Practical Benchmarking: The Complete Guide

Transcription

1 Practical Benchmarking: The Complete Guide

2 Practical Benchmarking: The Complete Guide Mohamed Zairi Unilever Lecturer in TQM Bradford University and Paul Leonard Senior Consultant Xerox Quality Solutions Rank Xerox Ltd SPRINGER-SCIENCE+BUSINESS MEDIA, B.V.

3 1996 Springer Science+Business Media Dordrecht Originally published by Chapman & Hali in 1996 Softcover reprint of the hardcover 1 st edition 1996 Comrnissioned and produced by Technical Comrnunications (Publishing) Ltd. ISBN ISBN (ebook) DOI / Apar! from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the UK Copyright Designs and Patents Act, 1988, this publication may not be reproduced, stored, or transmitted, in any form or by any means, without the prior permission in writing of the publishers, or in the case of reprographic reproduction on1y in accordance with the terms of the licences issued by the Copyright Licensing Agency in the UK, or in accordance with the terms of licences issued by the appropriate Reproduction Rights Organization outside the UK. Enquiries conceming reproduction outside the terms stated here should be sent to the publishers at the London address printed on this page. The publisher makes no representation, express or implied, with regard to the accuracy of the information contained in this book and cannot accept any legal responsibility or liability for any errors or omissions that may be made. A Catalogue record for this book is available from the British Library

4 Contents Foreword by Bob Camp Preface Part One: VII ix 1 1 Competing in a modern business environment: what does it mean? Introduction Market-driven strategies - a first requirement Time-based competition Being a global competitor - what does it mean? Competing through learning - the role of core competences Competing through benchmarking - a proposed model 9 2 The total quality movement: where did it start, what does it mean, and how does it affect business organizations? Background The evolution oftqm 14 3 Origins of benchmarking and its meaning Introduction Why is benchmarking so important? The evolution of benchmarking Benchmarking today 26 4 Benchmarking - an all encompassing tool Introduction The importance of benchmarking The links between process and people 32 5 Benchmarking - the strategic tool Customer - key determinant of strategic planning The link between competitive analysis and benchmarking Benchmarking strategic quality planning The development of an effective benchmarking strategy Strategic supremacy through benchmarking 44

5 IV 6 Types of benchmarking Competitive benchmarking Functional benchmarking 6.3 Internal benchmarking 6.4 Generic benchmarking Benchmarking, benchmarking processes 7.1 Introduction 7.2 Criteria used for benchmarking 7.3 Methodology of benchmarking 7.4 The benchmarking methodologies considered 7.5 Outcome of benchmarking exercise 8 Data collection approaches 8.1 Prerequisites to data collection 8.2 Data collection methods 8.3 Which methodes) to use? 9 The translation of benchmarking to business results The link between benchmarking and performance measurement Introduction Understanding performance measurement Best practice in financial measurement - what happens in Japan? 84 loa Integrating performance measurement with benchmarking Deploying measurement throughout the organization An integral approach to measurement An integral approach to benchmarking Choosing partners for ettective benchmarking Beginning the search for benchmarking partners List reduction Basic pitfalls Making initial contact The next step 98 Part Two: Benchmarking applications Benchmarking in the utilities sector Benchmarking in financial services Benchmarking in innovation Benchmarking in human resources 128

6 12.5 Benchmarking customer-consumer satisfaction Benchmarking in marketing Benchmarking in education Benchmarking in healthcare Benchmarking in R&D Benchmarking in the environment Benchmarking quality systems Benchmarking in the public sector Benchmarking in a multinationavmonopoly situation Critical factors in benchmarking Organizational factors Benchmarking and TQM: a positive link Partner issues Resource issues Communication/planning issues Customer issues Implementation issues Futuristic issues How to avoid pitfalls Benchmarking in the future Benchmarking future competitivness: is time the most critical factor? Establishing a market-driven approach through benchmarking Global benchmarking for global supremacy Competing for superiority - how to beat the Japanese Benchmarking and strategic alliances 212 Part Three: Who is who in benchmarking? Profile of the organizations who have promoted benchmarking Department of Trade and Industry (DT!) The European Centre for Total Quality Management Xerox Quality Solutions (XQS) Price Waterhouse Coopers and Lybrand Oak Business Developers British Quality Foundation (BQF) The Benchmarking Centre Ltd European Foundation for Quality Management (EFQM) International Benchmarking Clearing House 230 v

7 vi Profit impact of market strategy (PIMS) Personnel Euro-club (PEC) The Benchmark Partners Inc The Inter-company Productivity Group IMD Lausanne IBM Consultants IFS International A review of key publications on benchmarking Introduction Benchmarking- the search for industry best practices that lead to superior performance Benchmarking: a tool for continuous improvement Best practice benchmarking: the management guide to successful implementation Strategic benchmarking: how to rate your company's performance against the world's best Benchmarking: a practitioner's guide for becoming and staying America's best of best Competitive benchmarking: an executive guide Articles 244 References 253 Index 258

