Using Benchmarking And Six Sigma Process To Improve Organizational Performance: Tesco Essay.

1. Understand the nature and purpose of total quality management and how it is influenced by the management culture of organisations.

2. Identify a range of total quality management techniques including benchmarking and process re-engineering.

3. Determine how the introduction of total quality management involves reconsideration and synchronisation of functional policies to achieve maximum efficiency in organisational performance

Total Quality Management and its philosophy

Total Quality Management can be explained as a philosophy of management that embraces each and every activity, by which the requirements as well as expectations of the customer as well as the organizational goals gets satisfied in the most effective as well as efficient manner. Benchmarking is considered being an effective tool for making significant changes within the company. In this assignment, Tesco as an organization will be using benchmarking tool for trying to compete with another brand named Lidl within the retail industry. It will be using the six-sigma process for trying to overcome its shortcomings, excel as one of the biggest supermarket chain, and possibly try to be a better brand than Lidl within the retail industry.

Benchmarking is considered being the method to compare as well as measure the operations of an organization or its internal methods against those of a best-in-class performer from inside or outside its industry. There are four types of benchmarking such as internal, competitive, functional as well as process. Moreover, there are four kinds of benchmarking applications such as process benchmarking, functional benchmarking, competitive benchmarking and internal benchmarking.

To have an extensive knowledge of the personal performance will be getting the company so far. For example, when the organization is functioning towards the aspect of improving the year-over-year new product introduction defect rates, it might be beneficial for Tesco for understanding the present industry average. Where one or two points of percentage will be having a significant influence, that intelligence might be warranting an investment or resource allocation (Talib 2015).

Benchmarking is generally not considered being an exercise, which will be requiring competitive intelligence. For various organizations, particularly the ones that are large and distributed, benchmark performance in respect of products as well as services will have similar methods and metrics as well as KPIs. Moreover, this evaluation will leading towards deeper enquiries to understand the reason for the underperformance of a specific product, service or business unit (Wang 2016).

In the absence of an internal or external benchmark towards the comparison of businesses, it might be considered challenging towards setting standards year after year. Benchmarking projects as well as reports will be providing the organization perceptions on what is regarded as better performance, and will be considered being an instrumental tool to do the measurement of efficiency relating to the services, business units, product lines as well as specific personnel.

Types of benchmarking and their applications

To benchmark a high-level metric like overall equipment effectiveness (OEE) will be resulting in certain major discussions between leadership. Many organizations are carrying out benchmarking projects, and then drilling down into the variables for identifying the actual discrepancies in respect of underperforming. For instance, OEE can be disintegrated into elements relating to availability, quality as well as productivity. There might occur a disproportion amongst the industry averages, which might be surfacing as a disproportion regarding the process of quality management (Jacxsens 2015).

The method to undertake benchmarking project will be encouraging Tesco for investing the resources to standardize the aspect of calculating the metrics as well as KPIs. The challenging aspect is that metrics like OEE as well as the calculation of the cost of quality can occur in various ways. It might be through the adoption of industry standards or simply to ensure calculations are normalized throughout the facilities of the organization, which will have a solid baseline in respect of comparison, which is considered to be one of the keys regarding successful metrics program and projects regarding benchmarking (Xie 2013).

To provide metrics performance visibility in respect of shop floor workers all the way till the top floors allowing the personnel in understanding in what way their actions will be impacting specific business areas. To add one more layer to the key performance indicators, showing them in what ways their present performance will be comparing to the industry targets or targets that are internal as well, which can be considered as an incentive for driving productivity as well as innovation required for exceeding the averages (Potts 2014).

Markets leaders are the ones that are exceeding the industry benchmarks. When a comparison is occurring regarding on-time deliveries, benchmarking will be providing an improved outlook stating where the company is presently situated, against where the organization is desiring to be. The challenging aspect is that organizations that are successful are trying to broaden the gap.

