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TQM (Module 2)

The document outlines seven basic quality tools for process improvement, including cause-and-effect diagrams, check sheets, control charts, histograms, Pareto charts, scatter diagrams, and stratification. It also introduces the 5S principles for workplace organization and efficiency, emphasizing the importance of sorting, ordering, cleaning, standardizing, and sustaining improvements in the work environment. Each tool and principle serves to enhance data analysis, identify root causes, and foster a culture of continuous improvement.

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0% found this document useful (0 votes)
7 views26 pages

TQM (Module 2)

The document outlines seven basic quality tools for process improvement, including cause-and-effect diagrams, check sheets, control charts, histograms, Pareto charts, scatter diagrams, and stratification. It also introduces the 5S principles for workplace organization and efficiency, emphasizing the importance of sorting, ordering, cleaning, standardizing, and sustaining improvements in the work environment. Each tool and principle serves to enhance data analysis, identify root causes, and foster a culture of continuous improvement.

Uploaded by

anand.h
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Module 2

7 BASIC QUALITY TOOLS FOR PROCESS IMPROVEMENT


1.Cause-and-effect diagram (also called Ishikawa or fishbone diagrams): Identifies many
possible causes for an effect or problem and sorts ideas into useful categories. Cause-and-Effect
Diagrams - 1943 by Mr. Kaoru Ishikawa at the University of Tokyo Purpose: One important part of
process improvement is continuously striving to obtain more information about the process and it's
output. Cause-and-effect diagrams allow us to do not just that, but also can lead us to the root
cause, or causes, of problems

Constructing the Cause-and-Effect Diagram:

Step 1: Select the team members and a leader. Team members knowledgeable about the quality.
Team members focus on the problem under investigation.

Step 2: Write the problem statement on the right hand side of the page, and draw a box around it
with an arrow running to it. This quality concern is now the effect.

Step 3: Brain-storming. The team members generate ideas as to what is causing the effect.

Step 4: This step could be combined with step 3. Identify, for each main cause, its related sub-causes
that might affect our quality concern or problem (our Effect). Always check to see if all the factors
contributing to the problem have been identified. Start by asking why the problem exists.

Step 5: Focus on one or two causes for which an improvement action(s) can be developed using
other quality tools such as Pareto charts, check sheets, and other gathering and analysis tools.
2. Check sheet: A structured, prepared form for collecting and analyzing data; a generic tool that can
be adapted for a wide variety of purposes.

The check sheet is a simple document that is used for collecting data in real-time and at the location
where the data is generated. The document is typically a blank form that is designed for the quick,
easy, and efficient recording of the desired information, which can be either quantitative or
qualitative. When the information is quantitative, the check sheet is sometimes called a tally sheet.
A defining characteristic of a check sheet is that data is recorded by making marks (“checks”) on it. A
typical check sheet is divided into regions, and marks made in different regions have different
significance. Data is read by observing the location and number of marks on the sheet. 5 Basic types
of Check Sheets:

Classification: A trait such as a defect or failure mode must be classified into a category.

Location: The physical location of a trait is indicated on a picture of a part or item being evaluated.

Frequency: The presence or absence of a trait or combination of traits is indicated. Also number of
occurrences of a trait on a part can be indicated.

Measurement Scale: A measurement scale is divided into intervals, and measurements are indicated
by checking an appropriate interval.

Check List: The items to be performed for a task are listed so that, as each is accomplished, it can be
indicated as having been completed.

3. Control chart: Graph used to study how a process changes over time. Comparing current data to
historical control limits leads to conclusions about whether the process variation is consistent (in
control) or is unpredictable (out of control, affected by special causes of variation). Control charts
have long been used in manufacturing, stock trading algorithms, and process improvement
methodologies like Six Sigma and Total Quality Management (TQM). The purpose of a control chart
is to set upper and lower bounds of acceptable performance given normal variation. In other words,
they provide a great way to monitor any sort of process you have in place so you can learn how to
improve your poor performance and continue with your successes. The control chart serves to
“sound the alarm” when a process shifts (for instance, a machine suddenly breaking on a factory
floor) or if someone has a breakthrough that needs to be documented and standardized across the
larger organization. Simply put (without taking anomalies into consideration).

