Summary Total Quality Management part 1

Deze samenvatting is gebaseerd op het studiejaar 2013-2014.



A.1 Quality and customers requirements


In today’s dynamic business environment many organizations competes of its reputation. There are several aspects of reputation important:


  1. It is built upon the competitive elements of quality, reliability, delivery and price.
  2. Once an organization acquires a poor reputation for quality, it takes a long time to change it.
  3. Reputations can quickly become national reputations.
  4. The management of competitive weapons (like quality) can be learned like any other skill.


Quality is simply meeting the customers requirements and has been expressed in many ways:


  • “Fitness for purpose”. (Juran)
  • “Quality should be aimed at the needs of the consumer, present and future”. (Deming)
  • “Conformance to requirements”. (Crosby)
  • “Degree to which a set of inherent characteristics fulfils requirements”. (ISO)


Quality and reliability are used synonymously, often in a confused way. Reliability is the ability of the product or service to continue to meet the customer requirements over time.


Organizations ‘delight’ the customer by consistently meeting their requirements. Customer loyalty is an important variable in an organization’s success since it is a development of thinking about customers and their satisfaction. The focus on customer loyalty can provide a longer relationship with the customer (and a higher profitability) and these customers cost less to retain than acquire. Furthermore, about half of new customers come through referrals from existing clients.


A.2 Quality chain


Everyday common accidents are often answered by the acceptance of one thing: failure. Failure is not doing it right the first time at every stage of the process. A process is the transformation of a set of inputs into outputs that satisfy customer needs and expectations, in the form of products, information or services. As shown in figure 1.1, there is a series of quality chains of customers and suppliers throughout and beyond all organizations whether they be manufacturing concern, banks, retail stores, universities, hospitals or hotels.


The concept of internal and external customer-supplier chains form the core of total quality management. Therefore quality has to be managed, it will not just happen. It must involve everyone in the process and must be applied throughout the whole organization. Failure to meet the requirements in any part of the quality chain creates a problem elsewhere in the quality chain, leading to yet more failure (and so on). The benefits of making sure the

process is covered and the requirements are met at every stage, every time, are enormous.


Internal supplier/customer relationships are often the most difficult to manage in terms of establishing the requirements. Therefore each person in the quality chain must interrogate the interfaces as follows:




  • Who are my immediate customers and what are their true requirements?
  • How can I measure the ability to meet the requirements and do I have the necessary capabilities to meet them?
  • Do I continually meet the requirements and how do I monitor changes in the requirements?




  • Who are my immediate suppliers and what are my true requirements?
  • How can I, or they, measure their ability to meet my requirements?
  • Do my suppliers have the capability to meet the requirements and do they continually meet these?


How quality is built into a product or service at any stage?


  1. Quality of design: A measure of how well the product or service is designed to achieve the agreed requirements. Herein the specifications are most important.
  2. Quality of conformance to design: The extent to which the product or service achieves the quality of design. The use of figure 1.3 can help organizations to assess how much time they spend doing the right things right.


A.3 Managing quality


Have we done the job correctly?” This not quality control, but detection – wasteful detection of bad products before it hits the customer. To get away from the natural tendency to rush into the detection mode, it is necessary to ask first: “Are we capable of doing the job correctly?”.


Everything that we do is a process and each process in each department or area can be analyzed by an examination of the inputs and outputs. The output from a process is that which is transferred to somewhere or to someone – the customer. A transformation process (figure 1.4) will reside at every supplier/customer interface. Asking the questions in the right order replaces a strategy of detections with one of prevention. ‘Do we continue to do the job correctly?’ brings a requirement to monitor the process and to control it. The control of quality can only take place at the point of operation or production.


Quality control are the activities and techniques employed to achieve and maintain the quality of a product, process or service. It includes monitoring activity, but is also concerned with finding and eliminating causes of quality problems so that the requirements of the customer are continually met.


Quality assurance is the prevention of quality problems through planned and systematic activities. These will include the establishment of a good quality management system (QMS) and the assessment of its adequacy, the audit of the operation of the systems and the review of the system itself.


A.4 Understand the needs


“Excellent communication between customers and suppliers is the key to a total quality performance; it will eradicate the demanding nuisance view of customers which still pervades some organization.” If there are failures in communicating the requirements, all the efforts devoted to finding the nature and timing of the demand will be pointless. The use of a preliminary set of specifications as the basis for service or product design is necessary which include:


  1. Characteristics of performance and reliability.
  2. Aesthetic characteristics (styles, colour, smell, taste).
  3. Any obligatory regulations or standards governing the nature of the product or service.


The organization must also establish systems for feedback of customer information and reaction, and these systems should be designed on a continuous monitoring basis. Some items that require some attention include assessment of:


  • the suitability of the distribution and customer-service process;
  • training of personnel in the ‘field’;
  • availability of ‘spare parts’ of support staff;
  • evidence that the organization is capable of meeting customer requirement.


The following most common research methods are used to understand the market, keep close to customers and maintain the external perspective:


  • Surveys
  • Panel or focus groups
  • In-depth interviews
  • Brainstorming
  • Role rehearsal and reversal
  • Interrogation of trade associations


A.5 Quality throughout the entire organization


All components of an organization must work properly together, because they are all interrelated. The co-operation of everyone at every interface is necessary to achieve improvements in performance. This can only happen if the top management is really committed.






B.1 Early TQM frameworks


In the early 1980s there were many attempts to construct lists and frameworks to help the process quality and its management.


Deming had 14 points to help management as follows:


  1. Create constancy of purpose towards improvement of product and service.
  2. Adopt the new philosophy. We can no longer live with commonly accepted levels of delays. Mistakes and defective workmanship.
  3. Cease dependence on mass inspection. Require instead statistical evidence that quality is built in.
  4. End the practice of awarding business on the basis of price tag.
  5. Find problems. It is management’s job to work continually on the system.
  6. Institute modern methods of supervision of production workers. The responsibility of foremen must be changed from numbers to quality.
  7. Institute modern methods of supervision of production workers. The responsibility of foremen must be changed from numbers to quality.
  8. Drive out fear, so that everyone may work effectively for the company.
  9. Break down barriers between departments.
  10. Eliminate numerical goals, posters, and slogans for the workforce asking for new levels of productivity without providing methods.
  11. Eliminate work standards that prescribe numerical quotas.
  12. Remove barriers that stand between the hourly worker and his right to pride of workmanship.
  13. Institute a vigorous program of education and retraining.
  14. Create a structure in top management that will push every day on the above 13 points.


Juran’s 10 steps to quality improvement were:


  1. Build awareness of the need and opportunity for improvement.
  2. Set goals for improvement.
  3. Organize to reach the goals.
  4. Provide training.
  5. Carry out projects to solve problems.
  6. Report progress.
  7. Give recognition.
  8. Communicate results.
  9. Keep score.
  10. Maintain momentum by making annual improvement part of the regular systems and processes of the company.