The prerequisites related to benchmarking are considered to be will and commitment, vision and strategic goal related to link, goal for becoming the best-in-class and not just having a simple improvement, having an openness to ideas that are considered to be new, identification of the key business methods. Moreover, understanding the processes, products, services, practices as well as requirement for customers, which is present. Also, documenting the methods, skills for analyzing the processes and also concerning research, communication and building of teams (Leng 2016).

The importance of metrics and KPIs in benchmarking

Benchmarking will be having the ability for generating better ideas as well as broader usage, improving the competitiveness globally, and having an awareness relating to relative performance.

There are five phases of benchmarking such as the planning phase, analysis phase, integration phase, action phase as well as maturity phase.

The objective of this phase is laying out Tesco’s plan related to benchmarking. The major questions that Tesco is required addressing are considered being the primary components relating to any plan. To be specific, three common questions need to be answered,

• What needs to be benchmarked? Every business function is delivering a “product”, so Tesco is required identifying which of the “products” should get benchmarked.
• Who is the best competitor? While Tesco has recognized that Lidl is the main business competitor of the organization and considered as the key issue that the organization needs to be concerned about, Tesco can also do the benchmarking against other organizations, which are setting the standards in an operational process (Wood 2016).
• How will the collection of data take place? It needs to be understood that there is no single “correct” process for doing benchmarking.

After the data has been collected by Tesco, it needs to be evaluated. The objective of this phase is associated with the aspect of understanding the strengths of Lidl as well as assessing those strengths in comparison to the performance of Tesco. As a result, it is necessary for finding solutions to the primary questions that will be explaining whether the competition was genuinely better, and how much. Also, what is the reason for them to be better and what can Tesco learn from them (Sparks 2014). Moreover, in what ways will Tesco be able to do the application of what has been learnt regarding the business. The solutions in respect of these questions will assist Tesco in finding the “gap” amongst the organization and its competitors.

In this phase, benchmarking actually starts to “earn its keep”. The primary scheme is gaining the acceptance of the senior management regarding the outcomes relating to the analysis of benchmarking as well as its assurance for developing short-term effective action plans. After the senior management will be understanding as well as accepting the date as well as the conclusions, then the strategic development as well as action plans will be beginning (Sanders 2015). The process for problem solving is the best option for Tesco in this period. In this context, it needs to be stated that communication as well as timing are also considered being very much significant.

Post the phase regarding integration gets completed and the organization is having a plan depending upon the data regarding benchmarking, and particular goals as well as objectives have been set by the company, then it is appropriate in respect of taking actions. The company is required following the plan regarding benchmarking and simultaneously, updating the perceptions regarding the satisfaction of the customers. The most effective process is by using surveys (Ivanov 2017).

To understand in what ways the benchmarking process has reached maturity, there is the need to find out when a position of leadership has been attained and has turned out to be necessary in respect of assessing the performance as well as changes relating to the process.

The five phases of benchmarking

Benchmarking can be done through the aspect of obtaining the commitment of the management, baseline the company’s processes, identifying the strong as well as weak methods and doing their documentation, selecting the methods whose benchmarking needs to be done, forming the benchmarking teams, researching the best-in-class and forming agreements with the partners of benchmarking. There is also the requirement for collecting the data, analyzing the data as well as establishing the gap, planning action for closing the gap or surpassing them, implementing the changes relating to the process as well as monitoring the outcomes (Dervitsiotis 2014).

The TQM tool will be aiming towards the establishment of optimum practices through the aspect of making comparisons between organizations. Here, the comparison is being made between Tesco and Lidl. Lidl is a leading German global discount supermarket chain and Tesco is trying to implement techniques of benchmarking that will assist the company to compete with Lidl, achieve the benchmark that has been set by Lidl and having the scope of becoming the market leader (Gandhi 2017).

