APPAREL QUALITY MANAGEMENT II

ASSIGNMENT I
BENCHMARKING
CASE STUDY: BENCHMARKING PRACTICES OF HUNDAI
THAT LED TO ITS SUCCESS IN THE US MARKET

SUBMITTED TO:
MR. SUMIT KUMAR
ASST. PROF
NIFT BHUBANESWAR

SUBMITTED BY:
VAISISTHA BAL
BFT/17/470
DEPT. OF FASHION TECHNOLOGY

NATIONAL INSTITUTE OF FAHION TECHNOLOGY

1
1.BENCHMARKING
According to Joseph Juran, Benchmarking is a systematic and continuous process
that facilitates the measurement and comparison of performance and the
identification of best practices that enable superior performance.
Continuous improvement: Benchmarking is essentially a continuous improvement
tool allowing a more formalized and disciplined application of search for excellence
through operational improvement. It is based on the principle of measuring the
performance of an organization against a standard or benchmark. Benchmarking
emphasizes the importance of improving, rather than maintaining the status quo. It
should not be viewed as a stand-alone activity, it must be conducted regularly, and it
should be enveloped in the continuous improvement culture of an organization.
Organizations must change performance rapidly to remain competitive in business
environments today.
Best Practices: Best practices are defined as good practices that have worked well
elsewhere. They are proven and have produced successful results. They must focus
on proven sources of best practices. Organizations should schedule frequent
reviews of practices to determine if they are still effective and whether they should
continue to be utilized. This definition suggests that best practices evolve over time.
Hence, continuous improvement calls for movement, not business processes that
are stagnant.
Main purpose: The purpose of benchmarking is to get feedback about the actual
situation and specific information on factors for success, and areas of difficulty and
disappointment. The results have proved of wider value, not only for corrective
actions but for example in helping in the tactical and strategic decision. It aims to
enable a firm to close the gap between how it is currently performing and a superior
performance. It is generally agreed that the motivation behind benchmarking is to
“improve” so as to reduce a performance gap relative to some best practice or
superior benchmarks.

BENCHMARKING: GAP ANALYSIS

NATIONAL INSTITUTE OF FAHION TECHNOLOGY

2
Gap Analysis: A gap analysis is a key component of any benchmarking project and
helps that project achieve the business objectives. A gap analysis is divided into the
following three main phases:
 Baseline – the foundation, or where the company is at present
 Entitlement – the best that the company can achieve with effective utilization
of their current resources
 Benchmark – the Best Practice performance of a truly optimized process.
Benchmarking can be viewed as a two-phase process, where phase one is a
positioning analysis aimed at identifying gaps in performance and phase two is
focused upon learning from those best practices that enable superior performance.

2.OBJECTIVES OF BENCHMARKING
The objectives of benchmarking can be summarized as follows:
1. Determine superior performance levels.
2. Quantify any performance gaps.
3. Identify best practices.
4. Evaluate reasons for superior performance.
5. Understand performance gaps in key business areas.
6. Share knowledge of working practices that enable superior performance.
7. Enable learning to build foundations for performance improvement

3.CLASSIFICATION OF BENCHMARKING
There are 4 major types of benchmarking:
1. Internal benchmarking: Internal benchmarking is the comparison of performance
and practices of similar operations within the same organization. Depending upon
the size of the organization and the nature of its business, this may or may not be
feasible. This is likely also to be the least costly and time-consuming way to
benchmark. Here, the information is usually gathered and circulated within the
organization itself.
2. External benchmarking: External benchmarking involves participants from
different organizations. The opportunity for learning is normally greater than that
achievable by internal benchmarking, but there is obviously a requirement to share
information outside of the organization. There will almost certainly be limits on the
data organizations are willing to share. Usually, the data is collected through
associations or third party.
3. Competitive benchmarking: By definition, the participants in a competitive
benchmarking program are from the same industry, and the focus is normally upon
industry specific processes. Competitive benchmarking is a direct competitor-to-
competitor comparison of a product, service, process, or method.

NATIONAL INSTITUTE OF FAHION TECHNOLOGY

3
4. Functional benchmarking: Functional benchmarking describes the process
whereby a specific business function forms the focus for the benchmarking.
Functional benchmarking is a comparison to similar or identical practices within the
same or similar functions outside the immediate industry. Typical examples of
functional benchmarking include the analysis of the procurement, finance, Internet
technology (IT), safety, operations, or maintenance functions. The analysis focuses
upon all aspects of the function rather than on the processes involved and the
specific activities conducted.
4. BENEFITS OF BENCHMARKING
1. Understand your performance relative to close competitors

