Assumptions:
1. Every manufacturing factory has to have several major customers to survive. These customers are the market.

2. The customers have their own supply evaluation system, they do the evaluation of their supply performance on a monthly or quarterly basis, and they have the rating data of their suppliers.

So the benchmarking is simply getting the customers’ rating data and using them.

Benchmarking steps:
1. Select a well educated employee from the organization as contact window to do the benchmarking.
2. This person negotiates an agreement with the major customers to get access to the customers’ supply rating data.
Note: the organization doesn’t have to know the customers’ supplier name, so the customer can use letters to represent suppliers.
3. The organization can then use the data to decide its position in market (the customer’s rating), adjust its KPIs, do gap analysis, and take suitable measures to close the gaps.

I see no reason why the customers would not cooperate, so it is operable.

My first question is: is this benchmarking? Second question: how do you think of this?

Steps for benchmark

1. Planning - What to be benchmarked, Who will be compared and How the data will be collected

2. Analysis - Determine the current gap analysis, work out on the future performance

3. Integration - Communicate the benchmark finding and gain acceptance, work out the goals

4. Action - establish the action plans, implement the action and close monitor, recalibrate the benchmark if neccesary

5. Maturity - fully integrated into the process and leadership attained

I would ask the question, "Why?"

Why do you want to benchmark? What is the benefit?

Can an organization (business system) assume that what works in a different business system will work in its system? If another organization performs in a certian way, design and develops their system in a certian way, then that structure will work in the system of the organiztion doing the benchmarking?

Never assume what works in one system will work in another. Design and develop for your organization's system. Do not cut and paste without rigorous review. And concentrate on expanding the market and not on gaining a certian percentage of the existing market.

Regards,

Dirk

My experience of benchmarking is that you look at organizations who are the best in their market with excellent performance around some KPI you're interested in improving.

It helps that they use a similar technology to your organization. For example there's a powertrain company who bench marked a die-cast toy manufacturer on their design and development process - they bring toys to market in 11 months, cast products which are assembled before delivery.

Dirk has it though, why?

Andy

I am more interested in the KPI performance of my direct competitors. The means through which I get the information is from the direct customers that we share.

By doing so I can know what need to be done to make our direct customers happy, to get more orders.

I would ask the question, "Why?"

Why do you want to benchmark? What is the benefit?

Can an organization (business system) assume that what works in a different business system will work in its system? If another organization performs in a certian way, design and develops their system in a certian way, then that structure will work in the system of the organiztion doing the benchmarking?

Never assume what works in one system will work in another. Design and develop for your organization's system. Do not cut and paste without rigorous review. And concentrate on expanding the market and not on gaining a certian percentage of the existing market.

Regards,

Dirk

I like this answer. I don't like benchmarking, which is the practice of formally admitting that your competitors have smarter people than you do.

I've always thought of benchmarking as comparing to a similar industry / process. So, if I'm a metal stamper and I find that my die change takes 45 minutes, and I find that a competitor which does very similar work and has similar equipment does die changes in 20 minutes, I may be able to look at my die change process and see what I can do to reduce my die change time.

Granted there are differences between companies and processes, not to mention specific manufacturing equipment, but there are aspects which can, and should, be benchmarked if only to see 'where you stand with respecct to one or more competitors'.

I've always thought of benchmarking as comparing to a similar industry / process. So, if I'm a metal stamper and I find that my die change takes 45 minutes, and I find that a competitor which does very similar work and has similar equipment does die changes in 20 minutes, I may be able to look at my die change process and see what I can do to reduce my die change time.

Granted there are differences between companies and processes, not to mention specific manufacturing equipment, but there are aspects which can, and should, be benchmarked if only to see 'where you stand with respecct to one or more competitors'.

Sorry, Marc, but I disagree. Anyone can, at any time, look at their own processes and find possibilities for improvement. If I can benefit from faster tooling changes, I don't need to know how fast my competitor does it. If you take two companies that are equal in technology and their general processes, and one is more successful than the other, it's because of people, and management that allows people to find better ideas and implement them. If you don't have that, you'll play follow-the-leader forever, and benchmarking becomes a perpetual requirement.

Sorry, Marc, but I disagree. Anyone can, at any time, look at their own processes and find possibilities for improvement. If I can benefit from faster tooling changes, I don't need to know how fast my competitor does it. If you take two companies that are equal in technology and their general processes, and one is more successful than the other, it's because of people, and management that allows people to find better ideas and implement them. If you don't have that, you'll play follow-the-leader forever, and benchmarking becomes a perpetual requirement.

