that can be adopted and implemented by the
organization with the purpose of improving company performance. This is the
beach-learning process.
The actual implementation is taking place in the bench-action process.
Usually, benchmarking is carried out within the same industry.
However, benchmarking is often carried out between organizations that have a
similar process but belong to different industries. By benchmarking the process
across industries, the organization sometimes achieves greater results than by
sticking to its own industry.

4. Types of Benchmarking
INTERNAL
BENCHMARKING
EXTERNAL
BENCHMARKING
• Industry
Benchmarking
• Competitive
Benchmarking
• Process
Benchmarking

5. Internal Benchmarking
Benchmarking against internal operations is one of the simplest forms of
benchmarking since mon companies have similar functions inside their business
units.
The immediate benefit comes from identifying the best internal procedures, and
subsequently transferring them to other parts of the organization.
The advantage is to access sensitive data and information is easier; standardized
data is often readily available and mainly less time and resources are needed.
Companies which implement internal benchmarking alone often retain an
introverted view, unless they use internal benchmarking as a baseline for external
benchmarking at a later time.

6. Industry (Functional) Benchmarking
Industry benchmarking is the measurement of various aspects of the company's
functional operations and comparison of these to similar measurements from
other companies (often industry leaders) within the industry group.
Many industry groups publish comparative data either privately for members of
the group or publicly or both. The benchmarking partners usually share some
common technological and market characteristics. Often, they also concentrate
on specific functions. Because there are no direct competitors involved, the
benchmarking partners are more willing to contribute and share.
This can lead to innovations and dramatic improvements.
Disadvantages can be scheduling companies that are already overflowed by
benchmarking and therefore hesitate to participate in benchmarking.

7. External Benchmarking
It requires a comparison of work with external organisations in order to discover
new ideas, methods, products and services.
External benchmarking provides opportunities of learning from those who are at
the leading edge. This usually takes long time for the results to come.
It involves analyzing of outside organization that are known to be best in class.
Example-
Comparing sales figures for similar products made by different companies.

8. Competitive Benchmarking
This type of benchmarking is used against direct competitors.
Performed externally, its objective is to compare companies offering competing
products, services or processes in the same markets.
With direct competitors, information is not easy to obtain. Public domain
information is the most accessible.
If some key customers in the market have experience with more suppliers
(competitors) they may be willing to give their evaluation of these suppliers. But
this method often involves high costs.

9. Process (generic) Benchmarking
Here, similar procedures at dissimilar companies are benchmarked. Although it is
considered relatively effective it is difficult to implement.
Process benchmarking requires a broad conceptualization of the entire process
and a thorough understanding of procedures. As indicated above, the concept has
also been referred to as generic benchmarking because it is not restricted structure
or market.
As a contrast to process benchmarking, data benchmarking is a way of comparing
quantitative measures with competitors or with members of an industry group.
In data benchmarking the team is not interested in the underlying processes.

10. Benchmarking Process
Benchmarking usually involves seven main stages-
 Decide what functions of the business to benchmark by evaluating the KSF's (key
success factors)
 Evaluate the importance of each subject area (KSF).
 Identity against whom to benchmark (determine benchmarking partners).
 Gather the benchmarking information
 Compare "best-in-class" with the firm's own performance (identify performance gaps)
 Implications of benchmarking results, bench learning- how can the firm's skills /processes be
improved by learning from the "best-in-class"?
 Bench-action implementation of the changes

11.  Decide what functions of the business to benchmark by evaluating the KSF-
Key success factors (KSFs) are the limited number of the firm's subject areas in which results, if they are
satisfactory, will ensure successful competitive performance for the organization In benchmarking projects
the starting point is identification of subject areas within which improvements are critical.
The criteria for selecting the subject areas are: They should be of strategic importance to the business; and
Improvements in the areas will make a significant contribution to overall business results.
 Evaluate the importance of each subject area (KSF)-
The purpose is to narrow down the number of subject areas to a few areas in which benchmarking might
have a considerable impact. After this screening the subject areas are prioritized and may be given
importance.
It is wise to direct attention to a small number of areas, particularly in the early stages of benchmarking
when knowledge of the technique needs to be developed concurrently with the process itself. One must
always bear in mind whether the subject area is really important to the success of the company.