4. Histogram: The most commonly used graph for showing frequency distributions, or how often
each different value in a set of data occurs.
Usage of histogram: Let’s see usage of Histogram in context of “Plan Quality Management” and
“Control Quality” for your The Project Management Professional (PMP examination.

 In “Plan Quality Management” a Histogram serves as a preventive approach to improve


processes. We use historical data to identify categories of causes effecting most. Based on effecting
most categories, we select processes to improve. For example due to higher frequencies in IES, MCC
and EDR, we may select improvements in “Collect Requirement”, and “Define Scope” processes.

 Using “Control Quality” we identify causes of poor performance help in improving processes and
their work products. In this way, causes of poor performance analysis make Histogram a powerful
tool to take corrective actions.
5. Pareto chart: A bar graph that shows which factors are more significant. Pareto analysis is a
technique for recording and analysing information relating to a problem or cause, which easily
enables the most significant aspects to be identified. A Pareto diagram is a special form of vertical
bar chart, or column chart, which allows the information to be visually displayed.

When to use it

 Separating the 'vital few' from the 'useful many' problems, (80/20 rule).
 Selecting major problem areas
 Identifying major effects and causes

What does it achieve?

“First things first" is the thought behind the Pareto diagram; the properly constructed diagram
should suggest on which error or activity resources should be used first to make the best
improvement. Very often the simple process of arranging data may suggest something of
importance that would otherwise have gone unnoticed. Selecting classifications, tabulating data,
ordering data, and constructing the Pareto diagram have often served a useful purpose in problem
investigation. The communication process between people takes on many forms, and Pareto
diagrams are a form of language using a display in a commonly understood format. The continued
use of the Pareto diagram enhances communication between members of staff and through all
levels of management.

Key steps

 List the activities to be analysed


 Calculate totals
 Order totals
 Draw the Pareto diagram
 Interpret results

Pareto Diagram example


6. Scatter diagram: Graphs pairs of numerical data, one variable on each axis, to look for a
relationship.

Also called: scatter plot, X-Y graph The scatter diagram graphs pairs of numerical data, with one
variable on each axis, to look for a relationship between them. If the variables are correlated, the
points will fall along a line or curve. The better the correlation, the tighter the points will hug the
line. This cause analysis tool is considered one of the seven basic quality tools.

WHEN TO USE A SCATTER DIAGRAM

 When you have paired numerical data


 When your dependent variable may have multiple values for each value of your
independent variable
 When trying to determine whether the two variables are related, such as:
o When trying to identify potential root causes of problems
o After brainstorming causes and effects using a fishbone diagram to
determine objectively whether a particular cause and effect are related
o When determining whether two effects that appear to be related both occur
with the same cause
o When testing for autocorrelation before constructing a control chart.
SCATTER DIAGRAM PROCEDURE

1. Collect pairs of data where a relationship is suspected.

2. Draw a graph with the independent variable on the horizontal axis and the dependent variable on
the vertical axis. For each pair of data, put a dot or a symbol where the x-axis value intersects the y-
axis value. (If two dots fall together, put them side by side, touching, so that you can see both.)

3.Look at the pattern of points to see if a relationship is obvious. If the data clearly form a line or a
curve, you may stop because variables are correlated. You may wish to use regression or correlation
analysis now. Otherwise, complete steps 4 through 7
Divide points on the graph into four quadrants. If there are X points on the graph:  Count X/2
points from top to bottom and draw a horizontal line.

 Count X/2 points from left to right and draw a vertical line.
 If number of points is odd, draw the line through the middle point.