For using the six-sigma process for undertaking an opportunity related to benchmarking several practical phases will be used, which will assist the organization for growing as well as thriving. Six-sigma is considered being a broad as well as flexible method to achieve, sustain as well as maximize the success relating to the organizational business. Six-sigma process distinctively take into consideration a close understanding of the requirements of the customers, disciplined utilization of facts, data as well as statistical evaluation and diligently attending to process to manage, improve as well as reinvent the processes relating to the organizational business (Fernie 2014).

There are certain objectives associated with six sigma process that are concerned with business transformation, strategic improvement as well as problem solving. The objective regarding business transformation is associated with the cultural changing aspects to create an attitude that will be focusing on the customers, to build greater flexibility, and to abandon old structures or ways of conducting businesses. The objective regarding strategic improvement is associated with targeting the key functional or strategic weaknesses or scopes such as to speed up the development of product, enhancing the effectiveness of supply chain and to build capabilities relating to e-commerce (Christopher 2016). The objective associated with problem solving will be fixing particular segments related to high cost, re-works or delays to shorten the time in respect of processing the application, doing the reduction of storage parts as well as decrease the quantity of overdue receivables.

The role of Six Sigma in benchmarking

There are five phases related with the six-sigma improvement process, which are mentioned as under,

The first phase is associated with the aspect of defining. The phase will be associated with defining the goals of the project as well as internal and external deliverables relating to the customers. Regarding the aspect of process improvement, Tesco needs to do the identification of problems, defining the customers as well as the needs, do the development of problem statement, objectives as well as advantages, defining the resources as well as developing the process map (Chen 2015).

The second phase is associated with the aspect of measuring. This phase will be measuring the method for determining the present performance as well as quantifying the problem. Regarding the aspect of process improvement, Tesco needs to do the aspect of defining the defect as well as scope, developing the data collection plan, validating the measurement system, collecting the data, determining the process capability as well as Sigma baseline (Chandra 2015).

The third phase is associated with the aspect of analysing as well as determining the core causes relating to the defects. This phase will be defining the performance objectives, identifying the steps associated with the value added method and determining “vital few” core causes.

The fourth phase is associated with the aspect of improving the method through the elimination of defects. This phase will be developing the potential solutions, testing the solutions through pilot studies, doing the standardization of the solutions as well as measuring the outcomes (Chae 2013).

The fifth phase is associated with the aspect of controlling the process performance regarding the future. This phase will be defining as well as validating the monitoring as well as the control process, developing the processes as well as standards, developing the transfer plan as well as verifying the beneficial aspects.

Various issues might be hindering the efforts regarding Tesco for instituting benchmarking practices that are considered to be meaningful. These are as follows,

• Core businesses processes that are unexamined. The final quality, reliability or price regarding the final product or service, which is having its availability for the customers is predicated on different aspects regarding the functional aspects of Tesco. These features are required to be considered when the internal methods will be getting examined (Chae 2014).
• Insufficient resources in relation to individuals or technological aspects. The organizational business of Tesco is required ensuring that it will be comprising of the resources, which is concerned with the technological aspects, workforce or funding, for the launching of a comprehensive benchmarking program as well as implementing its findings.
• Unwillingness or failure for accepting the authenticity regarding ideas or practices regarding businesses from external sources. There exists different staffs as well as companies that are opposed to changing aspects, due to basic contentedness, fearing the unknown, recognized challenging aspects regarding the capabilities and so on (Bill 2014). There might occur the minimization of the resistances, only when organizational managers will be making it clear that benchmarking is not considered to be an exercise associated with finding faults but rather an recognized program for assisting Tesco for growing as well as prospering in a dynamic world of business.
• Speed of in-house methods related to benchmarking. Benchmarking programs that are considered having efficiency are provided with authorizations for conducting their investigations in a judicious way, for the implementation of the developments in a quick manner (Ahmad 2014).
• Insufficient follow-up training. The programs relating to benchmarking will be uncovering various areas where Tesco can do the improvement of their performing ability. However, if Tesco will not be providing the employees with adequate training for the implementing of the changing aspects that are required in a judicious as well as efficient manner, then the endeavour will be becoming a time waste as well as wastage of resources.

