Jacob Chase Mid-Term Summary

1 Chapter 1

1.1 What is Operations and Supply Chain Management?

Operation and Supply chain management (OSCM )= the design, operation, and
improvement of the systems that create and deliver the firm’s primary products and
services.
OSCM is functional field of business with clear line management possibilities
OSCM is concerned with the management of the entire system that produce a product or
delivers a services.
Producing a certain goods ex: Men’s Nylon Supplex Parka (Jacket), any other goods, or
providing any services are involving production process from manufacturing plant,
warehouse to store goods, until distribution centre to reach the customer

1.2 Distinguish Operations vs. Supply Chain Processes

Operations Supply Chain

Manufacturing and service processes Processes that move information and

used to transform the resources material to and from the
employed by a firm into products manufacturing and service process of
desired by customers. the firm.
Manufacturing Process would produce The Logistics processes that
some type of physical product such as physically move product and the
an automobile or a computer. warehousing and storage processes
that position products for quick
delivery to the customer.
A Service process would produce an Supply chain in this context refers to
intangible product such as call center providing products and service to
that provides information to plants and warehouses at the input end
customers. and also the supply of products and
service to the customer on the output
end of the supply chain.
1.3 Categorizing Operations and Supply Chain Processes

Process: One or more activities that transform inputs into output

Planning: consists of the process needed to operate an existing supply chain

strategically. Here a firm must determine how anticipated demand will be met with
available resources. A major aspect of planning is developing a set of metrics to monitor
the supply chain so that it is efficient and delivers high quality and value to customers.
Sourcing: Involves the selection of suppliers that will deliver the goods and services
needed to create the firm’s products. A set of pricing, delivery, and payment processes
are needed, include receiving shipment, verifying them, transferring them to
manufacturing facilities, and authorizing supplier payments.
Making: Major products is produced or the services provided. The step requires
scheduling processes for workers and the coordination of material and other critical
resources such as equipment to support producing or providing the service.
Delivering: referred to as logistics processes. Carriers are picked to move products to
warehouses and customers, coordinate and schedule the movement of goods and
information through the supply network, develop and operate a network of warehouses,
and run the information systems that manage the receipt of orders from customers and the
invoicing systems that collect payments from customers.
Returning: Involves processes for receiving worn-out, defective, and excess products
back from customers and support for customers who have problems with delivered
products.
1.4 The Goods-Services Continuum

Pure goods industries have become low-margin commodity businesses, and often adding
some services “ex: providing consulting advice”
Core goods already provide a significant service component as part of their businesses
“Ex: automobile manufacturers provide extensive spare part distribution services to
support repair centre at dealers
Core Service must integrate tangible goods. For example: a cable television company
must provide cable hookup and repair services and also high-definition cable boxes.
Pure Service: Ex: a financial consulting firm, to facilitating services use textbooks,
professional references, and spreadsheet.

1.5 The Major Concepts of OSCM

1.5.1 Manufacturing Strategy

Emphasizes how a factory’s capabilities could be used strategically to gain advantage
over a competing company

1.5.2 Just-In-Time (JIT)

An integrated set of activities designed to achieve high-volume production using minimal
inventories of parts that arrive exactly when they are needed

1.5.3 Total Quality Control (TQC)

Aggressively seeks to eliminate causes of production defects

1.5.4 Lean Manufacturing

To achieve high customer service with minimum levels of inventory investment

1.5.5 Total Quality Management (TQM)

Managing the entire organization so it excels in all dimensions of products and services
important to the customer
1.5.6 Business Process Reeingineering (BPR)
An approach to improving business processes that seeks to make revolutionary changes
as opposed to evolutionary (small) changes.

1.5.7 Six Sigma

A statistical term to describe the quality goal of no more than 3.4 defects out of every
million units. Also refers to a quality improvement philosophy and program.

1.5.8 Mass Customization

The ability to produce a unique product exactly to a particular customer’s requirement

1.5.9 Electronic commerce

The use of the internet as the essential element of business activity.

1.5.10 Triple bottom line

A business strategy that includes social, economic, and environment criteria.