4. Count the points in each quadrant. Do not count points on a line.

5. Add the diagonally opposite quadrants. Find the smaller sum and the total of points in all
quadrants.

A = points in upper left + points in lower right

B = points in upper right + points in lower left

Q = the smaller of A and B

N=A+B

o If Q is less than the limit, the two variables are related.


o If Q is greater than or equal to the limit, the pattern could have occurred from
random chance.

7. Stratification (also known as Flow Chart and/or Run Chart)


A technique that separates data gathered from a variety of sources so that patterns can be seen
(some lists replace "stratification" with "flowchart" or "run chart").

Stratification is a way to organize data, and in particular of separating data into meaningful
groups. Stratification is also known as a flow chart or run chart. In stratification, you should include
each data point in only one group, and you should leave no data point(s) out. Below is an example of
stratification.

WHEN TO USE STRATIFICATION?

 Before collecting data


 When data come from several sources or conditions, such as shifts, days of the week,
suppliers, or population groups
 When data analysis may require separating different sources or conditions Here are
examples of different sources that might require data to be stratified:
 Equipment
 Shifts
 Departments
 Materials
 Supplier
 Day of the week
 Time of day
 Products
STRATIFICATION PROCEDURE
1. Before collecting data, consider which information about the sources of the data might have
an effect on the results. Set up the data collection so that you collect that information as well.

2. When plotting or graphing the collected data on a scatter diagram, control chart, histogram,
or other analysis tool, use different marks or colors to distinguish data from various sources.
Data that are distinguished in this way are said to be "stratified."

3. Analyze the subsets of stratified data separately. For example, on a scatter diagram where
data are stratified into data from source 1 and data from source 2, draw quadrants, count
points, and determine the critical value only for the data from source 1, then only for the data
from source 2.

5-S PRINCIPLES
The 5S framework was originally developed by just-in-time expert and international consultant
Hiroyuki Hirano. The 5S framework is an extension of Hirano's earlier works on just-in-time
production systems. The 5Ss represent a simple "good housekeeping" approach to improving the
work environment consistent with the tenets of Lean Manufacturing System.

It promotes daily activity for continuous improvement. It fosters efficiency and productivity
while improving work flow. It encourages a proactive approach that prevents problems and
waste before they occur. It provides a practical method for dealing with the real problems that
workers face every day. And it fits with a facility's other efforts, such as total preventive
maintenance, just-in-time manufacturing, pollution prevention, safety initiatives, and lean
manufacturing efforts.

SEIRI / SORT / CLEANUP

The first step of the "5S" process, Seiri, refers to the act of throwing away all unwanted,
unnecessary, and unrelated materials in the workplace. People involved in Seiri must not feel
sorry about having to throw away things. The idea is to ensure that everything left in the
workplace is related to work. Even the number of necessary items in the workplace must be kept
to its absolute minimum.
There are two main objectives of Seiri; first is the simplification of tasks and effective use of space. In
performing Seiri, this simple guideline is a must:

1. Separate needed items from unneeded items.

2. Remove unneeded items from working areas.

3. Discard the items never used.

4. Store items not Item not needed now.

5. Remove all excess items from working areas, including work pieces, supplies, personal items,
tools, instruments, and equipment.

6. Use red tag to get rid of unneeded items.

7. Store items needed by most people in a common storage area.

8. Store items only needed by each individual in his/her own working area.

9. Organize working / storage area.

SEITON / SET IN ORDER / ARRANGING


Seiton, or orderliness, is all about efficiency. This step consists of putting everything in an assigned
place so that it can be accessed or retrieved quickly, as well as returned in that same place quickly. If
everyone has quick access to an item or materials, work flow becomes efficient, and the worker
becomes productive. Every single item must be allocated its own place for safekeeping, and each
location must be labeled for easy identification of what it's for.

Its objective includes; the needed items can be easily found, stored and retrieved, supports
efficiency and productivity, First-in first-out (FIFO), and save space and time.