I agree that playing follow-the-leader will never make you cutting edge, but follow-the-leader is still better than standing still! Ideally you do both -- beg, borrow are steal the best from others and innovate your own further improvemnts. Perhaps benchmarking can be thought of as looking for the "low hanging fruit" -- a good start but not the ultimate goal.

Tim F

My experience with benchmarking was we went out in the market and bought our competitors products. We all had very similar equipment for the dimensions we wanted to compare. We selected 125 random samples from a random box and measured 4 dimensions 4 places. Then developed Cpks for each and compared the results to our products. We found that we were better on 2 of the 4 and very close to the other 2. So, our sales dept. had factual data to show customers to verify that we produced the best products for their use and processes. This was rigid pvc sheet stock used in the printing and credit card industry.
So, if your customers won't provide the info, just go buy your competitors product if it is available on the market, or ask your customer if you could buy competitor product from them. This could get into sticky legal issues depending on the product, but you need to determine if that is a potential roadblock.

I agree that playing follow-the-leader will never make you cutting edge, but follow-the-leader is still better than standing still! Ideally you do both -- beg, borrow are steal the best from others and innovate your own further improvemnts. Perhaps benchmarking can be thought of as looking for the "low hanging fruit" -- a good start but not the ultimate goal.

Tim F

If benchmarking is an effort to discover what should be obvious (the low-hanging fruit), you're doomed. Of course, I know what Newton said (http://www.bartleby.com/66/18/41418.html) about seeing further because he was standing on the shoulders of giants, but in my experience, the practice of benchmarking is almost always the result of poor leadership, and the misbegotten belief that one can rely on the innovations of others for improvement. If you want "best practices," get the best people.

Sorry, Marc, but I disagree. Anyone can, at any time, look at their own processes and find possibilities for improvement. If I can benefit from faster tooling changes, I don't need to know how fast my competitor does it. If you take two companies that are equal in technology and their general processes, and one is more successful than the other, it's because of people, and management that allows people to find better ideas and implement them. If you don't have that, you'll play follow-the-leader forever, and benchmarking becomes a perpetual requirement.

While any company can, and should, look at internal processes to identify possible improvement areas, if one never looks to others in their field for comparison, they are ignoring a significant factor. I do not agree that it is always simply a matter of "...it's because of people, and management that allows people to find better ideas and implement them..."

For companies that don't compare themselves against competitors, I predict they will eventually be over come by their competitors.

I personally never was in a company that wasn't benchmarking something either internally or externally.

In fact, I don't think I know anyone that doesn't technically benchmark daily in their personal lives in that they want something and they compare the different products available to meet their needs (perceived or real). I'm thinking of a HDTV this year. I will go out and benchmark the different models for features and such.

Benchmarking is only one tool in the arsenal. For some reason some folks in this thread see it as a useless resource. I disagree.
If benchmarking is an effort to discover what should be obvious (the low-hanging fruit), you're doomed.
If all one looks for, whether internally or externally, is 'low hanging fruit', then they're doomed anyway. I don't at all view benchmarking as limited to 'low hanging fruit'.

If benchmarking is an effort to discover what should be obvious (the low-hanging fruit), you're doomed. Of course, I know what Newton said (http://www.bartleby.com/66/18/41418.html) about seeing further because he was standing on the shoulders of giants, but in my experience, the practice of benchmarking is almost always the result of poor leadership, and the misbegotten belief that one can rely on the innovations of others for improvement. If you want "best practices," get the best people.

True, but if your competition spent $10,000,000 innovating and you can spend $10,000 imitating, perhaps your management isn't so stupid afterall. ;)

Even if you are months later to the market (or years later in the generic drug trade), you can undercut your competition due to lower R&D costs. There are entire industries built on watching the big boys and copying their best processes and products!


Tim

Added a Poll for the heck of it... :notme:

My organization has three levels within our benchmarking process.


Best Past Level - Internal within the site. This shows that we did, once upon a time, have a great month and our first step is to re-visit that level consistently (i.e., stabilize to that point).
Group - Within our locations around the world. Same reasons as above. Even nicer when our site is the group benchmark.
International - Competition or companies in similiar industry. Same reasons. Awesome feeling when our site is the international benchmark...or so we think...haven't quite achieved that level...yet (close...oh so close in some areas).

Benchmarking is useful for several reasons.

It helps companies stay on top of what is happening outside their company. Not using benchmark data allowed the Big 3 to be fat, dumb and happy far too long, and they got behind the curve.

It helps individual managers avoid getting complacent.

I can run a 10 minute mile, which seems pretty good to me, when I compare myself to myself. But, when I see benchmarks, I realize it is not so good after all.