Phil Crosby’s four absolutes:


  • Definition – conformance to requirements
  • Systems – prevention
  • Performance standard – zero defects
  • Measurement – price of non-conformance


He offered 14 management steps to improvement:


  1. Make it clear that management is committed to quality.
  2. Form quality improvement teams with representative from each department.
  3. Determine where current and potential quality problems lie.
  4. Evaluate the cost of quality and explain its use as a management tool.
  5. Raise the quality awareness and personal concern of all employees.
  6. Take actions to correct problems identified through previous steps.
  7. Establish a committee for zero defects program.
  8. Train supervisors to actively carry out their part of the quality improvement program.
  9. Hold a ‘zero defects day’ to let all employees realize that there has been a change.
  10. Encourage individuals to establish improvement goals for themselves and their groups.
  11. Encourage employees to communicate to management the obstacles they face in attaining their improvements goals.
  12. Recognize and appreciate those who participate.
  13. Establish quality councils to communicate on a regular basis.
  14. Do it all over again to emphasize that the quality improvement program never ends.


The table below compares the various approaches of the three American gurus (table 2.1).






Definition of quality

Conformance to requirements

A predictable degree of uniformity and dependability at low cost and suited to the market

Fitness for use

Degree of senior management responsibility

Responsible for quality

Responsible for 94% of quality problems

Less than 20% of quality problems are due to workers

Performance standard

Zero defects

Quality has many scales

Avoid campaign to do perfect work

General approach

Prevention, not inspection

Reduce variability by continuous improvement. Cease mass inspection

General management approach to quality (especially human elements)


14 steps to quality improvement

14 points for management

10 steps to quality improvement

Statistical process control (SPC)

Rejects statistically acceptable levels of quality

Statistical methods of quality control must be used

Recommends SPLC but warns that is can lead to too-driven approach

Improvement basis

A ‘process’ not a program

Continuous to reduce variation

Project-by-project team approach


Quality improvement teams.

Employee participation in decision making

Team and quality circle approach

Costs of quality

Cost of non-conformance, quality is free

No optimum, continuous improvement

Quality is not free, there is an optimum

Purchasing and goods received

State requirements

Inspection too late

Problems are complex.

Vendor rating

Yes and buyers

No, critical of most systems

Yes, but help supplier improve

Single sources of supply



No, can neglect to sharpen competitive edge

Total Quality Management (TQM) approaches are captured in a basic framework (figure 2.1). These approached brought together a number of components of the quality approach:


  • Quality circles (teams).
  • Problem solving and statistical process control (tools).
  • Quality systems (systems).


Furthermore it was recognized that culture, good communication and commitment from everyone in the organization plays an enormous role whether organizations were successful or not with their TQM approaches.


B.2 Award models


Quality frameworks may be used as the basis for awards. The Deming Prize was the first formal quality award established by JUSE in 1950. The Deming Prize ‘examination viewpoint’ include:


  1. Top management leadership and organizational vision and strategies.
  2. TQM frameworks (structure, daily and policy management, TQM promotion and operations etc.).
  3. Quality Assurance Systems (process control, quality audits, purchasing, subcontracting and distribution management etc.).
  4. Management systems for business elements (cross-functional management and its operations, cost management, environmental management, etc.).
  5. Human resources development (positioning of people in management, education and training etc.).
  6. Effective utilization of information (information systems, support for analysis and decision making etc.).
  7. TQM concepts and values (quality, respect for humanity etc.).
  8. Scientific methods (understanding and utilization of methods etc.).
  9. Organizational powers (core technology, speed, etc.).
  10. Contribution to realization of corporate objectives (customer-, employee-, social-, supplier-, shareholder relations etc.).


The Baldrige National Quality Program Criteria for Performance Excellence aims to help improve organizational performance practices, capabilities and results. It facilitate communication and sharing of best practices information. Furthermore, it serves as a working tool for understanding and managing performance and for guiding, planning and opportunities for learning. The award criteria are built upon a set of interrelated core values and concepts:


  • visionary leadership;
  • customer-driven excellence;
  • organizational and personal learning;
  • valuing employees and partners;
  • agility;
  • focus on the future;
  • managing for innovation;
  • management by fact;
  • public responsibility and citizenship;
  • focus on results and creating value;
  • systems developments.


These core values and concepts are embodied in a framework of 7 categories:


  1. Leadership.
  2. Strategic planning.
  3. Customer and market focus.
  4. Information and analysis.
  5. Human resource focus.
  6. Process management.
  7. Business results.


The seven criteria are further divided into items and areas which are describes in the “Criteria for Performance Excellence”. The framework (figure 2.2) has 3 basic elements:


  • organizational profile;
  • system;
  • information and analysis.


The European Quality Awards by the European For Quality Management (EFQM) followed from the Baldrige Award. This framework was the firs one to include business results and to really represent the whole business model. The simple model for improved performance is shown in figure 2.3. Both Baldrige and the EFQM model were recognized as descriptive holistic business models. The EFQM excellence model (figure 2.4) provides a framework which organizations can use to follow 10 new steps:


  1. Set direction through leadership.
  2. Establish the results they want to achieve.
  3. Establish and drive policy and strategy.
  4. Set up and manage appropriately their approach to processes, people, partnerships and resources.
  5. Deploy the approaches to ensure achievement of the policies, strategies and thereby the results.
  6. Assess the business performance in terms of customers, their own people and society results.
  7. Assess the achievements of key performance results.
  8. Review performance for strengths and areas for improvement.
  9. Innovate to deliver performance improvements.
  10. Learn more about the effects of the enablers on the result.


B.3 Four P’s and three C’s


The four P’s form the basis of a simple model for TQM and provide the ‘hard management necessities’:


  • Processes – key linkage between the enablers of;
  • Planning – through;
  • People – into the;
  • Performance.


The new TQM model is complete when the ‘soft outcomes’, the three C’s, are integrated into the four P’s framework (figure 2.5):


  • Culture
  • Communication
  • Commitment





C.1 TQM approach


What is TQM?


  • It is far more that shifting the responsibility of detection of problem from the customer to the producer.
  • It requires a comprehensive approach that must first be recognized and then be implemented.
  • An approach to improve the competitiveness, effectiveness and flexibility of a whole organization.
  • A way of planning, organizing and understanding each activity.
  • It depends on each individual at each level.
  • To be effective; each person and each part of the organization must work together towards the same goals.


The impact of TQM on an organization is to ensure that the management adopts a strategic overview of quality. TQM often requires a mind-set change to break down existing barriers. Management that doubt the applicability of TQM should ask the following questions:


  1. Is any attempt made to assess the costs arising from errors, waste, lost sales etc.?
  2. Is the standard of management adequate?
  3. Are the organization’s quality management systems in good order?
  4. Have people been trained in how to prevent errors and problems?
  5. Do job instructions contain the necessary quality elements?
  6. What is being done to motivate and train employees to do work right the first time?
  7. How many errors, defects etc. occurred last year and is this more or less than the previous year?