In performing Seiton, follow these guidelines:

1. A place for everything and everything in its place.


2. Place tools and instructional manual close to the point of use.
3. Store similar items together. Different items in separate rows.
4. Don't stack items together. Use rack or shelf if possible.
5. Use small bins to organize small items.
6. Use color for quickly identifying items.
7. Clearly label each item and its storage areas (lead to visibility).
8. Use see-through cover or door for visibility.
9. Use special designed cart to organize tools, jigs, measuring devices, etc., that are needed for each
particular machine.

SEISO / SHINE / NEATNESS


Seiso, the third step in "5S", says that 'everyone is a janitor.' Seiso consists of cleaning up the
workplace and giving it a 'shine'. Cleaning must be done by everyone in the organization, from
operators to managers. It would be a good idea to have every area of the workplace assigned to a
person or group of persons for cleaning. Seiso is not just cleaning, but a whole attitude that includes
ensuring everything is in perfect condition. Everyone should see the 'workplace' through the eyes of
a visitor - always thinking if it is clean enough to make a good impression.
Its objective includes; cleanliness ensures a more comfortable and safe working place, cleanliness
will lead to visibility so as to reduce search time and cleanliness ensures a higher quality of work and
products. Follow these guidelines in performing Seiso:
1. Use dust collecting covers or devices to prevent possible dirt or reduce the amount of dirt.
2. Investigating the causes of dirtiness and implement a plan to eliminate the sources of dirt.
3. Cover around cords, legs of machines and tables such that dirt can be easily and quickly removed.
4. Operators clean their own equipment and working area and perform basic preventive
maintenance.
5. Keep everything clean for a constant state of readiness.
SEIKETSU / SYSTEMIZE / DISCIPLINE:
The fourth step of "5S", or seiketsu, more or less translates to 'standardized clean-up'. It consists of
defining the standards by which personnel must measure and maintain 'cleanliness'. Seiketsu
encompasses both personal and environmental cleanliness. Personnel must therefore practice
'seiketsu' starting with their personal tidiness. Visual management is an important ingredient of
seiketsu. Color- coding and standardized coloration of surroundings are used for easier visual
identification of anomalies in the surroundings. Personnel are trained to detect abnormalities using
their five senses and to correct such abnormalities immediately.
The guidelines include:
1. Removing used, broken, or surplus items from the work area
2. Making safety a prime requirement by paying attention to noise, fumes, lighting, cables, spills, and
other aspects of the workplace environment
3. Checking that items are where they should be
4. Listening to the "voice" of the process and being alert to things such as unusual noises
5. Ensuring that there is a place for everything and that everything is in its place
6. Wearing safe working apparel and using safe equipment
7. Minimizing all waste and the use of valuable resources such as oil, air, steam, water, and
electricity.
SHITSUKE / SUSTAIN / ON-GOING IMPROVEMENT:
The last step of "5S", Shitsuke, means 'Discipline.' It denotes commitment to maintain orderliness
and to practice the first 4 S as a way of life. The emphasis of shitsuke is elimination of bad habits and
constant practice of good ones. Once true shitsuke is achieved, personnel voluntarily observe
cleanliness and orderliness at all times, without having to be reminded by management.
The characteristic of 5S tends to overlap significantly rather than cover very different subjects.
Rather than worry about what fits into Seiri and what fits into Seiton, use them to reinforce each
other and implement the whole thing.
QUALITY CIRCLE
Quality Circle is a small group of 6 to 12 employees doing similar work who voluntarily meet
together on a regular basis to identify improvements in their respective work areas using proven
techniques for analysing and solving work related problems coming in the way of achieving and
sustaining excellence leading to mutual upliftment of employees as well as the organisation. It is "a
way of capturing the creative and innovative power that lies within the work force".
CONCEPT
The concept of Quality Circle is primarily based upon recognition of the value of the worker as a
human being, as someone who willingly activises on his job, his wisdom, intelligence, experience,
attitude and feelings. It is based upon the human resource management considered as one of the
key factors in the improvement of product quality & productivity.
How does the QC circle work?
Training on problem-solving tools and techniques like 7 QC tools, 8D, 5Whys, and Poka-Yoke, etc.
must be given to the workforce for effective implementation of QC Circles projects in an
organization. The quality circle steps include:
 Step 1: Training on 7 QC tools and Poka-Yoke
 Step 2: Forming and naming quality circles-
 QC circles are formed with 4 to 6 members.
 One member acts as a leader by rotation.
 One supervisor acts as a facilitator.
 Step 3: Identify Quality Circle themes
 Step 4: Select a project based on priority.
 Step 5: Find the best solution using standardized methodology.
QUALITY FUNCTION DEPLOYMENT (QFD)
What is Quality Function Deployment?
Quality Function Deployment (QFD) is a process and set of tools used to effectively define customer
requirements and convert them into detailed engineering specifications and plans to produce the
products that fulfill those requirements. QFD is used to translate customer requirements (or VOC)
into measureable design targets and drive them from the assembly level down through the sub-
assembly, component and production process levels. QFD methodology provides a defined set of
matrices utilized to facilitate this progression.

