Page 134 - DMGT524_TOTAL_QUALITY_MANAGEMENT

Unit 9: Benchmarking

A classic example of formal best practice benchmarking is that of Xerox. In the late 1970s Notes
it faced stiff competition from Japan and, unsettled by the success of its competitors, it
compared its performance in a number of key areas. Its findings included:
Key competitors had a ratio of indirect to direct staff of half its own
It had nine times the number of production suppliers

It’s time to market for products was double that of the competition
Its defect rate was seven times worse
You can imagine the unsettling effect that this comparative analysis had on the Xerox
executives! The organisation embarked on a massive programme of learning,
predominately from outside of its own industry, to identify and implement best practice.
And the success it had is well documented.

A recent study conducted by COER, on behalf of the Global Benchmarking Network
(GBN), involved nearly 500 organisations that used best practice benchmarking and this
indicated an average financial return per project of $100,000 to $150,000 with some reaping
benefits of more than $1,000,000.
The wide appeal and acceptance of benchmarking has led to various processes emerging.
COER’s TRADE, as recognised by the UK Benchmarking Institute, is one such methodology.
It consists of five stages:

Terms of Reference (aims, objectives, scope, resources, cost/benefit analysis)
Research (current performance)
Act (data collection and comparative analysis)
Deploy (communicate and implement best practices)

Evaluate (review process and outcomes to ensure aims met)
Many benchmarking gurus advocate a 10-step generic process that includes:
Select process to benchmark
Put in place resources

Plan benchmarking project
Train staff
Research and engage partners
Collect and exchange data

Analyse gaps
Adapt superior practice
Develop and implement new process
Review Results
Most organisations’ benchmarking teams are small (typically less than four people); so if
you are considering formal benchmarking then please ensure that you’ve thoroughly
prepared the ground and put in place the critical success factors necessary for you to
succeed. Below is a summary of the critical success factors for effective benchmarking
identified by Keki Bhote, courtesy of the Best Practice Club knowledge base.
Contd...

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