If answers are satisfying to most of these questions, an organization can be reassured that it is already well on the way to using adequate quality management.


C.2 Quality policy


Control, systems and techniques are very important in TQM, but total commitment of management (TQM starts at the top) at all levels and all departments is a primary requirement. It is possible to detect real commitment; its shows at the point of operation.


Management should be dedicated to the regular improvement of quality. These ideas can be set out in a quality policy that requires management to:


  • Identify the customer’s needs.
  • Assess the ability of the organization to meet these needs economically.
  • Ensure that bought-in materials and services reliably meet the required standards of performance and efficiency.
  • Concentrate on the prevention rather than detection philosophy.
  • Educate and train for quality improvement.
  • Measure customer satisfaction.
  • Review the quality management systems to maintain progress.


C.3 Culture and quality


The culture within an organization is formed by a number of components:


  1. Behaviours based on people interactions.
  2. Norms resulting from working groups.
  3. Dominant values adopted by the organization.
  4. Rules of the game for ‘getting on’.
  5. The climate.


A vision framework includes (figure 3.1):


  • Vision or guiding philosophy. This is shaped by the leaders through their thoughts and actions. It is about ‘what we want to be’.
  • Core values and beliefs. These represent the organization’s basic principles about what is important. It is about ‘who we want to be’.
  • Purpose. It is about ‘what we are here for’.
  • Mission. This translate the abstractness of philosophy into tangible goals. It is about ‘what we want to achieve’.


The sum total of the activities that increase the probability of the planned results being achieved (mission) is control. Control is the process by which information or feedback is provided so as to keep all functions on track. Control mechanism fall into three categories:


  1. Before the fact

    • Strategic plan.
    • Action plan.
    • Budgets.
    • Job description.
    • Individual performance objectives.
    • Training and development.
  2. Operational
    • Observation.
    • Inspection and correction.
    • Progress review.
    • Staff meetings.
    • Internal information and data systems.
    • Training programs.
  3. After the fact
    • Annual reports.
    • Variance reports.
    • Audits.
    • Surveys.
    • Performance review.
    • Evaluation and training.


TQM is user driven and concerned with moving the focus of control from the outside to the inside of individuals, so that everyone is accountable for his/her own performance. TQM is about doing the right things, right first time, every time.


C.4 Leadership and quality


Effective leadership in combination with TQM result in an organization doing the right thing, right first time. There are five requirements for effective leadership:


  1. Developing and publishing clear documented corporate beliefs and purpose (mission statement).
    • The beliefs and objectives should address the definition of the business, a commitment to effective leadership and quality, indications for future directions, the distinctive competence, etc.
  2. Develop clear and effective strategies and supporting plans for achieving the mission.
  3. Identify the Critical Success Factors (CSFs) and critical processes. Figure 3.2.
  4. Review the management structure.
  5. Empowerment (encourage effective employee participation).


Furthermore the following aspects are important:


  • Attitude. The key attitude should start at the top and must them percolate down, to be adopted by each and every employee.
  • Abilities. Employees should know what is needed and expected from them and therefore training (related to needs, expectations and process improvement) is needed.
  • Participation. Employees must be trained to Evaluate, Plan, Do, Check and Amend which will lead to a never-ending improvement helix (figure 3.3).


C.5 Excellence in leadership


The vehicle for achieving excellence in leadership is TQM. To deliver excellence in leadership a combination of the earlier mentioned four P’s and three C’s (plus a fourth C) is necessary. The items are given below:


4 P’s:

  • Planning. Develop the vision and mission and develop, deploy and update policy and strategy.
  • Performance. Ensure that key performance results are measured, reviewed and improved.
  • Processes. Ensure that a system for managing processes is developed and implemented and prioritize improvement activities.
  • People. Stimulate empowerment and teamwork and encourage creativity, results of learning activities and motivation.


4 C’s:

  • Customers. Be involved with customers and other stakeholders and ensure that their needs are understood
  • Commitment. It is important to be personally and actively involved in quality and improvements activities.
  • Culture. Develop values and ethics to support the creation of a total quality culture and ensure that creativity and learning activities are developed and implemented
  • Communications. Personally communication vision, mission, policies and strategies and stimulate and encourage communication and collaboration.




D.1 Implementation of TQM


There are 6 basic steps for the implementation of TQM:


  1. Develop a shared vision and mission for the organization.
  2. Develop the mission into CSFs to coerce and move it forward.
  3. Define key performance outcomes as being the quantifiable indicators of success in terms of the mission and CSFs.
  4. Understand the core processes and gain process sponsorship.
  5. Break down the core processes into sub-processes, activities and tasks and form improvement teams around here.
  6. Ensure process and people alignment through a policy deployment or goal process


Develop a shared vision and mission for the organization.

The mission statement is usually long term and an expression of the aspiration of the organization. Typical content includes a statement of the role of the business (or contribution) and the definition of the business. Furthermore some indications for future direction can be mentioned.


The vision framework mentioned in chapter C.3 will be extended with three more aspects (figure 4.1):


  • Strategies and plans. This is about ‘how are we going to achieve it’.
  • CSFs. This is about  ‘what we need to achieve it’.
  • Core processes. This is about ‘the activities we need to perform particularly well to achieve it’.


Develop the mission into CSFs to coerce and move it forward.

The danger gap in which many organizations fall into can be prevented. The mission itself is not enough to ensure the complete implementation, and must first be translated through its CSFs. Whatever the organization tries to accomplish with their mission can be defined by CSFs. There should be no more than 8 CSFs (no more than four if the mission of the organization is survival). CSFs are the building blocks of the mission, they are the ‘whats’ and not the ‘hows’. CSFs provide direction but are not directly manageable.


Define key performance outcomes as being the quantifiable indicators of success in terms of the mission and CSFs.

The missions and CSFs provide the WHAT of the organization, but they must be supported by measurable key performance outcomes (KPOs). KPOs will help to translate the mission into clear targets.


Each CSF should have an ‘owner’ (member of the management team) that agreed the mission and CSFs. His/her tasks are:


  • define and agree the KPOs and associated targets;
  • ensure that appropriate data is collected and recorded;
  • monitor and report progress towards achieving the CFS (KPOs and targets) on a regular basis;
  • review and modify the KPOs and targets where appropriate.


Understand the core processes and gain process sponsorship.

The first stage in understanding the core processes is to produce a set of processes of a common order or magnitude. Some smaller processes identified may combine into core processes, other may be already at the appropriate level. The core processes listed must be sufficient for all the CSFs to be accomplished and each process should have a sponsor (member of the management team) that agreed the CSFs. The task of a sponsor is to:


  • ensure that appropriate resources are made available to map, investigate and improve the process;
  • assist in selecting the process improvement team leader and members;
  • remove blocks to the team’s progress;
  • report progress to the senior management team.