1.5.11 Efficiency
A ratio of the actual output of a process relative to some standard. Which mean doing
something at the lowest possible cost

1.5.12 Effectiveness
Doing the things that will create the most value for the customer.

1.5.13 Value
The attractiveness of a product relative to its price.

1.5.14 Benchmarking
When one company studies the processes of another company to identify the best
practices.

1.5.15 The receivable turnover formula

Measures a company efficiency in collecting its sales on credit.
A higher ratio implies that the company operates on a cash basis or that its extension of
credit and collection methods are efficient
High ratio reflect a short lapse of time between sales and the collection of cash.
1.5.16 The Inventory Turnover formula
Measures a company efficiency in turning inventory into sales.
To measure the liquidity or speed of inventory usage
A low ratio implies poor liquidity, possible overstocking, and obsolescence, A high ratio
implies strong sales and better liquidity

1.5.17 The asset turnover formula

Measure firm’s efficiency using its assets in generating sales revenue, the higher the
number, the better.
Indicate pricing strategy: company with low profit margins tend to have high asset
turnover

2 Chapter 2 – Strategy

2.1 The Tripple Bottom line

2.1.1 Social Responsibility

This pertains to fair and beneficial business practices toward labor, the community, and
the region in which a firm conducts its business. A triple bottom line company seeks to
benefit its employees, the community, and other social entities that are impacted by the
firm’s existence. A company should not use child labor, and should pay fair salaries to its
workers, maintain a safe work environment with tolerable working hours, and not
otherwise exploit a community or its labor force.
2.1.2 Economics Prosperity
The firm is obligated to compensate shareholders who provide capital through stock
purchases and other financial instruments via a competitive return on investments.
Company strategies should promote growth and grow long-term value to this group in the
form of profit.

2.1.3 Environmental Stewardship

This refers to the firm’s impact on the environment. The company should protect the
environment as much as possible—or at least cause no harm.

2.2 Operation and Supply Chain Strategy

Operation and supply chain strategy can be viewed as part of a planning process that
coordinates operational goals with those of the larger organization.
Because the goals of the larger organization change over time, the operation strategy
must be designed to anticipate future needs.

2.2.1 Operations and supply chain strategy

The setting of broad policies and plans that will guide the use of the resources needed by
the firm to implement its corporate strategy

2.2.2 Operations effectiveness

Performing activities in a manner that best implements strategic priorities at minimum
cost.

2.3 The Notion of Trade-Offs

Operation cannot excel simultaneously on all competitive dimensions. Consequently,

management has to decide which parameters of performance are critical to the firm’s
success and then concentrate the resources of the firm on these particular characteristics.
For example, if a company wants to focus on speed of delivery, it cannot be very flexible
in its ability to offer a wide range of products. Similarly, a low-cost strategy is not
compatible with either speed of delivery or flexibility. High quality also is viewed as a
trade-off to low cost.

2.3.1 Straddling
Occurs when a firm seeks to match what a competitor is doing by adding new features,
services, or technologies to existing activities (Products or services). This often create
problems if trade-offs needed to be made.
2.4 Order Winners and Order Qualifier

For example, consider your purchase of a notebook computer. You might think that such
features as screen size, weight, operating system version, and cost are important
qualifying dimensions. The order-winning feature that actually differentiates those
candidate notebook computers that qualify is battery life. In doing your search, you
develop a list of computers that all have 14-inch screens, weigh less than three pounds,
run the latest Microsoft Windows operating system, and cost less than $1,000. From this
list of acceptable computers, you select the one that has the longest battery life.

2.4.1 Order Winners

One or more specific marketing-oriented dimension that clearly differentiate a product
from competing product

2.4.2 Order Qualifiers

Dimension used to screen a product or services as a candidate to purchase.

3 Chapter 3 – Design of Products and Services

Product Design is integral to the success of many companies and differs significantly
depending on the industry
In recent time, companies often outsource major functions (such as product design) rather
than support these functions in-house.

3.1.1 Contract Manufacturer

An organization that performs manufacturing and/or purchasing needed to produce a
product or device not for itself, but as a service to another firm.

3.1.2 Core competency

The one thing that a firm can do better than its competitors. The goal is to have a core
competency that yields a long-term competitive advantage to the company
A core competency has 3 characteristics:
o It provides potential access to a wide variety of markets
o It increases perceived customer benefits
o It is hard for competitors to imitate.
3.2 Product development process

The process represent the basic sequence of steps or activities that a firm employs to
conceive, design, and bring a product to the market.