12.  Identify against whom to benchmark-
Following 2 questions provide the starting point in search of suitable partners:
1) Who/what is better than us?
2) To whom is this process a key to survival?
Essentially, benchmarking partners might be found in two locations:
Internal partners: Most organizations start with internal comparisons wherever possible. This makes a
great deal of sense since there are relatively few hurdles to overcome in terms of language, culture and
data availability.
External partners : Identifying potential external benchmarking partners is another step in the
research phase. The best is always to develop a list of potential benchmarking partners.
 Gather the benchmarking information-
The data collection team needs to have uniform collection methods. Be sure to specify the data at the
proper aggregation level: specify the data in terms of units and intervals to make the comparison and
the analysis phase easier. It is good practice to mail any questionnaires prior to your visit in order to
provide time for the benchmarking partner to prepare the data in the format requested.

13.  Compare "best-in-class" with the firm's own performance (identify performance gaps) –
The specific company's competitive position is always unique. The company's internal make- up of
the resources, competencies, etc. is special, customer demands and requests vary and competitors act
differently. These and other factors create the need to compare the results of a benchmarking process
with one's own unique company situation.
 Implications of benchmarking results, bench-learning: how can the firm's skills/processes be
improved by learning from "best in class"?
It’s the first step towards an improvement of the company's performance. Companies can be
considered as being a set of routines and practices. It is characteristic that the routines and practices
have been developed and acquired throughout a longer period of time and that the awareness of their
importance often is limited.
A central challenge is trying to understand the link between individual and organizational learning
better. Companies consist of individuals. The individuals are meant to carry out specific tasks. This
performance, however, is not independent of the individuals. Hence, an individual can strongly
influence how specific tasks are carried out. Thus, the performance varies Indefinitely and may
cause innovation.

14.  Bench-action: Implementation of the changes –
The actual implementation of the planned changes could take place through developing skills of the
employees, training and organizational development. A workforce with superior skills is a primary
force of sustainable competitive advantage. Hence, training and development become the critical
means for creating readiness and flexibility for change across all organizational levels. Implementation
often takes time to be successful. It is crucial for the benchmark concept that the company sees the
results of the benchmarking process only as a snapshot of the situation. It is up to the management and
the employees to change it. Changes are not always easy to undertake.
In particular, changes of habits and routines are often time consuming and complicated. In an
organization these habits and routines have developed over a long period of time. Therefore, new
concepts have to be learned and put into practice before the benchmarking process can have a real
effect.

15. Advantages
The common benefits of benchmarking is help to improve the productivity of the company.
Implements creative ideas: The benchmarking process helps the company find out their key features
and after finding out the key features of their company, that company compares it with another company
to complete the picture And if there are any filling to be needed, then the company starts implementing
creative ideas for the company.
Increases healthy competition among different companies.
Identifies essential activities: One of the best possible advantages of benchmarking is that it can help all
the companies to identify their own essential activities that can improve the profits of the company.
Therefore, after benchmarking it is very much important for all the companies to be identified in the list
of companies, which is in a run and where it can deliver the victory of their company effectively.

16. Quality of work: Because of benchmarking once the company identifies their strengths and
weakness compared with the rest of the company, then it is quite clear that all the aspects of the
company need to be improved at a time to time basis. And finally, the company can deliver some sort
of ways which can deliver quality in their working order. Therefore, benchmarking makes things clear
and creates some sort of awareness among the company's working environment.
Increased performance: As it is explained earlier that the benchmarking process, identifies all the
features and elements of the company which can lead them towards its success. And eventually, it also
provides essential signals regarding the need and wants of the company. Once the company finds out
about the actual requirements of the company, then it can increase its work performance as per the
comparison aspects.

17. Limitations
Focusing on numbers- Sometimes companies focus on data and not on the processes used to produce the data.
Losing focus on customers.
Losing focus on employees- Companies that try to produce better benchmarking results can quickly cause employee
burnout and errors.
Over-reliance on quantitative data- Consequently, misunderstanding of the underlying reasons for the performance
measures (strategic competencies and key processes).
Difficult to obtain useful information about competitors. Competitors may be uncooperative. Gathering competitive
intelligence requires considerable time effort, and money.
Lacking proper implementation.
Exposure of weaknesses- Some companies do not benchmark because their weaknesses are exposed.
Narrow scope of companies studied.
Cultural difficulties in transferring "best practices" in multinational firms- The biggest problems associated with
transferring "best practices across cultures are due to differences in behavioral and cultural background of the
organizational members in the foreign subsidiaries of the firm.