MCPs are Most Critical Processes which receive priority attention for improvement based on the number of CSFs impacted be each process.


Break down the core processes into sub-processes, activities and tasks and form improvement teams around here.

If all the core processes are defined and mapped out, the people need to develop skills to understand these new process structure. The breakdown from mission to individual tasks may assist in understanding the process required (figure 4.5). If all the processes are broken down in sub processes, activities and individual tasks, it is possible to link these with the Adair model of action-centered leadership and teamwork (chapter O)


The senior and middle managers need to provide the right support to all employees, because teamwork around the processes will ask more of them (think about training programs to develop new skills). The very well nature of the training process required has also been called just-in-time training.


Ensure process and people alignment through a policy deployment or goal process

Goal translation ensures that the ‘whats’ are converted into ‘hows’, using a Quality Function Deployment (QFD). This method is best described by an example (page 57 and 58).


The deliverables after one planning cycle of this process in a business will be:


  1. An agreed framework for policy/goal deployment through the business.
  2. Agree mission statement for the business and, if required, for the business units/division.
  3. Agreed CSFs with ownership at top team level for the business and business units/divisions.
  4. Agreed KPOs with targets throughout the business.
  5. Agree core business processes, with sponsorship at top team level.
  6. A corporate CSF/business unit CSF matrix showing the impacts and the first ‘whats/hows’ deployment.
  7. A what/how (CSF/process) matrix approach for deploying the goals into the organization through process definition, understanding, and measured improvement at the business unit level.
  8. Focused business improvement, linked back to the CSFs, with prioritized action plans and involvement of employees.


Strategic planning is the continuous process by which any organization will describe its destination, assess barriers standing in the way of reaching that destination and select approaches for dealing with those barriers and moving forward.


D.2 Development of policies and strategies


The development of policies and strategies are based on stakeholders’ needs and the organization’s capabilities. Some common themes emerge how individual organizations to require a clear detailed review.


  1. Customer/market

    • Data collected analysed and understood.
    • Customers’ needs and expectation understood.
    • Developments anticipated and understood.
    • The organization’s performance in the market place known.
    • Benchmarking against best in class organizations.


  1. Shareholder/major stakeholder

    • Shareholders’/major stakeholders’ needs and ideas understood.
    • Appropriate economic trends/indicators and their impact analyzed and understood.
    • Policies and strategies appropriate to shareholder/stakeholder needs and expectations developed.
    • Needs and expectations balanced.
    • Various scenarios and plans to manage risks developed.


  1. People

    • The needs and expectations of employees understood.
    • Data collected, analysed and understood.
    • Output from learning activities understood.
    • Everyone appropriately informed about the policies and strategies.


  1. Processes

    • A key process framework to deliver the policies and strategies designed, understood and implemented.
    • Key process owners identified.
    • Each key process and its major stakeholders defined.
    • Key process framework reviewed periodically in terms of its suitability to deliver to organization’s requirements.


  1. Partners/resources

    • Appropriate technology understood.
    • Impact of new technology.
    • Needs and expectations of partners understood.
    • Policies and strategies aligned with those of partners.
    • Financial strategies developed.
    • Appropriate buildings, equipment and materials identified.


  1. Society

    • Society, legal and environmental issues understood.
    • Environmental and corporate responsibility policies developed.




E.1 Partnerships


Organizations increasingly recognize the need to establish mutually beneficial relationships in partnerships. The contributors to effective partnerships (figure 5.1) must be in line with its overall policies and strategies. These contributors are:


  • Measure performance of partnership and feedback.
  • Identify key strategic partners.
  • Design and develop relationships to deliver maximum benefit.
  • Structure value-adding supply chain partnerships.
  • Ensure cultural fit and mutual development.
  • Share knowledge and learning with partners.
  • Improve processes together in partnership.


Attention should be given to the following factors when establishing partnerships:


  1. Maximizing the understanding of what is to be delivered by the partnership.
  2. Understanding what represents value for money.
  3. Understanding the respective roles and ensuring an appropriate allocation of responsibilities.
  4. Working in a supportive, constructive and a team-based relationship.
  5. Having solid programs of work, comprising agreed plans, timetables, targets etc.
  6. Structuring the resolution of complaints.
  7. Enabling the incorporation of knowledge transfer.
  8. Developing a stronger working relationship geared to delivering better products/services to the end customers.


E.2 Purchasing in partnerships


The primary objective of purchasing is to obtain the correct equipment, materials and services in the right quantity, of the right quality, from the right origin, at the right time and cost. Furthermore it plays an important role as the organization’s ‘window-on-the-world’. In this sense it should support any partnerships in the supply chain. The purchasing system should be documented and include:


  1. Assigning responsibilities for and within the purchasing procurement function.
  2. Defining the manner in which suppliers are selected, to ensure that they are continually capable of supplying the requirements.
  3. Specifying the purchasing documentation required in any modern procurement activity.


Many organization used to operate with an inspection-oriented quality system for bought-in parts. However, this approach has many disadvantages and these pushed forward the just-in-time (JIT) concept. But, improving the supplier performance is very complex and clearly relies very heavily on securing real commitment from the senior management of both organizations to a partnership. If a supplier understand the role its inputs play, he/she is less likely knowingly to offer non-conforming materials and services. Any external supplier should be updated on the organization’s policy on quality of incoming goods and services.


Single sourcing, the development of an extremely close relationship with just one supplier for each item or service, encourages greater commitment. However, to become an approved supplier or partner, it is usually necessary to pass through a number of stages:


  1. Technical approval
  2. Conditional approval
  3. Full approval


Many organizations examine their suppliers themselves, but this leads to high costs and duplication of activity for both the customer and supplier. Sometimes an independent third party is used to carry out the assessment.


E.3 JIT management


Just-In-Time (JIT) is a program which improves productivity and is directed towards ensuring that the right quantities are purchased or produced at the right time (immediately on demand), and that there is no waste. JIT is essentially:


  • A series of operating concepts that allows systematic identification of operational problems.
  • A series of technology-based tools for correcting problems following their identification.


JIT have made improvements in performance which includes increased flexibility, reduction in stock and work-in-process and the space it occupies and simplification of products/processes. The JIT concepts identify operational problems by tracking the following:


  1. Material movements
  2. Material accumulations
  3. Process flexibility
  4. Value-added efforts


The development of a long term relationship with suppliers, co-producers, is a feature of JIT. The requirements of JIT mean that suppliers are usually located near the purchaser’s premises, delivering small quantities, often several times per day.


The tools to carry out the monitoring required are familiar management methods such as flowcharting, plant layout methods, statistical process control etc. However, some techniques are more directly associated with JIT like Kanban, flexible workforce, pull-scheduling, mistake proofing etc.