QFD was first developed in Japan by Yoji Akao in the late 1960s while working for
Mitsubishi’s shipyard. It was later adopted by other companies including Toyota and its supply chain.
In the early 1980s, QFD was introduced in the United States mainly by the big three automotive
companies and a few electronics manufacturers. Acceptance and growth of the use of QFD in the US
was initially rather slow but has since gained popularity and is currently being used in
manufacturing, healthcare and service organizations.

Why Implement Quality Function Deployment (QFD)


Effective communication is one of the most important and impactful aspects of any organization’s
success. QFD methodology effectively communicates customer needs to multiple business
operations throughout the organization including design, quality, manufacturing, production,
marketing and sales. This effective communication of the Voice of the Customer allows the entire
organization to work together and produce products with high levels of customer perceived value.
There are several additional benefits to using Quality Function Deployment:

Customer Focused: QFD methodology places the emphasis on the wants and needs of the customer,
not on what the company may believe the customer wants. The Voice of the Customer is translated
into technical design specifications. During the QFD process, design specifications are driven down
from machine level to system, sub-system and component level requirements. Finally, the design
specifications are controlled throughout the production and assembly processes to assure the
customer needs are met.

VOC Competitor Analysis: The QFD “House of Quality” tool allows for direct comparison of how your
design or product stacks up to the competition in meeting the VOC. This quick analysis can be
beneficial in making design decisions that could place you ahead of the pack. Shorter Development
Time and Lower Cost: QFD reduces the likelihood of late design changes by focusing on product
features and improvements based on customer requirements. Effective QFD methodology prevents
valuable project time and resources from being wasted on development of non-value added
features or functions.

Structure and Documentation: QFD provides a structured method and tools for recording decisions
made and lessons learned during the product development process. This knowledge base can serve
as a historical record that can be utilized to aid future projects.

House of Quality
HOQ is a summary diagram that is used as part of a structured approach to transform
your voice of customer requirements into actual product specifications. This
approach is called Quality Function Deployment (QFD).

This article will discuss how to build the HOQ, present the benefits of the HOQ and
some best practices to building and using the HOQ to develop your process or
product to meet your customers’ needs and expectations.

Overview: What is House of Quality?

House of Quality, or HOQ, is a product planning matrix that is used to show how your
customer requirements relate directly to the actions you can take to achieve those
requirements.

HOQ diagrams resemble the shape of a house and should be created using direct
customer input if applicable. HOQ is considered the primary tool in QFD and serves
as the roadmap for describing the journey from initial idea to final product or service
specifics.

Below is the template used for building your house.

