What Value Does Benchmarking Have as an Element in Tqm Performance Measurement?

Introduction:

What has dominated the core content of strategy formulation and Total Quality Management-TQM have been a help from different academic disciplines of industrial engineering/production management and business policy, resulting in the separation of strategy formulation and TQM. However, TQM being an essential part of an organization can reduce say 20% cost of quality management in sales to 2.5% in a 5 year plan.

The need to both integrate TQM and Strategy Formulation as stated by Oakland (2003) is that it provides the right information on stakeholders needs, the conditions of both the market and industry/sector circumstances. The author went further to explain that integration helps in forming the basis of top level goals, planning of activities and the location of an organization's objectives and targets.

Organizational characteristics associated with each of these five stages will be diagnosed and weighted, which will aid in clarifying the respective progressions as we see fit.

5-Stage Model in the Integration of TQM with Strategy Formulation:

The process of integrating TQM and strategy formulation has been immensely useful, because companies known to implement TQMs have been more competitive in the market place than those that did not implement TQM (Oakland, 2003). These stages primarily captures the comprehensive platform of an organization understanding its operational process towards maturity and where the need arises for a standard approach by moving from project based improvement to a more inclusive, process based approach.

Stage 1 annual budgeting: Demand is strong at this stage, when the organization is young concentrating on surviving in the marketplace (Calingo, 1996).

Stage 2 long range planning: Closing the gaps between quantitative targets and forecast performance. At this point, top management has recognized the need to embrace quality management as the right tool to improve profitability.

Stage 3 quality planning: At this point management realizes the importance of understanding the basic market oriented driving changes rather than simply relying on market forecasts. The market dynamics is a lot better understood by managers than the way previous thought. This stage is quiet important because it addresses clearly customer needs and attaining the quality goals of an organization.

Stage 4 management by policy: Quality is seen here as a strategic weapon because in stage four planning is more effective than in stage three, and stage four involves more of co-ordination and management of quality improvement across the organization.

Stage 5 strategic, quality management: This stage deals with the complete integration of total quality management and strategic management. This is the zenith of a comprehensive management process that has integrated all aspect of the supply chain for optimal market penetration and satisfying the basic requirement of needs of the customer. a small number of companies ever get to this point of attaining their sets objectives as it was originally designed.

Company Case Study:

Michelin's launched process redesign effort can be classified as stage two long