Kanban (Japanese for visible record) is a card that signals the need to deliver or produce more parts. Two different systems are recognized:


  • Push system. The schedules of future demands push the production of the part/components out and onward. Originally these systems called MRP (Material Requirements Planning) or ERP (Enterprise Resource Planning)
  • Pull system: Kanban pulls parts/components through the production processes when they are needed.


A JIT program can succeed without a Kanban-based operation, but Kanban will not function effectively independently of JIT.


E.4 Resources


All organizations assemble resources to support the effective operation of the processes that hopefully will deliver the strategy:


  • Financial resources: investment is key for the future development and growth of business. Financial goals and performance will drive strategic direction.
  • Other resources: different resources are deployed by different types of organizations. Directors and managers must pay attention to the utilization of these resources, the security of the assets, maintenance of building and equipment, managing material inventories and consumption, waste reduction and recycling and environmental aspects.




F.1 Definitions


Everything we experience in or from an organization is the result of a design decision, or lack of one. Almost all areas of organizations have design issues inherent within them. Design is defined as ‘the way in which something had been planned and made, including what it looks like and how well it works’ (Collins Cobuild English Language Dictionary). It is about combining function and form to achieve fitness for purpose. Design is a process and can be used to:


  • gain and hold on to competitive edge;
  • save time and effort;
  • deliver innovation;
  • stimulate and motivate staff;
  • simplify complex tasks;
  • delight clients and stakeholders;
  • dishearten competitors;
  • achieve impact in a crowded market;
  • justify a premium price.


Innovation entails both the invention and design of radically new products and services, embodying novel ideas, discoveries and advanced technologies, and the continuous development and improvement of existing product/service and processes to enhance their performance and quality.


F.2 Design process


Commitment at the top is required to build quality throughout the design process. Successful organizations have demonstrated a state-of-the-art approach to innovation based on 3 principles:


  1. Strategic balance. Ensure that both old and new product service developments are important.
  2. Top management approach. Ensure that commitment is the common objective.
  3. Teamwork. Ensure that once project are running, problems are tackled simultaneously.


A design process is often associated with styling of products. For certain products and many service operations the secondary design considerations are vital. Some aspects that affect quality in this ways are:


  • Packaging;
  • customer-service arrangements;
  • maintenance routines;
  • warranty details and their fulfilment;
  • spare-part availability.


As mentioned in F.1 design is a process. It is the process of presenting needs in some physical form, initially as a solution and then as a specific configuration or arrangement of materials resources, equipment and people. The designing must take place in all aspect of identifying the need, developing that which satisfies the need, checking the conformance to the need and ensuring that the need is satisfied. Design must be carefully managed by each stage and activity (figure 6.1). However, it is not possible to exert the same tight control on the design effort a on other operational efforts. Certain features make control of the design process difficult:


  1. No design will ever be ‘complete’.
  2. Few designs are entirely novel.
  3. The longer the time spent on a design, the less the increase in the value of the design tend to be, unless technological breakthrough is achieved.
  4. External and/or internal customers will impose limitations on design time and cost.


Total design or ‘simultaneous engineering’ is similar to quality function deployment and uses multifunction teams to provide an integrated approach to product or service introduction.


F.3 The house of quality


The house of quality is the framework of the approach to design management. It is also knows as Quality Function Deployment (QFD). QFD is a system for designing a product or service, based on customers’ demands with the participation of members of the supplier organization. The activities in QFD include:


  • Market research.
  • Basic research.
  • Innovation.
  • Concept design.
  • Prototype testing.
  • Final- product or service testing.
  • After-sales service and troubleshooting.


The first step of a QFD exercise is to for a cross-functional QFD team. A QDF team’s purpose is to take the needs of the market and translate them into such a form that the can be satisfied within the operating unit. They must answer 3 questions;

  1. WHO are the customers?
  2. WHAT does the customer need?
  3. HOW will the needs be satisfied?


WHO, WHAT and HOW are entered into a QFD matrix of ‘House of Quality’ (HoQ), which is simply a quality table. HoQ provide structure to the design and development cycle. It provides an organization with the mean for interdepartmental planning and communicating (figure 6.2). It starts with the CAs (Customers Attributes), which are phrases customers use to describe products, processes and service characteristics. The essential components of the HoQ diagram are shown in figure 6.3. It has the following structure:


  1. Find the WHATS, the customer requirements, determined through the voice of the customer.
  2. The importance of each requirement is rated and rankings are added.
  3. All requirements should be examined in terms of customer rating and these results are placed to the right of the central matrix.
  4. The WHATS must be converted into HOWs and these are called the technical design requirements and will provide the voice of the process.
  5. The central relationship matrix is the working core of the HoQ. The WHATs are matched with the HOWs.
  6. The roof of the HoQ shows the interactions between the technical design requirements.
  7. The bottom of the HoQ shows the target values of the technical characteristics.


The use of competitive information should help prioritize resources within an organization. QFD has many more advantages:


  • It promotes teamwork.
  • Creates communication at functional interfaces.
  • It should lead to a ‘global view’ of the development process, from a consideration of all the details.
  • Increase in customer satisfaction and loyalty.
  • It should add structure to the information.
  • It provide documentation.


F.4 Requirements of specifications


To ensure that a products is standardized, specifications must be written. The ISO (International Standards Organization) defines specifications as the documents that prescribes the requirements within which the product or service has to conform. The basic requirements of a specification is that it gives the:


  • Performance requirements of the product or service.
  • Parameters.
  • Materials to be used.
  • Methods of production.
  • Inspecting/testing/checking requirements.
  • References to other applicable specifications.


F.5 Service sector


It is argued that if income elasticity of demand is higher for services than it is for goods, then as income rise, resources will shift towards services. It is important to know the difference between a product and a service. Particular characteristics of a service may be intangibility, perishability, simultaneity, heterogeneity. Several sources from the literature place services in one of 5 categories:


  1. Service factory.
  2. Service shop.
  3. Mass service.
  4. Professional service.
  5. Personal service.


Service attributes have particular significance for the design of service operations:


  1. Labour intensity
  2. Contact
  3. Interaction
  4. Customization
  5. Mature of service act
  6. Recipient of service.




Failure mode and effect analysis (FMECA) is the study of potential failures to determine their effects. It may be applied in any stage of design, development, production or use. The elements of FMECA are:


  • Failure mode
  • Failure effect
  • Failure criticality.


Special FMECA pro formas set out the following steps:


  1. Identify the product or system components.
  2. List all possible failure modes of each component.
  3. Set down the effects that each mode of failure would have on the function of the product or systems.
  4. List all the possible causes of each failure mode.
  5. Assess numerically the failure modes on a scale from 1 to 10 and determine values on this scale of P (probability), S (seriousness) and D (difficulty). See table 6.3.
  6. Calculate the product of the ratings, c= P x S x D (names RPN: risk priority number).
  7. Indicate briefly the corrective action required.