Let’s briefly run through each room, the attic, and the basement to see how you can
build this HOQ.
1. Customer needs: For each critical customer segment, capture customer
feedback and VOC input consisting of your customer’s needs and the priority
or weight of each need.
2. Customer critical requirements: The top row of the house contains the critical
customer requirements (CCRs), also referred to as critical to customer (CTC).
3. Interrelationship matrix: Evaluate the relationship between your customer
needs and CCRs. Determine the relative importance of each CCR.
4. Customer rating of your competitors: How does your customer perceive the
marketplace and your competition’s ability to meet each of their
requirements?
5. Correlation matrix: Compare CCRs to determine if they are in conflict with
each other, leveraging each other, or have no effect on each other.
6. Performance targets: Determine the necessary performance targets (specs)
for each CCR.

Benefits of HOQ

Although it can be a bit of a pain to develop and build your HOQ, the benefits of
having all of the elements in one easy-to-read diagram far outweigh the work and
effort required to develop it.

1. Organize your efforts to satisfy your customers


The HOQ document is structured and the elements are linked. You can’t complete
the house without building out each room.

2. Focus your development


Your focus is on customer needs and how to meet them using specific and
quantifiable targets and metrics.

3. Understand your customer needs and document their requirements


The HOQ forces you to drive everything for the purpose of meeting your customer’s
needs. By documenting and defining these needs, you will have a written and
documented baseline to work towards developing the best design you can.
Above Example on HOQ
Benchmarking – Need
The essence of benchmarking is the continuous process of comparing a company’s
strategy, products and processes with those of world leaders and best in class
organizations in order to learn how they achieved excellence and then setting out to
match and even surpass it. For many companies, benchmarking has become a key
component of their TQM programs.

It is a method of identifying new ideas and new ways of improving processes and hence
meeting customer expectations. A properly designed and implemented benchmarking
program will take a total system approach by examining the company’s role in the
supply chain (looking upstream at the suppliers) and downstream at distribution
channels.

Need of Benchmarking:

1. Benchmarking helps organizations focus on the external environment and improve


process efficiency.

2. Benchmarking promotes a climate for change by allowing employees to gain an


understanding of their performance what they are achieving now and how they
compare to others in order that they become aware of what they could achieve.

Benchmarking – 5 Key Reasons


Key reasons for benchmarking are as follows:

1. Defining Customer Requirements:

It is not based on history or gut feeling, perception and low fit but on the basis of
market reality, objective evaluation and high conformance.

2. Establishing Effective Goals and Objectives:

It is not on the basis of lacking external focus, reactive response, and lagging ind ustry
but on the basis of credibility, inarguable, proactive and leading industry goals and
objectives.

3. Developing True Measures of Productivity:

Without benchmarking this may be done by pursuing pet projects, strengths and
weaknesses not understood on-route of least resistance. But with benchmarking this is
carried out by solving real problems and understanding outputs of each decision based
on the best industry practices.
4. Becoming Competitive:

This is not carried out on internally focused, evolutionary change, and low commitment.
But it is done on the basis of concrete understanding of competition, new ideas of
proven practices, technology and high commitment.

5. Industry Best Practices to be Achieved:

This is also not done on methods not invented here, few solutions, average of industry
progress and frantic catch up activity. But it is done on the basis of proactive search for
change, many options, business practice breakthrough and superior performance.

BENCH MARKING

What is benchmarking? Benchmarking is a way to go backstage and watch another


company’s performance from the wings, where all stage tricks and hurried realignments are
visible. In Joseph Juran’s 1964 book Managerial Breakthrough, he asked the question: What
is that organizations do that gets result so much better than ours? The answer to this
question opens door to benchmarking, an approach that is accelerating among many firms
that have adopted the total quality management (TQM) philosophy.

Levels of Benchmarking There are three levels of benchmarking:

1. Internal benchmarking (within the company)

2. Competitive or strategic benchmarking (Industry and competitors)

3. Benchmarking outside the industry.(external )


1) Process benchmarking: The initiating firm focuses its observation and investigation of
business processes with a goal of identifying and observing the best practices from one or
more benchmark firms. Activity analysis will be required where the objective is to
benchmark cost and efficiency; increasingly applied to back-office processes where
outsourcing may be a consideration.