The generic process is most like the process used in market-pull a situation. This is when
a firm begins product development with a market market-pull opportunity and then uses
whatever available technologies are required to satisfy the market need (i.e., the market
“pulls” the development decisions).
The process begins with a planning phase, which the link to advanced research and
technology development activities
The conclusion of the product development process is the product launch, at which time
the product becomes available for purchase in the marketplace.
The six phase of the generic development process are the following:
o Phase 0: Planning. The planning activity is often referred to as “phase zero”
because it precedes the project approval and launch of the actual product
development process. This phase begins with corporate strategy and includes
assessment of technology developments and market objectives. The output of the
planning phase is the project mission statement, which specifies the target market
for the product, business goals, key assumptions, and constraints.
o Phase 1: Concept development. In this phase, the needs of the target market are
identified, alternative product concepts are generated and evaluated, and one or
more concepts are selected for further development and testing. A concept is a
description of the form, function, and features of a product and is usually
accompanied by a set of specifications, an analysis of competitive products, and
an economic justification of the project.
o Phase 2: System-level design. The system-level design phase includes the
definition of the product architecture and the decomposition of the product into
subsystems and components. The final assembly scheme (which we discuss later
in the chapter) for the production system is usually defined during this phase as
well. The output of this phase usually includes a geometric layout of the product,
a functional specification of each of the product’s subsystems, and a preliminary
process flow diagram for the final assembly process.
o Phase 3: Detail design. This phase includes the complete specification of the
geometry, materials, and tolerances of all the unique parts in the product and the
identification of all the standard parts to be purchased from suppliers. A process
plan is established, and tooling is designed for each part to be fabricated within
the production system. The output of this phase is the drawings or computer files
describing the geometry of each part and its production tooling, the specifications
of purchased parts, and the process plans for the fabrication and assembly of the
product.
o Phase 4: Testing and refinement. The testing and refinement phase involves the
construction and evaluation of multiple preproduction versions of the product.
Early prototypes are usually built with parts with the same geometry and material
properties as the production version of the product but not necessarily fabricated
with the actual processes to be used in production. Prototypes are tested to
determine whether the product will work as designed and whether the product
satisfies customer needs.
o Phase 5: Production ramp-up. In the production ramp-up phase, the product is
made using the intended production system. The purpose of the ramp-up is to
train the workforce and to work out any remaining problems in the production
processes. Products produced during production ramp-up are sometimes supplied
to preferred customers and are carefully evaluated to identify any remaining
flaws. The transition from production ramp-up to ongoing production is usually
gradual. At some point in the transition, the product is launched and becomes
available for widespread distribution.
3.3 Designing for the customer

Designing for aesthetics and for the user is generally termed industrial design

3.3.1 Quality Function Deployment (QFD)

A process that helps a company determine the product characteristics important to the
consumer and to evaluate its own product in relation to others.

3.4 Designing products for Manufature and Assembly

To some, it means the aesthetic design of a product, such as the external shape of a car or
the color, texture, and shape of the casing of a can opener
Yet another interpretation of the word design is the detailing of the materials, shapes, and
tolerance of the individual parts of a product.
Traditionally, these drawings are then passed to the manufacturing and assembly
engineers, whose job it is to optimize the processes used to produce the final product.
Frequently, at this stage manufacturing and assembly problems are encountered and
requests are made for design changes. Often, these design changes are major and result in
considerable additional expense and delays in the final product release.
One way to overcome this problem is to consult the manufacturing engineers during the
design stage

4 Chapter 4 – Projects
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5 Chapter 5 – Strategic Capacity Management

Capacity planning is generally viewed in three time durations:
Long range—greater than one year. Where productive resources (such as buildings,
equipment, or facilities) take a long time to acquire or dispose of, long-range capacity
planning requires top management participation and approval.
Intermediate range—monthly or quarterly plans for the next 6 to 18 months. Here,
capacity may be varied by such alternatives as hiring, layoffs, new tools, minor
equipment purchases, and subcontracting.
Short range—less than one month. This is tied into the daily or weekly scheduling
process and involves making adjustments to eliminate the variance between planned
and actual output. This includes alternatives such as overtime, personnel transfers,
and alternative production routings.
5.1.1 Strategic Capacity Planning
Finding the overall capacity level of capital-intensive resources to best support the firm’s
long-term strategy.

5.2 Capacity Planning Concepts

5.2.1 Capacity
The output that a system is capable of achieving over a period of time

5.2.2 Best Operating level

The level of capacity for which the process was designed and the volume of output at
which average unit cost is minimized

5.2.3 Capacity utilization rate

Measure of how close the firm’s current output rate is to its best operating level (percent)
The capacity utilization rate is expressed as a percentage and requires that the numerator
and denominator be measured in the same units and time periods (such as machine
hours/day, barrels of oil/day, or dollars of output/day).

