Effective Management of Benchmarking Projects

Mohamed Zairi

• Publisher: Routledge
• Year: 2010
• ISBN:
  9781136408502
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

Effective Management of Benchmarking Projects shows you how to apply benchmarking to a variety of projects. Effective Management of Benchmarking Projects equips the project team or manager with all the necessary competence for managing projects effectively. This practical book begins with definitions of 'what to benchmark' and ends with a stimulating real case study where a benchmarking project was conducted by observing all the necessary rules and with total adherence to the various protocols. This book deals with the application of benchmarking. It gives real examples of effective applications from such companies as:
Rank Xerox, D2D, American Express, Rover, Texas Instruments.

1 Rank Xerox: where the
benchmarking story started

Between knowledge of what really exists and ignorance of what does not exist lies the domain of opinion. It is more obscure than knowledge, but clearer than ignorance

Plato

As a general rule in the most successful man in life is the man who has the best information

Benjamin Disraeli

To most men, experience is like the stem lights of a ship, which illuminate only the track it has passed

S. T. Coleridge

1.1 The quality journey within Rank Xerox

Rank Xerox was a superior competitor since its foundation in 1956. However, there was a sharp erosion in its level of competitiveness to the benefit of the Japanese who managed to capture the market with high-quality, small copiers at a low cost.

The drive for quality became necessary in the early 1980s as a result of a sharp decrease in growth in revenue and profit. In 1980, for instance, ROA was 19 per cent but this had declined to 8.4 per cent by 1983. In Europe 80 per cent of the copiers in use were Japanese by the mid-1980s. This, of course, was a major drop from the days when Xerox was in a commanding position, when it grew from a small company with revenues of $33 million in 1959 to a major corporation with revenues of $176 million by 1963 and $4 billion by 1975. Xerox, of course, took advantage of the favourable situation in the marketplace. It was protected by its patented reprographic processes then, with very little competition. As Barry Rand (President, United States Marketing Group) puts it: ‘… It's not hard to be the best player when you're the only player’. Xerox's success was also spurred by the fact that there was a lot of demand for plain-paper copying. In the process of trying to capitalize on the available opportunities and satisfy existing levels of demand, Xerox lost sight of the customer, thus giving the competition the chance to innovate quickly and effectively and to start to challenge Xerox's market share. Realizing the gravity of the situation, Xerox decided to take action. Nobody under-estimated the magnitude of the task for a corporation the size of Xerox ($9 billion) and with more than 100 000 staff:

1 Xerox therefore launched a company-wide process called ‘Business Effectiveness’ based on a combination of employee involvement management style and a competitive process.

2 More attention was also given to obstacles to quality and areas leading to high cost by focusing on all aspects of product design, planning, engineering and production.

3 The customer was refocused through the development of a customer-satisfaction measurement system.

4 Much effort was devoted to ensuring that Xerox's new products were of the highest quality and that they would be able to assist Xerox to reclaim its market share.

These changes were very effective and led to significant progress.

1.2 Leadership through quality: a total quality process for Xerox

The changes were put in place with a high degree of effectiveness, and included, among others:

• A change in the approach to product development and delivery

• A change in the way Xerox approached its customers

• A change in Xerox's cost base

• Employee involvement programmes

• Introduction of competitive benchmarking.

The senior management team realized that all the above processes were working well only on some levels and tended to concentrate on uncoordinated and isolated areas. They decided that there was a need for a unifying process which would ensure employee involvement at all levels. These reinforcements came from the following four conclusions:

1 The Japanese success was due to the fact that their management process was driven by their commitment to total quality management.

2 Fuji Xerox in Japan had demonstrated the power of quality through achieving excellent business results and winning the ultimate quality prize (Demine Prize).

3 Quality started to spread in America and Europe, and many CEOs started to build it with their competitive objectives.

4 Through a strategic business analysis Xerox realized it could grow to a $25–30 billion corporation by 1992 through the use of quality management principles.

This led to the birth of ‘leadership through quality’ (LTQ).

1.2.1 What is leadership through quality?

LTQ is presented as an integrated philosophy with the following key areas of focus:

• A goal for Xerox to attain and maintain

• A strategy to enable Xerox to achieve its competitive advantage

• A way of working or process to use for managing operation of the business, and at all levels.

Leadership through quality works through five major mechanisms:

1 Standards and measurement:

• A six-step problem-solving process

• A nine-step quality improvement process

• Competitive benchmarking.

All tools must place emphasis on doing the right things right first time and determining the cost of quality.

2 Recognition and reward: recognizing quality efforts and contributions to continuous improvement in various forms.

3 Communications: formally and informally people are told about targets and objectives of the corporate organization, and are given feedback on a regular basis.

4 Training: training all employees in the principles of leadership through quality and giving them a good knowledge of the workings of the various problem-solving and continuous-improvement tools to use in their immediate work areas.

5 Management behaviours and actions: managers must adhere to the principles of leadership through quality and practise them in their everyday job. In other words, managers must walk like they talk. As expressed in the 1983 document which launched LTQ: ‘The introduction and adoption of leadership through quality will be fostered, encouraged and led by management at all levels.’

1.2.2 How does leadership through quality work?

The tools which are used to ensure that Rank Xerox does the right things right first time and all the time include:

• The problem-solving process

• The quality-improvement process

• The benchmarking process

• The self-assessment process (Business Excellence Certification Model.)

Here we will examine t...