8 Foreword by Bob Camp The business improvement topic and quality tool called benchmarking is becoming widely understood and broadly applied. There are now applications in almost all segments of the economy including industrial firms that either produce a product or a service, non-profit organizations such as healthcare, government and education. The approach is starting to spread around the globe with initiatives in Europe, Asia Pacific and South America. This is commendable and reassuring and must show that there is significant interest in the approach and that it works. What is missing, however, are books and reference material that are not solely prepared in the US where benchmarking started. Theses would include examples of applications relevant to the local area and industries. They would include references to articles written about benchmarking appearing in local publications. In this fashion those interested would have near hand case histories of the use of benchmarking and therefore become encouraged to use the technique. Zairi and Leonard have done the benchmarking community a real service by documenting the European view and application of benchmarking to a wide range of examples. But they have not stopped there. Their text includes treatment of a number of related facets of benchmarking that makes this a fairly thorough text. The text does cover the basics. These include the origins of benchmarking, the strategy for its use, the types of benchmarking that are the basic comparisons that can be made and the appropriate approach to choosing partners and data collection. However, they also cover some of the more difficult obstacles to understanding; namely how benchmarking relates to performance measurements and how it is integrated into the other continuous improvement initiatives that organizations invariably find they are pursuing. The text also covers a wide range of examples. These include applications in several different sectors of the economy: utilities, financial services, education, healthcare and several organization functional areas such as: human resources, marketing and R&D. In addition, the experiences of many European firms are covered, not the least of which are those of: Siemens, Rank Xerox, Diahatsu and Philips. The text gives

9 viii the authors' view of how to avoid pitfalls and the future of benchmarking; this includes the focus on competitiveness and the need for global market driven superiority. A unique feature of the work is a 'Who is who in Benchmarking' section. This does not exist in one comprehensively organized publication. The reader has a ready reference to organizations who have prominence in benchmarking, offer assistance in the pursuit of this improvement approach and who promote benchmarking. This offers invaluable reference for those organizations that are starting their benchmarking journey. New and different perspectives are needed to expand the art and practice of benchmarking and I welcome them and commend this book to your reading. Robert C. Camp Rochester, NY, USA

10 Preface The authors met for the first time some two and a half years ago at a seminar on benchmarking organized by the UK Chapter of the European Foundation for Quality Management. Our presentations were approached from different standpoints, yet we were both pleasantly surprised to see how similar were the core messages. One presentation was from the standpoint of the academic, the other from the standpoint of an experienced practitioner. Over the ensuing months, we began to share more and more platforms at benchmarking conferences both in the UK and abroad and would spend many hours before, during and after conferences talking and developing our overall understanding of benchmarking from many different viewpoints. Early in 1993 someone, we're not quite sure who, said that the combination of academic and practitioner was a very powerful one and that we should write a book on the subject of benchmarking. At first we rejected the idea because there are so many books, articles, conferences, seminars and workshops on the subject that we felt there wasn't any room for more. However, one day we sat down and looked at the proposition more carefully. Was there really no room for any more literature? Was there really nothing we could contribute? Had it really all been said? After a couple of hours of debate we decided to give it a try! We (and our wives!) were later to regret this decision as writing the book began to consume more and more time and effort. However, the die was now cast, so the process of writing began. Imagine the scene - one author based in Bradford and travelling extensively, the other in the Midlands and also travelling extensively. One using one word processing technology, the other using a different, incompatible system. The sheer size of the logistics problem began to dawn and we began to wonder if we had bitten off more than we could chew and whether the book would ever be completed. In order to minimize the problem we allocated a 'lead' writer to each chapter with the intent of regular progress reviews and aimed at adding value to the lead writer's work. The definition of 'regular' took on a whole new meaning. Half an hour here, an hour there, in Bradford, in London hotels, in Paris, over the telephone, by exchanges of faxes etc. Time began to hurtle by and progress seemed to be moving at a snails's pace. In spite of all the pressures of other

11 x priorities the book gradually took shape. As each chapter took the form of a first draft it was forwarded to the publisher and eventually all the initial work was completed. The rest, as they say, is history. Our intent was to produce a complete guide to benchmarking from a practical standpoint which would help any company, whether large or small, expert practitioner or beginner to improve their results by a much better use of this most powerful of quality tools. We believe we have succeeded in this task but ultimately it is up to you, the reader, to decide. We have to thank Bob Camp of Xerox Corporation, whose book Benchmarking - the search for industry best practices that lead to superior performance, is a world best seller, for writing such an encouraging foreword. Above all though, we have to thank our respective wives Alweena Zairi and Edna Leonard, without whose unstinting support, as more and more midnight oil was burnt, this book would never have seen the light of day.