5.2.4 Economies of scale

Idea that as the plant gets larger and volume increases, the average cost per unit drops.
This is partially due to lower operating and capital cost, because a piece of equipment
with twice the capacity of another piece typically does not cost twice as much to purchase
or operate. Plants also gain efficiencies when they become large enough to fully utilize
dedicated resources (people and equipment) for information technology, material
handling, and administrative support
At some point, the plant gets too large and cost per unit increase. These diseconomies
may surface in many different ways. For example, maintaining the demand required to
keep the large facility busy may require significant discounting of the product. The U.S.
automobile manufacturers continually face this problem

5.2.5 Focused Factory

A facility designed around a limited set of production objectives. Typically, the focus
would relate to a specific product or product group
5.2.6 Plant within a plant (PWP)
An area in a larger facility that is dedicated to a specific production objective (for
example, product group). This can be used to operationalize the focused factory concept.

5.2.7 Economies of scope

When multiple products can be produced at lower cost in combination than they can be
separately.

5.2.8 Capacity Cushion

Capacity in excess of expected demand

6 Chapter 7 – Manufacturing Process

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7 Chapter 12 – Six Sigma Quality

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7.1 Total Quality Management (TQM)

Managing the entire organization so it excels in all dimension of products and services
important to the customer. It has two fundamental operational goals, namely:
o Careful design of the product or services
o Ensuring that the organization’s system can consistently produce the design.

7.1.1 Malcolm Baldridge National Quality Award

An award established by the U.S. Department of commerce given annually to companies
that excel in quality.
7.1.2 The Quality Gurus
The quality gurus had different definition of what quality is and how to achieve it, but
they all had the same general message: to achieve outstanding quality requires quality
leadership from senior management, a customer focus, total involvement of the
workforce, and continuous improvement based upon rigorous analysis of processes.

7.1.3 Design Quality

The inherent value of the product in the marketplace
7.1.4 Conformance quality
The degree to which the product or service design specification are met

7.1.5 Quality at the source

The philosophy of making workers personally responsible for the quality of their output.
Workers are expected to make the part correctly to make the part correctly the first time
and to stop the process immediately if there is a problem.

7.1.6 Dimension of quality

Criteria by which quality is measured.

7.1.7 Cost of quality

Expenditures related to achieving product or service quality, such as the costs of
prevention, appraisal, internal failure, and external failure
3 basic assumption of the cost of quality:
o Failures occur
o Prevention is cheaper
o Performance can be measured.
The costs of quality are generally classified into four types:
o Appraisal costs. Costs of the inspection, testing, and other tasks to ensure that the
product or process is acceptable.
o Prevention costs. The sum of all the costs to prevent defects, such as the costs to
identify the cause of the defect, to implement corrective action to eliminate the
 cause, to train personnel, to redesign the product or system, and to purchase new
equipment or make modifications.
o Internal failure costs. Costs for defects incurred within the system: scrap,
rework, and repair.
o External failure costs. Costs for defects that pass through the system: customer
warranty replacements, loss of customers or goodwill, handling complaints, and
product repair.

7.2 Six Sigma Quality

A statistical term to describe the quality goal of no more than 3.4 defects out of every
million units. Also refers to a quality improvement philosophy and program.
One of the benefits of Six Sigma thinking is that it allows managers to readily describe
the performance of a process in terms of its variability and to compare different processes
using a common metric. The metric is Defects per million opportunities (DPMO)

7.2.1 Defect Per million Opportunities (DPMO)

A metric used to describe the variability of a process.
The calculation requires three pieces of data:
o Unit. The item produced or being serviced.
o Defect. Any item or event that does not meet the customer’s requirements.
o Opportunity. A chance for a defect to occur.
The formulation measure DPMO are:

7.2.2 Six Sigma Methodology

Other way to use six sigma beside the statistical tools are quality movements through
project oriented fashion through the define, measure, analyse, improve, and control
(DMAIC)
7.2.2.1 Define, Measure, Analyse, Improve, and Control (DMAIC)
An acronym for the define, measure, analyse, improve, and control improvement
methodology followed by companies engaging in Six Sigma programs.
A standard approach to Six Sigma projects is the following DMAIC methodology:
o Define (D)
Identify customers and their priorities.
Identify a project suitable for Six Sigma efforts based on business
objectives as well as customer needs and feedback.
Identify CTQs (critical-to-quality characteristics) that the customer
believes have the most impact on quality.
o Measure (M)
 Determine how to measure the process and how it is performing.
Identify the key internal processes that influence CTQs and measure the
defects currently generated relative to those processes.
o Analyse (A)
Determine the most likely causes of defects.
Understand why defects are generated by identifying the key variables
most likely to create process variation.
o Improve (I)
Identify means to remove the causes of defects.
Confirm the key variables and quantify their effects on the CTQs.
Identify the maximum acceptance ranges of the key variables and a system
for measuring deviations of the variables.
Modify the process to stay within an acceptable range.
o Control (C)
Determine how to maintain the improvements.
Put tools in place to ensure that the key variables remain within the
maximum acceptance ranges under the modified process.

