Six Sigma and Beyond: Design for Six Sigma, Volume VI

TYPES OF BENCHMARK SOURCES

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.

Internal Best Performers

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.

Competitive Best Performers

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.

Best of Class

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:

Milliken & Company, winner of the 1989 National Quality Award, provided the following partial list of benchmarks:

SELECTION CRITERIA

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.

SOURCES OF COMPETITIVE INFORMATION

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

GAINING THE COOPERATION OF THE BENCHMARK PARTNER

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.

MAKING THE CONTACT

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