1. Contemporary Techniques in
TQM
Chapter - 4
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi
B E N C H M A R K I N G

2. Benchmarking
The secret to benchmarking is the notion of ‘ best”
- XEROX
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

3. Introduction:
Xerox invented the photocopier in 1959, and maintained a virtual monopoly for many
years to the extent that its name became a generic name for all photocopiers. However, by
1981, the company’s market shrank to 35% as IBM and Kodak developed high end machines
and Canon, Richo and Savin dominated the low-end segment of the market. The Company
was suffering from the “ not invented here” syndrome as its managers did not want to admit
that they were not the best. The company then instituted the benchmarking process.
However, this was initially resisted. When faced with the facts, reaction went from denial to
dismay to frustration and finally to action. Once the process began, the company
benchmarked virtually every function and task for productivity, cost, service and quality. The
results of benchmarking were dramatic:
Quality problem were cut back by two – thirds.
Suppliers were reduced from 5,000 to 300.
Manufacturing costs went down by half.
Development time was cut by two - thirds.
Concurrent engineering was practiced. Each product development group secured inputs
from the design, manufacturing and services department from the initial stages of the project.
Direct labour was cut by 50% and corporate staff went down by 35% while increasing
volume.
The hierarchical organizational structure was pared, and use of cross- functional “Teams
Xerox” was established
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

4. Finally, Xerox became the only company worldwide to win all the three prestigious
quality awards – The Deming Prize (JUSE) in 1980, The Malcolm Baldridge National
Quality Award in 1989, and the European Quality Award in 1992. The Company’s
document out-sourcing division, Xerox Business Services, also won the Baldridge Award
in the service category in 1997.
This success is mainly attributed to the “leadership through quality” initiative, and to the
positive intervention of benchmarking practices.
The success of benchmarking at Xerox motivated many companies to implement
benchmarking practices. By the mid-1990s, many companies such as Ford, AT&T, IBM,
GE, Motorola etc. implemented benchmarking practices at their divisions across the world
and derived many benefits.
During the 1990s, Xerox, along with Ford, AT&T, Motorola and IBM created the
International Benchmarking Clearinghouse (IBC) to promote benchmarking and guide
other companies and best practices through its electronic bulletin board.
More than 1000 companies joined the IBC to gain access to its extensive database.
By 2011, benchmarking had become a common phenomenon in many companies
Globally.
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

5. What is a Benchmarking?
Benchmarking can be defined as a process for improving
performance by constantly identifying, understanding and
adapting best practices and processes followed inside and
outside the company and implementing the results.
Simply it is “ the search of industry best practices that
lead to superior performance”.
The main emphasis of benchmarking is not on “ best
performance” but on improving a given business operation
or a process by exploiting “ best practices.”
WHY Benchmarking?
1.To promote best practices and processes for superior performance
2.To build a culture for continuous Improvement
3.To gain competitive advantages
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

6. When Benchmarking?
Where there is 8 Negative answers:
1.Is the company’s QMS properly developed, documented and implemented? No.
2.Is there any system to allocate appropriate resources and findings for the
effective implementation of QMS? No.
3.Company’s great strength areas measured? No
4.Company’s great weakness areas measured? No
5.Company’s great opportunity areas measured? No
6.Areas have threats for its survival measured? No
7.Customer needs assessed & Rectified? No.
8.KSF application is central focus? No.
Where Benchmarking?
Operational Strategies
Hr Practices
Quality Improvement effects
Marketing and SCM
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

7. How Benchmarking: Process
IntegrationIntegration
AnalysisAnalysis
PlanningPlanning
MaturityMaturity
ActionAction
Process
• Planning: Identify the product, service or process
to be benchmarked
• Analysis: Determine the gap between the firm’s
current performance and that of the firm’s
benchmarked and identify the causes of significant
gaps.
• Integration: Establish goals and obtain the
support of managers who must provide the
resources for accomplishing the goals
• Action: Develop action plans, and team
assignment, implement the plans, monitor progress
and recalibrate benchmark as improvements are
made
• Maturity: Leadership position attended, best
practices fully integrated into process.
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