The Moment of Truth (MoT) is the moment in time when a customer first comes into contact with people, systems, procedures, or products of an organization.


F.7 The links between good design and managing the business


The aspects that should be addressed to integrate design into the business or organization are:


  • Leadership and management style.
  • Customers strategy and planning.
  • People – their management and satisfaction.
  • Resource and partnership management.
  • Process management.
  • Impact on society and business performance.




G.1 Improvement cycle


Measures are used in process control and in performance improvement. Performance measures used to be derived from cost-accounting information. Organizations that want to be successful in the long term, should measure the performance by the improvement seen by the customer. In the cycle of never-ending improvement, measurement plays an important goal in:


  • Tracking progress against organizational goals.
  • Identifying opportunities for improvement.
  • Comparing performance against internal standards.
  • Comparing performance against external standards.


Existing problems concerning performance measurement systems that frustrated improvement efforts are:


  1. Produce irrelevant or misleading information.
  2. Track performance in single, or isolated dimensions.
  3. Generate financial measures too late.
  4. Do not take account of the customer perspective (internal and external).
  5. Distort management’s understanding of how effective the organization has been implementing its strategy.
  6. Promote behaviour that undermines the achievement of the strategic objectives.


An example of a measurement with shortcomings is the ROI (Return On Investment). ROI tells what happened, not was is happening or what will happen. It was designed for a long-term, single-period measure, but is often used as a short-term one.


The critical elements of a good performance measurement framework (PMF) are:


  • leadership and commitment;
  • full employee involvement;
  • good planning;
  • sound implementation strategy;
  • measurement and evaluation;
  • control and improvement;
  • achieving and maintaining standards of excellence.


The Deming cycle of continuous improvement clearly requires measurement to drive it:


Plan:               establish performance objectives and standards.

Do:                  measure actual performance.

Check:           compare actual performance with the objectives and standards (find gap).

Act:                             take the necessary actions to close the hap and make the necessary improvements.


Four questions need to be answered, before to use the performance measurement in the improvement cycle:


  1. Why measure?

    • To ensure customers requirements have been met.
    • To be able to set sensible objectives and comply with them.
    • To provide standards for establishing comparisons.
    • To provide visibility and provide a scoreboard for people to monitor their own performance levels.
    • To highlight quality problems and determine which areas require priority attention.
    • To give an indication of the costs of poor quality.
    • To justify the use of resources.
    • To provide feedback for driving the improvement effort.


  1. What to measure?

    • Ratios indicators.
    • Scales indicators.
    • Rankings indicators.
    • Financial indicators.
    • Time-based indicators.


  1. Where to measure?

    • Human components. Wherever measures are used they must be accepted and understood by all people involved, compatible with the rewards and recognition systems and designed to offer minimal opportunity for manipulation.
    • Technical components. Measures must be truly represent (correct, precise and accurate) the controllable aspects of the processes.
    • Business components. The measures must be objective, timely and result-oriented. They must mean something to the employees.


  1. How to measure?

    • Effectiveness: looks at the output side of the process and reflects whether the organization achieving desired goals.


   Actual output

Effectiveness =        ---------------------   x 100%
                                   Expected output


  • Efficiency: concerned with the percentage resource actually used over the resources that were planned to be used.


      Resources actually used

Efficiency =               -----------------------------------------   x 100%
                                   Resources planned to be used


  • Productivity: relate the process outputs to its inputs



Productivity =           ------------


   Expected output

Expected productivity=      -------------------------------------------------   x 100%
                                               Resources expected to be consumed




             Actual output

Actual productivity =           ----------------------------------------   x 100%
                                               Resources actually consumed


  • Quality: The voice-of-the-customers measures. “Are we doing a good job?” The non-quality-related measures include:
    • Simple counts of defect or error rates.
    • Percentage outside specification or Cp/Cpk values.
    • Deliveries not on time.
    • Poor quality.


  • Impact: Lead to key performance indicators.


Value-added management (VAM)=            Volume of sales (turnover) - total inputs costs

Net profits before tax

Return on Capital employed (ROVA) =     ----------------------------   x 100%
                                                                            Value added


Activity-Based Costing (ABC) is based on the activities performed being identified and costs traces to them. ABC uses cost drivers, which reflect the demands placed on activities.


G.2 The costs of quality


The costs of quality (COQ) must be carefully managed and the analysis is a significant management tool that provides a method of assessing the effectiveness of the management of quality and a means of determining problem areas, opportunities, savings and action. The activities are separated into the so called P-A-F- model (prevention, appraisal and failure costs) presented by Feigenbaum.


  1. Prevention cost. These are associated with design, implementation and maintenance of the quality management systems. Prevention includes product/service requirements, quality planning, quality assurance, training and miscellaneous. Resources devoted to prevention give rise to the ‘costs of doing it right the first time’.
  2. Appraisal costs. These are associated with the supplier’s and customer’s evaluation of purchased goods. Appraisals includes verification, quality audits, inspection equipment and vendor rating. Appraisal activities result in the ´costs of check it is right´. 
  3. Internal failure costs: These occur when the results of work fail to reach designed quality standards and are detected before transfer to the customer. Internal failure includes waste, scrap, rework-rectification, re-inspection, downgrading and failure analysis
  4. External failure costs: These occur when outputs fail to reach quality standards but are not detected until after transfer to the customer. External failure includes repair and servicing, warranty claims, complaints, returns, liability and the loss of good will. External and internal failure produce the ‘costs of getting it wrong’.


The relationship between prevention, appraisal and failure costs are shown in figure 7.1.


G.3 Process model


The P-A-F model has some disadvantages:

  • It may be impossible to categorize costs into the three categories.
  • It focuses attention on cost reduction and ignores the positive contribution made to sales volume by improved quality.
  • It implies that there is an acceptable optimum quality level, but this is not in line with the never-ending improvement cycle of TQM.


Process cost models can be used for any process within an organization. These models are a method for applying quality costing to any other process. The categories of the Cost Of Quality (COQ) have been rationalized into the Cost of Conformance (COC) and the Cost Of Non-Conformance (CONC).




COC is the process cost of providing products/services to the required standards in the most effective manner. CONC is the failure cost associated to the process not being operated to the requirements.


The steps in process cost controlling are:


  1. Choose a key process to be analysed, identify and name it.
  2. Define the process and its boundaries.
  3. Construct the process diagram:
    • Identify outputs and customers (figure 7.2);
    • Identify inputs and suppliers (figure 7.3);
    • Identify controls and resources (figure 7.4).
  4. Flow chart the process and identify the process owners (figure 7.5).
  5. Allocate the activities as COC or CONC (table 7.1).
  6. Calculate the COQ at each stage (COC + CONC).
  7. Construct a process cost report (table 7.2 and 7.3).