2) Financial benchmarking: Performing a financial analysis and comparing the results in an


effort to assess your overall competitiveness.

3) Performance benchmarking: Allows the initiator firm to assess their competitive


position by comparing products and services with those of target firms.

4) Product benchmarking: The process of designing new products or upgrades to current


ones. This process can sometimes involve reverse engineering which is taking apart
competitors products to find strengths and weaknesses.

5) Strategic benchmarking: Involves observing how others compete. This type is usually
not industry specific meaning it is best to look at other industries.

6) Functional benchmarking: A company will focus its benchmarking on a single function


in order to improve the operation of that particular function. Complex functions such as
Human Resources, Finance and Accounting and Information and Communication
Technology are unlikely to be directly comparable in cost and efficiency terms and may need
to be disaggregated into processes to make valid comparison.
Other types

4. Corporate benchmarking:

Corporate benchmarking is not about comparing the working or performance of the


product but a comparison of various divisions of the organization and basic studies to
improve the organization’s working model.

For example, in corporate benchmarking, they would compare other organization’s

marketing division, finance, research team, and testing squad etc to improve the overall

efficiency of the organization.

5. Global benchmarking:

Global benchmarking is an extension of strategic benchmarking where the comparison of

the strategies takes place globally.

For example, Microsoft operating in the USA would compare its accounts division with

Mazda of Japan and found that they have employed 500 employees to do a 5 people job.

6. Collaborative benchmarking:

Collaborative benchmarking is something that happens within the organization. Where the

Information technology team would collaborate with the IT support center to Information

technology division.

Various other team collaborations would also happen by discussing the various team

strategies. This type of benchmarking is very common among all industries.

7. SWOT:

SWOT analysis, this type of benchmarking is something which gathers information about the

companies strength, weakness, opportunities, and threats to help the management do it

better.
8. Best practices:

Organizations usually study and do research on the successful organization’s winning

practices. By doing this type of benchmarking, they would get a clear picture of their

practices and there is more scope of improvement.

11. First in class benchmarking:

In this type, the leading organization or concern which best carries out its function is

studied.

12. Energy benchmarking:

This is another category that takes into account analysis, collection and related energy

performance data of various activities with the main intention to compare and analyze the

performance of various entities.

When entities are mentioned, they can be varied such as buildings,


processes or companies.

Procedure of benchmarking
The following is an example of a typical shorter version of the methodology:

1. Identify your problem areas

Because benchmarking can be applied to any business process or function, a range of


research techniques may be required. They include: informal conversations with customers,
employees, or suppliers; exploratory research techniques such as focus groups; or in-depth
marketing research, quantitative research, surveys, questionnaires, re-engineering analysis,
process mapping, quality control variance reports, or financial ratio analysis. Before
embarking on comparison with other organizations it is essential that you know your own
organization's function, processes; base lining performance provides a point against which
improvement effort can be measured.

2. Identify other industries that have similar processes

For instance if one were interested in improving hand offs in addiction treatment he/she
would try to identify other fields that also have hand off challenges. These could include air
traffic control, cell phone switching between towers, transfer of patients from surgery to
recovery rooms.

3. Identify organizations that are leaders in these areas

Look for the very best in any industry and in any country. Consult customers, suppliers,
financial analysts, trade associations, and magazines to determine which companies are
worthy of study.

4. Survey companies for measures and practices

Companies target specific business processes using detailed surveys of measures and
practices used to identify business process alternatives and leading companies. Surveys
are typically masked to protect confidential data by neutral associations and consultants.

5. Visit the "best practice" companies to identify leading edge practices

Companies typically agree to mutually exchange information beneficial to all parties in a


benchmarking group and share the results within the group.

6. Implement new and improved business practices

Take the leading edge practices and develop implementation plans which include
identification of specific opportunities, funding the project and selling the ideas to the
organization for the purpose of gaining demonstrated value from the process.