8. Phase 1: Planning
1. Identify what to benchmark;
2. Identify comparative companies;
3. Determine data collection method & collect data.
Phase 2: Analysis
4. Determine current performance gap;
5. Project future performance levels.
Phase 3: Integration
6. Communicate finding and gain acceptance;
7. Establish functional goals.
XEROX ‘s twelve steps of benchmarking (1980)
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

9. Phase 4: Action
8. Develop action plans;
9. Implement specific actions & monitor progress;
10. Recalibrate benchmarks.
Phase 5: Maturity
11. Attain leadership position ;
12. Fully integrate practices into processes.
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

10. What is our
Performance level?
How do we do it?
Refine
What are others’
Performance levels?
How did they get there?
Creative
adaptation
Compare
and
contrast
(BORROW)
For breakthrough
PERFORMANCE
How Benchmarking: Method
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

11. Types of Benchmarking
There are Seven major types of Benchmarking:
• Strategic benchmarking
• Performance or competitive benchmarking
• Process benchmarking
• Functional / generic benchmarking
• Internal benchmarking
• External Benchmarking
• International Benchmarking
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

12. BMBM
Strategic BM:
Org. seek to
improve their
overall
performance for
Long term by KSF
Strategic BM:
Org. seek to
improve their
overall
performance for
Long term by KSF
Performance
BM:
Concentrate to
Performance of
Key products/
services
Performance
BM:
Concentrate to
Performance of
Key products/
services
Process BM:
Critical Factors /
Process Mapping
Process BM:
Critical Factors /
Process Mapping
Functional BM:
Innovation and
Dramatic
improvement by
seeing best
processes from
different sectors
Functional BM:
Innovation and
Dramatic
improvement by
seeing best
processes from
different sectors
Internal BM:
Partners are sought
from within
organization
Internal BM:
Partners are sought
from within
organization
External BM:
Partners are sought
from outside
organization
External BM:
Partners are sought
from outside
organization
Internal BM:
Partners are sought
from other countries
Internal BM:
Partners are sought
from other countries

13. KEY SUCCESS FACTOR MATRIX (KSF)
Key
success
factor
Competitive analysis – Computer Industry …… Segment
Performance Rating
Weight Our
Company
Competitor
A
Competitor
B
Competitor
C
Sales Force
Distribution
Suppliers
R&D
Service
Cost
Structure
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

14. Therefore the simple methodology for
effective benchmarking is
Step – 1: Identify what to benchmark and
determine what to measure
Step – 2: Identify who to benchmark
Step – 3: Collect the data.
Step – 4: Analyze data and determine the
performance gap
Step – 5: Set goals and develop action plan
Step – 6: Implement action plan
Step – 7: Monitor / recalibrate / recycle the process
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

15. • Benchmarking must have the full support of senior
management and they should actively involved.
• Training is very important for benchmarking team and
process
• Benchmarking should be a team activity
• Benchmarking is an ongoing process.
• Benchmarking efforts must be organized, planned, and
carefully managed.
• Use correctly, benchmarking can lead you to the
competitive edge in today’s business market place.
Remember
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

16. Limitations
• Some times Benchmarking comes from the idea of
copying others.
• BM is not a panacea. It is not a strategy nor is it intended
to be a business philosophy.
• It is an important technique. To be effective it must be used
properly. It breaks down (waste money, time and energy
and some times morale too) if process owners and
managers feel threatened or do not accept and act on the
findings.
• BM is also not a substitute for innovation: however, it is a
source of ideas from outside the organization.
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

17. Advantages
• Benchmarking is a systematic comparison by which
it promotes superior performance by providing an
organized framework through which organization
learn how the “ best in class” do things.
• It helps for continuous improvement on current
performance
• Benchmarking inspire managers (and organization)
to compete.
• Through Benchmark, organization can borrow
ideas and opting them to gain competitive
advantages.
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

18. Conclusion
• Benchmarking Ethics:
– Keep it legal
– Be willing to give what you get
– Respect confidentiality
– Don’t refer without permission
– Select the right Bench mark
Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi

19. Prepared and Presented by Dr. Shyamal Gomes // XISS-Ranchi