Page 139 - DMGT524_TOTAL_QUALITY_MANAGEMENT

Total Quality Management

Notes 9.6 Cost of Benchmarking

The three main types of costs in benchmarking are:
Visit Costs: This includes hotel rooms, travel costs, meals, a token gift, and lost labor time.

Time Costs: Members of the benchmarking team will be investing time in researching
problems, finding exceptional companies to study, visits, and implementation. This will
take them away from their regular tasks for part of each day so additional staff might be
required.
Benchmarking Database Costs: Organizations that institutionalize benchmarking into
their daily procedures find it is useful to create and maintain a database of best practices
and the companies associated with each best practice now.
The cost of benchmarking can substantially be reduced through utilizing the many internet
resources that have sprung up over the last few years. These aim to capture benchmarks and best
practices from organizations, business sectors and countries to make the benchmarking process
much quicker and cheaper.

9.7 Some Issues of Benchmarking

Benchmarking is based on learning from others, rather than developing new and improved
approaches. Since the process being studied is there for all to see, a firm will find that
benchmarking cannot give them a sustained competitive advantage. Although helpful,
benchmarking should never be the primary strategy for improvement.
Competitive analysis is an approach to goal setting used by many firms. This approach is
essentially benchmarking confined to one’s own industry. Although common, competitive
analysis virtually guarantees second-rate quality because the firm will always be following
their competitors. If the entire industry employs the approach it will lead to stagnation for the
entire industry, setting them up for eventual replacement by outside innovators.

Self Assessment

Fill in the blanks:
20. The cost of benchmarking can substantially be …………………… through utilizing the
many internet resources that have sprung up over the last few years.
21. Although helpful, ………………… should never be the primary strategy for improvement.
22. …………………… analysis is an approach to goal setting used by many firms.

Case Study Xerox Benchmarking

ossibly the best-known pioneer of benchmarking in Europe is Rank Xerox, the
document and imaging company, which created the original market for copiers.
PThe virtual monopoly the company had in its sector almost became its undoing,
however. Spurred by the threat from the emerging Japanese copier companies, an
in-depth study within the company recognized that fundamental changes were needed.
To understand how it should change, the company decided to evaluate itself externally –
a process which became known as competitive benchmarking. The results of this study
Contd...

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