The three further steps are carried out by the process owners:


  1. Prioritize failure costs and select the process stages for improvement through reduction in CONC.
  2. Review the flowchart to identify the scope for reduction in the cost of conformance.
  3. Monitor conformance and non- conformance costs on a regular basis.




Performance Measurement Framework (PMF) is based on the strategic development and goal deployment (figure 7.6). The framework consists of four levels related to:


Level 1: Strategy development and goal deployment

  1. Develop a mission statement.
  2. Define performance measures for each CSF.
  3. Set targets of each KPO.
  4. Assign responsibility at the organizational level for achievement of desired goals.
  5. Develop plans to achieve the target performance.
  6. Deploy mission, CSFs, KPOs, targets, responsibilities and plans to the core business process.
  7. Measure performance against KPOs and compare to target performance.
  8. Communicate performance and proposed actions throughout organization.
  9. At the end of the planning cycle compare organizational capability to target against all KPOS (begin again a step 2).
  10. Reward and recognize superior organizational performance.

Level 2: Process management

  1. If not already completed, identify and map processes.
  2. Translate organizational goals into process performance measures and KPIs.
  3. Define appropriate performance targets based on known process capability, competitor performance and customer requirements.
  4. Assign responsibility and develop plans for achieving process performance targets.
  5. Deploy measures, targets, plans and responsibility to all sub processes.
  6. Operate processes.
  7. Measure process performance and compare to target performance.
  8. Use performance information to update action plans, redesign processes etc.
  9. At the end of each planning cycle compare process capability to customer requirements against all measures and begin again a step 2.
  10. Reward and recognize superior process performance, including sub processes and teams.


A balanced scorecard (Kaplan) include performance results, customer results, people results and society results. Within these areas there needs to be a clear distinction between perception measures and other performance measured (figure 7.7).


The matrix in figure 7.8 shows the impact of the core processes on the CSFs. It incluces the CSFs and owners (whats), the KPO and targets, the core business processes and sponsors (hows) an the process performance measures, KPIs. In this way it helps to:


  • gain clarity about what is important and how it is measures;
  • remain focused on what is important and what the performance is;
  • know where to look if problems occur.


Level 3: Individual performance management

  1. If not already completed, identify and document job descriptions.
  2. Translate process goals and action plans, and personal training and development requirements into personal performance measures.
  3. Define appropriate performance targets based on known capability and desired characteristics.
  4. Develop plans towards achievement of personal performance targets.
  5. Document 1 to 4 using appropriate form.
  6. Manage performance.
  7. Formally appraise performance against range of measures developed and compare to target performance.
  8. Use comparison with target to identify areas for improvement, update action plans etc.
  9. Compare capability to job requirements and begin again at step 2 (after 1 year).
  10. Reward and recognize superior performance.


Good performance management attempt to measure a combination of process/task performance and personal development. Appraisal systems are often designed to motivate individuals to achieve process and personal development objectives.


Level 4: Review performance

  1. Identify the need for review.
  2. Identify the method of performance review to be used.
  3. Carry out the review.
  4. Feed results into the planning process at the organizational or process level.     
  5. Determine whether to repeat the exercise


The identification of CSFs and KPOs are the key to successful performance measurement. Success at the process level is the identification and translation of customer requirements and strategic objectives into a process framework. It relies on performance appraisal and planned formal reviews to reach success at the individual level. Furthermore, the key to success in the review stage is the use of appropriate innovative techniques to identify improvement opportunities.


The critical factors of the success of performance measurement systems are:


  1. Level of top management support for nonfinancial performance measures.
  2. Identification of the vital new measures.
  3. The involvement of all individuals in the development of performance measurement.
  4. Clear communication of strategic objectives.
  5. Inclusion of customers and suppliers in the measurement process.
  6. Identification of the key drivers to performance.


Some techniques to review include:

  1. Quality costing.
  2. Self-assessment.
  3. Benchmarking.
  4. Customer satisfaction surveys.
  5. ABC (Activity-Based Costing).


G.5 Implement PMF


If employees participate in the development of measures it will enhance their understanding and acceptance, there will be lower resistance to the system and a positive commitment towards future changes will be engaged. However, there are some reasons why measurement systems fail:


  • They do not define performance operationally.
  • They do not relate performance to the process.
  • The boundaries of the process are not defined.
  • The measures are misunderstood.
  • There is not distinction between control and improvement.
  • There is a fear of exposing poor and good performance.
  • It is seen as an extra burden in terms of time and reporting.
  • There is a perception of reduced autonomy.
  • Too many measurements are focused internally and too few are focused externally.
  • There is a fear of the introduction of tighter management controls.


There are 12 steps for the introduction of TQM-based performance measurement:



  1. Identify the purpose of conducting measurement.
  2. Choose the right balance between individual measures.
  3. Plan to measure all the key elements of performance.
  4. Ensure that the measures will reflect the voice of the internal/external customer.
  5. Carefully select measures that will be used to establish standards of performance.
  6. Allow time for learning process during the introduction of a new measurements system.



  1. Ensure full participation during the introductory period.
  2. Carry out cost/benefit analysis on the data generation.
  3. Make the effort to spread the measurement system as widely as possible.
  4. Use surrogate measures for subjective areas;i here quantification is difficult.
  5. Design the measurement systems to be as flexible as possible, to allow for changes in strategic direction and continual review.
  6. Ensure that the measures reflect the quality drive by showing small incremental achievements that match the never-ending improvement approach.




H.1 Frameworks


Many organizations are turning to TQM models, like Deming or Baldrige, to measure and improve performance. Excellence models recognize that customer satisfaction, business objectives, safety and external considerations are mutually dependent. The EFQM excellence model recognize that processes are the means by which an organization harnesses and releases the talents to produce results performance (figure 8.1). Within this model, the enabler criteria (leadership, policy and strategy, people, resources and partnerships and processes) focus on what is needed to be done to achieve results (figure 8.2). Enablers are assessed on the basis of (figure 8.3):


  • Degree of excellence of the approach.
  • Degree of deployment of the approach.


Self-assessment promotes business excellence and should be demonstrate within this model how:


  1. Leadership (leaders) develop mission, vision and values. How they are personally involved in ensuring the management systems and involved with customers partners etc. Ho they motivate, support and recognize organization’s people.
  2. Policy and strategy are based on the present and future needs and expectations of stakeholder. How they are based on information from performance management and are developed, reviewed and updated. How they are deployed through a framework of key processes.
  3. People plan and manage resources and how they are involved and empowered. How they identify, develop and sustain knowledge and competencies.
  4. Partnerships and resources manage external parties, finance, building and equipment and technology and information.
  5. Processes are systematically designed and managed and improved and how product/services are designed and developed based on customer needs and expectations.


