UNIT-4Bench marking. Need, Advantages, Limitations,

Levels and Types of Benchmarking and process of benchmarking . Quality Function Deployment. Definition, Benefits and Process of QFD. Failure Mode and Effect Analysis. Explanation Examples and Steps in FMEA. ISO 900, ISO 14000 .

BenchmarkingBenchmarking is defined as” measuring our

performance against that of best-in-class companies, determining how the best –in-class achieve those performance levels and using the information as a basis for our own company ‘s targets, strategies and implementation.”

Evolution of BenchmarkingBenchmarking is not a new concept. The

practice of benchmarking can be seen in early 1800s when a New England industrialist, Francis Lowell travelled to England to study manufacturing at the best British factories.

Reasons for Benchmarking

To develop strengths and reduce weaknessTo achieve business and competitive

objectives.It is a powerful and effective tool when used

for right reasons.

Advantages of bench markingIt promotes a thorough understanding of the

company’s own process.It involves adaption of the practices of

superior competitions.It helps in identifying non value added

activities.It enables comparison of performance

measures in different dimensions.It focuses on performance measures and not

on products.It helps organizations to set realistic goals

It allows organization to define specific gaps in performance.

It provides a basis for training human resources.

Limitations

Best in class performance is a moving target.Benchmarking is not a panaceaIt is not instant

Why benchmarking fails?If employees fail to get involvedIf process improvement is not related to

competitive positioningGathering data before clearly understanding the

firm’s process.If assumed benchmarking as just one time

processIf the scope of companies studied is narrow.If the set goals do not bridge the gap between

what is and what can beIf they do not empower employees to achieve

improvementsIf benchmarking is not perceived to process

improvement.

Levels of Benchmarking

Internal benchmarkingCompetitive benchmarkingNon-competitive benchmarking

-related process in the industry with a firm-a related process in a different industry-an unrelated process in a different industry

World-class benchmarking

Types of benchmarking1. Performance benchmarking or operational

benchmarking.2. Process benchmarking or functional

benchmarking.3. Strategic benchmarking.

Key Success Factor Matrix Competitive Analysis- Industry- Segment

Performance Rating

KSF Weight Our co. Competitor A

Comp B Comp C

Sales force

Distribution

Suppliers

R &D

Service

Cost structure

Areas to benchmark1. Customer service levels2. Inventory management3. Inventory control4. Purchasing5. Billing and collection6. Purchasing practices7. Quality process8. Warehousing and distribution9. transportation

Guidelines to benchmarkingDo not go on a fishing expeditionUse company peopleExchange informationLegal concernsConfidentiality

Four Phases of BenchmarkingPlanningAnalysisIntegrationAction