The benchmarking process often starts with a library search to identify alternative views, issues, approaches, and possible benchmarking sources. Benchmarking sources can be internal best performers, competitive best performers, or best in class worldwide.
Xerox used internal benchmarking when it studied Fuji-Xerox's manufacturing methods (but not until Florida Power and Light began to emulate them). Different divisions, plants, distribution outlets, and departments tend to do things differently. Much can often be learned by looking at these company operations.
The advantage of making comparisons with direct competitors is obvious. However, it can be difficult to get competitors to share their source of competitive advantage. When working with direct competitors, it can also be difficult to get out of the industry mind-set and come up with creative ideas. It could be that the competitors in an industry are not particularly good at what they do and hence provide little stimulus for improvement.
Xerox regularly benchmarks all direct competitors, all their suppliers, and all major competitors to those suppliers. Updates are important. Knowing how fast competitors are moving is just as important as knowing where they are.
There is, in general, no way to know the "best" of the best. Companies generally pick the "best" based on reputation through publications , speeches, news releases, etc. A company might start out with four to ten "best" candidates and narrow them down based on initial discussions.
Xerox looked at IBM and Kodak but also L.L. Bean, the catalog sales company, known for effective and efficient warehousing and distribution of products. Additional benchmarking partners used by Xerox were:
Customer satisfaction, customer retention | USAA (Insurance Co.) |
Financial stability and growth | A.G. Edwards & Sons |
SPC and quality | Florida P&L |
Customer care and training | Walt Disney |
Milliken & Company, winner of the 1989 National Quality Award, provided the following partial list of benchmarks:
Strategy | |
---|---|
Safety | DuPont |
Customer satisfaction | ATT, IBM |
Innovation | 3M, KBC |
Education | IBM, Motorola |
Strategic planning | Frito-Lay, IBM, ATT |
Time based competition | Lenscrafters |
Quality Process | |
---|---|
Benchmarking | Xerox |
Self-managed teams | Goodyear, P&G |
Continuous improvement | Japanese |
Heroic goals concept | Motorola |
Role model evaluation | Xerox |
Environmental practice | DuPont, Mobay, Ciba-Geigy |
Statistical methods | Motorola |
Flow charting | Sara Lee |
Quality process | FP&L, Westinghouse, Motorola |
Miscellaneous | |
---|---|
Security | DuPont |
Accounts payable | Mobay |
Order handling | L.L. Bean |
How do you know who is the best? Here are some ways to get that information:
Library search
Reputation
Consultants
Networking
Characteristics to be examined when seeking partners include:
Company size
Customer non-price reasons to buy
Industry critical success factors
Availability of data
Data collection costs
Innovation
Receptivity
One hundred percent accuracy of information is not required. You only need enough to head you in the right direction.
Read everything and ask, "Has anyone faced this or a similar problem? What have they done?"
Do not forget to ask people in your own organization, including:
Past employees of benchmark company
Family members
Market researchers
Sales and marketing
It is also helpful to make use of trade associations and consultants and to network.
Review studies in which people have identified the characteristics of best performers. Good sources here are Clifford and Cavanagh (1988), Smith and Brown (1986), and Berle (1991).
Another good source is the Encyclopedia of Business Information Sources , published frequently by Gale Research, Detroit, Michigan. This source contains references by subject to the following:
Abstracting and indexing services
Almanacs and yearbooks
Bibliography
Biographical sources
Directories
Encyclopedias
Financial ratios
Handbooks and manuals
Online databases
Periodicals and newsletters
Research centers and institutes
Trade associations/professional associations
Other
Additional sources may also be found in the John Wiley publication entitled Where to Find Business Information , as well as the following:
Books and periodicals
Trade journals
Functional journals
F.W. Dodge reports
Technical abstracts
Local newspapers, national newspapers
Nielson ” Market Share
Yellow Pages
Textbooks
Special interest books
City, region, state business reviews
Standard and Poors industry surveys
Directories
Trade show directory
Directory of Associations
Brands and Their Companies
Who Runs the Corporate 1000
Corporate Technology Directory
American Firms in Foreign Countries
Corporate Affiliations
Foreign Manufacturers in U.S.
Directory of Company Histories
International Trade Names
Leading Private Companies
Marketing Economics Key Plants
Directory of Advertisers
Books of business lists
Thomas Register
Wards Directory
Lists of 9 Million Businesses ” ABI
Computer databases ” CD-ROM or online
Text databases
Business dateline ” articles
BusinessWire ” press releases
Intelligence Tracking Service ” consumer trends
Dow Jones Business and Financial Report
Newsearch
Trade and Industry Index
Statistical business information
BusinessLine
Cendata
Consumer Spending Forecast
Disclosure Database
CompuServe
Retail Scan Data
Moody's 5000 Plus
Demographic data
Census Projection 1989 “1993
Donnelley demographics
Directories
Dun's Million Dollar Directory
Thomas Register
Company direct
Advertising
Benchmarking partner
Company newsletters
Minority interest partners
Speeches
Direct contact
Financial sources
Annual reports, 10k, proxies, 13D
Investment reports
Prospectus
Filings with regulatory agencies
Dun and Bradstreet, Robert Morris
Moody's Manuals
S&P Reports
Individuals
Company employees
Past employees/retirees
Social events
Construction contractors
Landlords, leasing agents
Salesmen
Service personnel
Focus groups
Professional societies
Professional society members
Trade shows/conventions
National associations
User groups
Seminars
Rating services
Newsletters
Government
Public bid openings
Proposals
National Technical Information Center
Freedom of Information Act
Occupational Safety and Health Administration (OSHA) filings
Environmental Protection Agency (EPA) filings
Commerce Business Daily
Government Printing Office Index
Federal depository libraries
Court records
Bank filings
Chamber of Commerce
Government Industrial Program reviews
Uniform Commerce Code filings
State corporate filings
County courthouse
U.S. Department of Commerce
Federal Reserve banks
Legislative summaries
The Federal Database Finder
Patents
Customers
New customers
Consumer groups
Industry members
Suppliers
Equipment manufacturers
Distributors
Buying groups
Testing firms
Snooping
Reverse engineering
Hire past employees
Interview current employees
Dummy purchases
Shopping
Request a proposal
Hire to do one job
Apply for a job
Mole
Site inspections
Trash
Chatting in bars
Surveillance equipment
Schools and universities
Directories of case studies
Industry studies
Consultants
Business schools on a consulting basis
Jointly sponsored studies
Information brokers
Industry studies
Market research studies
Seminars
Without confidentiality, benchmarking will not work. Some items for consideration in gaining this confidentiality and cooperation are:
Use consultants or trade associations or universities to ensure confidentiality.
Make sure that there is mutual sharing ” could be different areas.
Be prepared to give and receive.
Focus on mutual learning and self improvement.
Benefit of probing questions and debate
Opening up of a vision
Confirmation of good practice
Consider benchmarking a circuit of companies.
Important that all know in advance
Consider all security and legal implications of sharing data.
When making the contact for benchmarking, follow these steps:
Call and express interest in meeting.
Send/receive a detailed list of questions.
Make sure that you have prepared your questions carefully . (The quality of the questions can be the signal for a worthwhile use of time.)
Follow up by telephone.
Visit ” keep an open mind ” document everything