7.2.3 Analytical Tools for Six Sigma

The analytical tools of Six Sigma have been used for many years in traditional quality
improvement programs. What makes their application to Six Sigma unique is the
integration of these tools in a corporate wide management system.
7.2.3.1 Flowcharts
There are many types of flowcharts. Depicts the process steps as part of a SIPOC
(supplier, input, process, output, and customer) analysis. SIPOC is essentially a
formalized input-output model, used in the define stage of a project.
7.2.3.2 Runcharts
They depict trends in data over time, and thereby help in understanding the magnitude of
a problem at the define stage.

7.2.3.3 Pareto charts.

These charts help to break down a problem into the relative contributions of its
components. They are based on the common empirical finding that a large percentage of
problems are due to a small percentage of causes. In the example, 80 percent of customer
complaints are due to late deliveries, which are 20 percent of the causes listed.

7.2.3.4 Checksheets.
These are basic forms that help standardize data collection. They are used to create
histograms such as shown on a Pareto chart.
7.2.3.5 Cause-and-effect diagrams/fishbone diagram
They show hypothesized relationships between potential causes and the problem under
study. Once the C&E diagram is constructed, the analysis would proceed to find out
which of the potential causes were in fact contributing to the problem.

7.2.3.6 Opportunity flow diagram.

This is used to separate value-added from non–value-added steps in a process.
7.2.3.7 Process control charts.
These are time-sequenced charts showing plotted values of a statistic, including a
centreline average and one or more control limits. It is used to assure that processes are in
statistical control.
7.2.3.8 Failure Mode and Effect Analysis (FMEA)
This is a structured approach to identify, estimate, prioritize, and evaluate risk of possible
failures at each stage of a process. It begins with identifying each element, assembly, or
part of the process and listing the potential failure modes, potential causes, and effects of
each failure.
A risk priority number (RPN) is calculated for each failure mode. It is an index used to
measure the rank importance of the items listed in the FMEA.
These conditions include the profitability that the failure takes place
The damage resulting from the failure (severity)
The profitability of detecting the failure in-house (detection).
High RPN items should be targeted for improvement first.
The FMEA suggests a recommended action to eliminate the failure condition by
assigning a responsible person or department to resolve the failure by redesigning the
system, design, or process and recalculating the RPN.

7.2.3.9 Design of Experiments (DOE)

Also referred as multivariate testing, is a statistical methodology used for determining the
cause-and-effect relationship between process variable (X) and the output variable (Y).
DOE permits experimentation with many variables simultaneously by carefully selecting
a subset of them.
7.2.3.10 Lean Six Sigma
Combines the implementation and quality control tools of six sigma and the inventory
management concept of lean manufacturing.

7.2.4 Six Sigma Roles and Responsibilities

The following is a brief summary of the personnel practices commonly employed in Six
Sigma implementation:
7.2.4.1 Executive Leaders
Who are truly committed to Six Sigma and who promote it throughout the organization,
and champions, who take ownership of the processes to be improved? Champions are
 drawn from the ranks of the executives, and managers are expected to identify
appropriate metrics early in the project and make certain that the improvement efforts
focus on business results
7.2.4.2 Corporatewide training in Six Sigma concept and tools.
To convey the need to vigorously attack problems, professionals in Six Sigma firms are
given martial arts titles reflecting their skills and roles:
o Black Belts:
Individual with sufficient Six Sigma training to lead improvement teams.
o Master Black Belts:
Individuals with in-depth training on statistical tools and process
improvement.
o Green belts:
Employee who have enough Six Sigma training to participate in
improvement teams.
7.2.4.3 Setting of stretch objectives for improvement
7.2.4.4 Continuous reinforcement and rewards.
Before savings from a project are declared, the black belt in charge must provide proof
that the problems are fixed permanently.