Advantages of Bench Marking


Limitations of Benchmarking:

Even though, there are various advantages of benchmarking there are few limitations also
which have to be considered. They are,

1. It is just a mere suggestion:


Benchmarking only suggests the organization to improve on weak factors. It does not have
any proving factor to adopt the strategy it recommends.

2. Results shown are mere numbers:


The result comparisons or profit rate of the other organization are mere numbers.
Benchmarking does not show or concentrate on minute factors that have been adopted by
the other organizations.

3. Benchmarking fails when it is not properly implemented:


It has to be properly adopted by following the various data collected. When it is not
followed periodically, there might be no net result as it is not a one day process.

4.No clarity in data produced:


Benchmarking only produces rough data and it is only the team or board members who
have to concentrate on the whole process using the data collected.

BUSINESS PROCESS RE-ENGINEERING (BPR)


Business process re-engineering (BPR) is a business management strategy, originally
pioneered in the early 1990s, focusing on the analysis and design of workflows and business
processes within an organization. BPR aimed to help organizations fundamentally rethink
how they do their work in order to improve customer service, cut operational costs, and
become world-class competitors.
BPR seeks to help companies radically restructure their organizations by focusing on
the ground-up design of their business processes. According to early BPR proponent Thomas
H. Davenport (1990), a business process is a set of logically related tasks performed to
achieve a defined business outcome. Re-engineering emphasized a holistic focus on business
objectives and how processes related to them, encouraging full-scale recreation of processes
rather than iterative optimization of sub-processes. Business process reengineering is also
known as business process redesign, business transformation, or business process change
management.

Business process can be defined as "a set of logically related tasks performed to
achieve a defined business outcome." It is "a structured, measured set of activities designed to
produce a specified output for a particular customer or market." Improving business
processes is important for businesses to stay ahead of competition in today's marketplace.
Over the last 10 to 15 years, companies have been forced to improve their business processes
because customers are demanding better products and services. Many companies begin
business process improvement with a continuous improvement model. The BPR
methodology comprises of developing the business vision and process objectives, identifying
the processes to be redesigned, understanding and measuring the existing processes,
identifying IT levers and designing and building a prototype of the new process. In this
context it can be mentioned that, some of the biggest obstacles faced by reengineering are
lack of sustained management commitment and leadership, unrealistic scope and
expectations, and resistance to change.

The Role of Consultants in BPR projects


New reengineering teams typically employ the assistance of a consultant for their
project. Consultants can play a valuable role in BPR projects. They are objective and immune
to internal politics. Having followed the processes before, they provide valuable information
and best practices from a wide range of experience. Consultants can also serve as good
communication bridge between the team and management, write project documentation, lead
the project and facilitate meetings, make presentations to stakeholders and associates, and last
but not the least, contribute subject-matter expertise in your organization's work processes.

BPR and Information Technology Business Process


Re-engineering has rapidly developed towards a new management philosophy. The
inherent business process orientation changes the perspective of international management
from a structural to that of a process view. The re-engineering of business processes is only
one aspect of the management of business processes. In particular, the re-engineering of
international business processes needs special attention, because the multifaceted structure of
multinational corporations increases the complexity of business processes, there by
influencing the options for redesign. Business Process Re-engineering has rapidly developed
towards a new management philosophy based upon predecessors like Total Quality
Management, Overhead Value Analysis, Kanban or Just-In-Time-Management. Business
processes can be re-engineered by redesigning the steps, by changing the logical and
temporal sequence of the steps, or by changing any other characteristics of the process. The
role of IT is discussed in contradictory way. Advocates of information systems favor the view
that the new technology is an enabler of process re-engineering. IT has to be monitored
constantly to determine whether it can generate new process designs or contribute to the
performance of a business process. The breakthrough of BPR is closely connected with IT,
which opens new dimensions of process reorganization. Moreover, those who take the
initiative in process improvement/redesign, influence the role of IT. If the data processing
department initiates the process change, then IT will have more of a generator function for
new process redesigns. If on the other hand, the top management sets off the change process,
then the process will be first restructured and later optimized through IT.

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