2.Compare performance between product lines/business units in your own company

3. Hold people more responsible for their performance

4. Drill down into performance gaps to identify areas for improvement

5. Develop a standardized set of processes and metrics

6. Enable a mindset and culture of continuous improvement

7. Better understand what makes a company successful

5. CASE STUDY: SUCCESS OF HYUNDAI IN THE US MARKET THROUGH

BENCHMARKING TOYOTA

Introduction: In competitive business market, company’s success and strategies

usually depend on when the company entered the market. This is where the concept
of first movers and second movers was arise. A firm that is first to enter a certain
market space is called a first mover and it has the majority of the shares and every
other company that comes after that is called a second mover.
In the case of US market, Hyundai can be considered a late mover. Before entering
the US market, Hyundai was a small automobile company in South Korea. Being
founded in 1967, it entered the US market in 1986. Since its entry, sales have risen,
with the market share of 4.6% in the US according to a report in 2010. These
accomplishments can be attributed to 4 key areas such as unique culture,
production strategy, positioning strategy, marketing team.
History of Hyundai: In 1962, South Korean Government implemented the
automobile industry protection law and five year economic development plan with
incentives to be provided to new entrant to the countries automobile industry.
Consequently, Hyundai Motor company was founded in 1967. However, being a late
into the country’s automobile market it had to focus on two very important goal –
self-reliance and technological independence.
Entry into the US market: Hyundai entered the US market in 1986 with a
subcompact model Excel. Within four months of entry, it broke Renault's record for

NATIONAL INSTITUTE OF FAHION TECHNOLOGY

4
the first year sales. By the end of first year it won product of the year by Fortune
Magazine.
Failure in Canada: after initial success, HMC built its own production plant in
Bromont, Quebec, Canada in 1986. The total failure of the Quebc facility is termed
as the Bromont Nightmare and it was due to a plague of quality problems that
forced the new plant to be scrapped. The failure can be attributed to management
lack of skills, majority of labour unrest, the Canadian workfoce’s inability to
produce quality products. This resulted in an enormous hit to the image of
Hyundai Motor company and subsequently made it to move its plant from Canada to
India.
BENCHMARKING: In order to regain its position Hyundai acquired KIA in 1998 and
it did so for three main reason - economy of scale, Economics of scope, and
construction of global network. With this acquisition Hyundai surpassed Honda but
this was not enough to pay off the debts after the Bromont nightmare. So, the CEO
Mong- Koo decided to increase production however the lack of quality damaged the
brand reputation. Then they realized that they need to focus on the highest quality of
vehicles possible. This was a major change.
This is when Hyundai benchmarked Toyota and installed Six Sigma in its
engineering Centre to improve its processes.
Benchmarking Production System: When the company first configured its
manufacturing system in 1975, it looked at the Japanese giant, Toyota Motors, as a
model to emulate. So, when Hyundai began to emulate the Toyota Production
System (TPS), the South-Korean company recruited Seiyu Arai, a former student of
Ohno Taiichi (the inventor of Toyota’s Production System), as a technical advisor.
Under the advise of Mr. Arai, HMC adopted the JIT production system by switching
its material handling process from the bulk-parts delivery systems to a more
streamlined sequence.
Hyundai continued to improve its plants as time went on, continually benchmarking
itself against Toyota as it did with the “one buck system” or devising its own methods
such as its “windmill jig system”, both of which automate the welding of panels onto
auto body frames.
While Hyundai constantly modelled its production processes after Toyota’s, the
South Korean company also purposely deviated from the Japanese producer in
certain areas, namely worker involvement and the production mode of auto
construction. Toyota’s production system involved “pull” production. On the other
hand, HMC reverted back to the standard “push” production system that is used by
most automakers as well as giving up the JIT system.
Benchmarking Work Force: While Toyota tried to maximize skilled workforce,
Hyundai decided to eliminate or minimize workforce and automate its processes,
focusing on gaining the newest technology and standardizing the processes. Toyota
tries to prevent mistakes by hiring highly skilled workers while Hyundai tries to
eliminate them by automating as many processes as possible.

NATIONAL INSTITUTE OF FAHION TECHNOLOGY

5
Hyundai chose to emulate the TPS method to improve the tooling of stamping dies in
order to shorten the preparation time for press lines, as well as improve the
efficiency of its body-welding line. However, the South Korean producer chose not to
copy TPS’s JIT or pull systems.
Benchmarking Car designs and style: HMC shifted its focus away from traditional
Korean styles which were “baroque and fussy,” to international designs that had
cleaner lines and more elegant details. As a result, when Hyundai Motors was
producing the Sonata in 2004, it benchmarked the Toyota Camry for quality and Audi
A6 for design. Once Hyundai began to improve its quality, its customers began to
notice. HMC again imitated Japanese producers’ positioning strategies, which
involved selling the new luxury cars for significantly less than the competition, when
it introduced two luxury cars, Genesis and Equus.
Conclusion: It can be said that Hyundai’s production system is a selective
emulation of the Toyota Production System. Hyundai’s system is extremely flexible,
minimizing mistakes by standardizing its unskilled workers’ jobs and supplementing
them with an engineering-driven and automation-intensive production process.
Due to its benchmarking of Toyota, Hyundai allowed itself to significantly grow in the
US market.

NATIONAL INSTITUTE OF FAHION TECHNOLOGY

6
REFERENCES
 https://www.maintworld.com/Applications/Benchmarking-The-Key-to-Continuous-
Improvement
 https://www.researchgate.net/publication/271478971_Benchmarking_A_Tool_for_the_Imp
rovement_of_Production_Management
 https://gmpua.com/QM/Book/quality%20handbook.pdf
 https://digitalccbeta.coloradocollege.edu/pid/coccc:7935/datastream/OBJ

NATIONAL INSTITUTE OF FAHION TECHNOLOGY

7