7.2.5 The Shingo System: Fall safe-Design

The Shingo system developed in parallel and in many ways in conflict with the
statistically based approach to quality control. This system—or, to be more precise,
philosophy of production management—is named after the co-developer of the Toyota
just-in-time system,
Defects arise because people make errors. Even though errors are inevitable, defects can
be prevented if feedback leading to corrective action takes place immediately after the
errors are made.
The corrective action can be referred as inspection and can be done from any following
type:
o Successive check
is performed by the next person in the process or by an objective evaluator
such as a group leader
o Self-check
Is done by the individual worker and is appropriate by itself on all but
items that require sensory judgement (such as existence or severity of
scratches, or correct matching of shades of paint.
o Source Inspection
is also performed by the individual worker, except instead of checking for
defects, the worker checks for the errors that will cause defects. This
prevents the defects from ever occurring and, hence, requiring rework.
All three types of inspection rely on controls consisting of fail-safe procedures or device
called poka-yokes.
7.2.5.1 Fall-safe procedures
Simple practices that help prevent error/defects.
7.2.5.2 Poka-yokes.
Procedures that prevent mistakes from becoming defects. They are commonly found in
manufacturing but also can be used in service processes.
Poka-yokes includes such things as checklist or special tooling that:
o Prevent the worker from making an error that leads to a defect before starting a
process
o Gives rapid feedback of abnormalities in the process to the worker in time to
correct them.

7.3 ISO 1900 and ISO 14000

ISO 9000 and ISO 14000 are international standards for quality management and
assurance.
The standards are designed to help companies document that they are maintaining an
efficient quality system
ISO 9000 has become an international reference for quality management requirements in
business-to-business dealing, and ISO 14000 is primarily concerned with environmental
management.
The idea behind the standards is that defects can be prevented through the planning and
application of at every stage of business—from design through manufacturing best
practices and then installation and servicing.

7.3.1 ISO 9000

Formal standard for quality certification developed by the international organization for
Standardization.
The ISO 9000 standards are based on seven quality management principles. These
principles focus on business processes related to the following areas in the firm:
o customer focus,
 o leadership,
o involvement of people,
o process approach,
o continual improvement,
o factual approach to decision making, and
o Mutually beneficial supplier relationships.

7.3.2 ISO 14000

The ISO 14000 family of standards on environmental management addresses the need to
be environmentally responsible
The standard define three-pronged approach for dealing with environmental challenges:
o The first is the definition of more than 350 international standards for monitoring
the quality of air, water, and soil. (Mostly served as technical basis)
o The second part of ISO 14000 is a strategic approach defining the requirements
of an environmental management system that can be implemented using the
monitoring tools.
o The Third, the environmental standard encourages the inclusion of environment
aspects in product design and encourages the development of profitable
environment-friendly products and services

7.3.3 QS-9000
Is a quality management system developed by Chrysler, Ford, and General Motors for
suppliers of production parts, materials, and services to the automotive industry.

7.3.4 ISO/TS 16949

Developed by the International Automotive Task Force, aligns existing American,
German, French, and Italian automotive quality standards within the global automotive
industry.

7.3.5 ISO 14001

Environmental standards are applied by automobile suppliers as a requirement from Ford
and General Motors.

7.3.6 ANSI/ASQ Z1.4-2003

Provides methods for collecting, analysing, and interpreting data for inspection by
attributes, while Z1.9-2003 relates to inspection by variables.

7.3.7 TL 9000
Defines the telecommunications quality system requirements for the design,
development, production, delivery, installation, and maintenance of products and services
in the telecommunications industry.
7.4 External Benchmarking for quality improvement

It seek to make improvements by analysing in detail the current practices of the company
itself.

7.4.1 External benchmarking

Looking outside the company to examine what excellent performers inside and outside
the company’s industry are doing in the way of quality.
Benchmarking typically involves the following steps:
o Identify processes needing improvement
Identify a firm that is the world leader in performing the process. For
many processes, this may be a company that is not in the same industry.
Examples would be Procter & Gamble using Amazon as the benchmark in
evaluating its order entry system, or Ford Motor Company benchmarking
Walmart to improve its distribution system. Many companies select a team
of workers from the process needing improvement as part of the team of
visitors sent to the company being benchmarked.
o Analyze data
This entails looking at gaps between what your company is doing and
what the benchmarking company is doing.
There are two aspects of the study:
One is comparing the actual processes;
the other is comparing the performance of these processes
according to a set of measures
The processes are often described using flowcharts and subjective
evaluations of how workers relate to the process. In some cases,
companies even permit video recording.