Self-assessment asks the following questions in relation to each criterion:


  • What is currently done in this area?
  • How is it done? Is the approach systematic and prevention based?
  • How is the approach reviewed and what improvements are undertaken following review?
  • How widely used are these practices?



The model result criteria of customer-, people-, society-, and key performance results in relation to its external customer, people, local, society and planned performance (figure 8.4).

Results are based on the basis of two factors (figure 8.5):


- Degree of excellence of the results.

- Scope of the results.


Self-assessment should demonstrate the organization’s success in satisfying the needs and expectations of its:


  1. Customer results.
  2. People results
  3. Society results
  4. Key performance results


Self-assessment against the Excellence Model is also called RADAR (Results, Approach, Deployment, Assessment and Review) system. The RADAR screen is visible in figure 8.6.


H.2 Self-assessment


Self-assessment provides an organization with valuable information which can help to achieve business goals. The EFQM model provides general steps in undertaking it (figure 8.7). It can be done with discussion groups, surveys, an award stimulation, pro formas and many other approaches. The emphasis should be on understanding the organization’s strengths and weaknesses. Furthermore, it must be linked to the 5 stakeholders embraced: Customers, employees, suppliers, stakeholders and community. Customers, employees and suppliers belong to the determinant elements. The application of total quality principles in these areas will provide satisfaction as a resultant to the shareholders and the community.


H.3 Securing prevention


Error is the process of removing or controlling defect causes in the management systems. There are two major elements:


  1. Checking the systems

Six methods are used in general (figure 8.9):


  • Quality audits and review (wide ranging).
  • Quality survey (in depth).
  • Quality inspection (scheduled).
  • Quality tour (unscheduled).
  • Quality sampling (random).
  • Quality scrunities.


  1. Error/defect investigation and follow up

General method is based on collecting data, checking the validity and selecting the evidence without making assumptions. It should focus on the positive preventive aspects (not a negative inquisition table 8.1). The results are used to:


  • Decide to most likely cause of the error/defect.
  • Notify the person able to take action.
  • Record the finding and outcomes (to everyone concerned).


H.4 Management system audits and reviews.


A good management system will not function without adequate audits and reviews. A review should be instituted every year with the aims of ensuring that the system is achieving the desired goals, revealing defects or irregularities in the system and uncovering potential danger areas.


A first party assessment scheme is the assessment of a quality management system against a particular standard of requirements by internal audit and review. If an external customer makes the assessment it is knows as a second part assessment scheme. If the assessment is done by an independent organization with no connections between the consumer and supplier is it known as an independent third party assessment scheme.


International standards emphasize the importance of auditing as a management tool. The generic steps involved are as follows:


  1. Initiations.
  2. Preparation.
  3. Execution.
  4. Report.
  5. Completion.



I.1 Why and what?


Benchmarking is a total quality management approach which measures an organization’s operations/products/services against those of its competitors. It is the continuous process of identifying, understanding and adapting best practises. External drivers for benchmarking are:


  • Customers continually demand better qualities, lower prices, shorter lead times, etc.
  • Competitors are constantly trying to get ahead and steal markets.
  • Legislation changes leads to demand for improvement.


Internal drivers for benchmarking include:


  • Targets which require improvements on our ‘best ever’ performance.
  • Technology (new) requires changes in processes.
  • Self-assessment results provide opportunities to learn from each other.


The benefits of benchmarking are numerous, for example it encourage innovation, it creates a better understanding of current position and its develop realistic stretch goals and establish action plans. The reasons for benchmarking are therefore extensive (table 9.1) like:


  1. Become competitive.
  2. Industry best practices.
  3. Define customer requirements.
  4. Establish effective goals and objectives.
  5. Develop true measures of productivity.


The four basic categories of benchmarking are internal, functional, generic and competitive.


I.2 Purpose and practise


Benchmarking is likely to progress through 4 focuses:


  1. Focus on competitive product/services.
  2. Focus on industry best practices.
  3. Focus on all aspects of the total business performance across all functions and aspects.
  4. Focus on processes and true continuous improvement.


Benchmarking is a strategic approach to getting the best out of people and processes and deliver improved performance. The purpose is to:


  • change the perspectives of management;
  • compare business practices with world class organizations;
  • challenge current practices and processes;
  • create improved goals and practises for the organization.


If an organization have not carried out benchmarking before, it may be useful to carry out a self-assessment before the implementation in terms of their readiness (table 9.3). The five main stages of benchmarking are (figure 9.1):


  1. Plan the study. Kick-off meeting
  2. Collect data and information. Partners ill be identified
  3. Analyse data and information. Best practices
  4. Adapt the approaches. Feedback session
  5. Review performance and the study.


I.3 Benchmarking and change


Benchmarking is about gaining understanding of how other organizations achieve superior performance. With this knowledge gaps in own organization can be recognized and solved. If the gap is small and the change can be undertaken quickly it is called quick wins. Some characteristics of quick wins:


  • Change is incremental and carries low levels of risk (but usually low levels of benefits).
  • It often givens temporary relief from a problem, but will not find the underlying reasons/diseases.
  • It should provide a platform from which longer lasting changes may be made to create short term wins.
  • Effective weapons in change, but must be followed up properly.


Whatever type of is involved, a key ingredient of success in taking the people along. Benchmarking efforts need to fit into the change model deployed (figure 9.2). However, the success from any benchmarking activity is directly related to the excellence of the preparation.


I.4 Communicate and manage stakeholders


Organizations must understand their stakeholders’ needs and their potential to do both good and ill. The act of stakeholder management is to proactively head off any major confrontations. Successful stakeholder management should include:


  1. Defining and mapping stakeholder groupings.
  2. Analysing and prioritizing these groupings.
  3. Researching the key players in the most important groupings.
  4. Developing a management strategy.
  5. Deploying the strategy by tactical actions.
  6. Reviewing effectiveness of the strategy and improving the future approach.


Objective measurement is key to targeting change activity wisely and provides a reliable baseline for making decisions. Baseline performance allows teams to monitor and understand success in delivering beneficial change. It must be mentioned that measurement and benchmarking are tools not substituted for management and leadership!


I.5 Benchmarking-driven change activities


It is very important to think wisely about (another) change to make and implement in the organization. Table 9.4 provides a simple decision-making tool to help consider the opportunities that are presented.


The following 12 steps are conducted by a study to examine the contribution that business management systems (BMS) make to achievement of organizational objectives:


  1. A benchmarking team was formed and educated.
  2. Background research was conducted.
  3. A decision was made on precisely what to benchmark.
  4. A questionnaire was produced and sent out to prospective companies.
  5. The returns were analysed
  6. Partners were selected.
  7. Partners were visited.
  8. Data collected during the visit was analysed.
  9. Good practice was distilled from the data.
  10. A final report was produced.
  11. Recommendations were made.
  12. The project was reviewed.



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