Conclusion

To conclude it can be stated that Tesco is following the six-sigma process of benchmarking to compete against Lidl. There are certain objectives associated with six sigma process that are concerned with business transformation, strategic improvement as well as problem solving. The objective regarding business transformation is associated with the cultural changing aspects to create an attitude that will be focusing on the customers, to build greater flexibility, and to abandon old structures or ways of conducting businesses.

Objectives of Six Sigma process

Reference

Ahmad, A., Noor, S.M. and Wel, C.A.C., 2014. Factors Influencing Consumers’ Purchase Decision of Private Label Brand Products. International Journal of Economic Practices and Theories, 4(2), pp.101-110.

Bill, M., Sivakumar, D., Thompson, A.K. and Korsten, L., 2014. Avocado fruit quality management during the postharvest supply chain. Food Reviews International, 30(3), pp.169-202.

Chae, B., Olson, D. and Sheu, C., 2014. The impact of supply chain analytics on operational performance: a resource-based view. International Journal of Production Research, 52(16), pp.4695-4710.

Chandra, P.V., 2013. A Study on Implementation of Total Quality Management in Businesses. International Journal of Engineering Science and Innovative Technology, 2(3), pp.440-446.

Chen, E., Flint, S., Perry, P., Perry, M. and Lau, R., 2015. Implementation of non-regulatory food safety management schemes in New Zealand: A survey of the food and beverage industry. Food control, 47, pp.569-576.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Dervitsiotis, K.N., 2014. Cultivating total innovation for operational and adaptation excellence. Sinergie Italian Journal of Management, pp.19-31.

Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

Gandhi, A.V., Gandhi, A.V., Shaikh, A., Shaikh, A., Sheorey, P.A. and Sheorey, P.A., 2017. Impact of supply chain management practices on firm performance: Empirical evidence from a developing country. International Journal of Retail & Distribution Management, 45(4), pp.366-384.

Ivanov, D., Tsipoulanidis, A. and Schönberger, J., 2017. Basics of Supply Chain and Operations Management. In Global Supply Chain and Operations Management (pp. 1-14). Springer International Publishing.

Jacxsens, L., Van Boxstael, S., Nanyunja, J., Jordaan, D., Luning, P. and Uyttendaele, M., 2015. Opinions on fresh produce food safety and quality standards by fresh produce supply chain experts from the global South and North. Journal of food protection, 78(10), pp.1914-1924.

Leng, M., Li, Z. and Liang, L., 2016. Implications for the Role of Retailers in Quality Assurance. Production and Operations Management, 25(5), pp.779-790.

Potts, K. and Ankrah, N., 2014. Construction cost management: learning from case studies. Routledge.

Sanders, N.R., 2015. Big data driven supply chain management. China Ren Min University Press: Beijing.

Sparks, L., 2014. 07 tesco’s supply chain management. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, p.149.

Talib, F. and Rahman, Z., 2015. Identification and prioritization of barriers to total quality management implementation in service industry: an analytic hierarchy process approach. The TQM Journal, 27(5), pp.591-615.

Wang, E.S.T., 2016. The moderating role of consumer characteristics in the relationship between website quality and perceived usefulness. International Journal of Retail & Distribution Management, 44(6), pp.627-639.

Wood, S., Coe, N.M. and Wrigley, N., 2016. Multi-scalar localization and capability transference: exploring embeddedness in the Asian retail expansion of Tesco. Regional Studies, 50(3), pp.475-495.

Xie, Y. and Allen, C., 2013. Information technologies in retail supply chains: a comparison of Tesco and Asda. International Journal of Business Performance and Supply Chain Modelling, 5(1), pp.46-62.