It is why sports records are tracked so carefully.

If company A can do something in 30 seconds, and company B can do it in 10 seconds, it tells company A they are overlooking something. The same can be applied internally. Operator A is 2 times as productive as operator B - there is something going on there that can be analyzed.

And, lastly, sometimes we think we have hired the best, until we see what "best" really is. Then we have to improve. It drives improvement.

How can we justify thinking there is no value in benchmarking?

I'd have to agree that benchmarking is useful, valid, and a practical way of ensuring your company stays competitive in it's field. It is NOT a tool for developing a system which mimics your competitors...if you believe it is, then you're likely applying it wrong. The idea is to stay competitive by ensuring that your organization compares/exceeds your competition in it's market. Ignoring others' success is a good way to injure your business and stunt your capability to learn, ignoring others' mistakes produces the same effect.

Benchmarking can give you incite into where you could focus your quality/business objectives. It's all part of competition, and competition is always a great contributor to improvement.

I've always been taught that benchmarking is used not to keep up with the competition, but to leap ahead of them. So how do you do that while looking to my competition for direction?

True advances with benchmarking come from outside the proverbial box. Companies to be benchmarked do not necessarily have to be in your market, in-fact if we really intend to seek the "best in class" they more than likely will not be in our market. Identify your weakest process, indentify the best in class company for that process (this can be in any market, any product, any field), then (and here's the trick) don't just implement their practices into your process, but look for ways of improving upon their practices first.

As an example: Wal-mart is known for their ability to turn stock (warehousing and resupply) - no matter what market or product we are selling, if resupply is a weak process for us, then we need to be benchmarking Wal-mart for this process.

Always seek out the best in class process, no matter who owns it.:2cents:

I'd have to agree that benchmarking is useful, valid, and a practical way of ensuring your company stays competitive in it's field. It is NOT a tool for developing a system which mimics your competitors...if you believe it is, then you're likely applying it wrong. The idea is to stay competitive by ensuring that your organization compares/exceeds your competition in it's market. Ignoring others' success is a good way to injure your business and stunt your capability to learn, ignoring others' mistakes produces the same effect.

Benchmarking can give you incite into where you could focus your quality/business objectives. It's all part of competition, and competition is always a great contributor to improvement.

Benchmarking, as it's commonly understood, is the process of seeking out "best practices" in various processes. What you're referring to (keeping an eye on one's competition) isn't "benchmarking" as I believe most people understand the term these days. It's essential to know what your competition is doing, but as I said earlier in this thread, looking to other companies for good ideas is an admission that your people don't have any.

... but as I said earlier in this thread, looking to other companies for good ideas is an admission that your people don't have any.


I think it was Truman who said, "Use all the brains you have, plus all the brains you can beg, borrow or steal."

I beg, borrow...(not sure I get to steal)...continually and synthesize it to other companies. I doubt most of our ideas are purely generations of our our minds. It is the application that counts. I don't consider that an admission of anything negative.

After all, this Elsmar forum was established to allow us to look to other companies for good ideas.

Also, I think benchmarking can be looking at "best practices," but it can also be a look at comparative practices. I don't try to be restrictive when using the term. I look to whatever will get the job done for the client I am working for.

I think it was Truman who said, "Use all the brains you have, plus all the brains you can beg, borrow or steal."

Helmut, I found this:

I not only use all the brains that I have, but all that I can borrow.
- Woodrow Wilson

Stijloor.

Helmut, I found this:

I not only use all the brains that I have, but all that I can borrow.
- Woodrow Wilson

Stijloor.


I borrowed all the brains that I have, so I do not use them.
- Jim Wynne

Is there any forum on Benchmarking. There is One Set of parameters which are Training Hours/ Person Employees, Direct Manpower to Indirect manpower , Inventory Turnover ratio, Absenteeism etc. which could be easily Benchmarked. Besides this Industries also would not have much problem to share in comparison to Functional ratio and Productivity ratios.

Regards,

Manoj

Is there any forum on Benchmarking. There is One Set of parameters which are Training Hours/ Person Employees, Direct Manpower to Indirect manpower , Inventory Turnover ratio, Absenteeism etc. which could be easily Benchmarked. Besides this Industries also would not have much problem to share in comparison to Functional ratio and Productivity ratios.

Regards,

Manoj

I don't know of any benchmarking forums offhand, but since there are Internet forums for just about everything, I'd be surprised if there weren't. You might want to start with a simple Google search (http://www.google.com/search?q=benchmarking+forums&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a) and go from there.

I wouldn't put very much credence in any information found regarding actual performance numbers that can't be verified, but there could be some value in learning about how others do things. I still say that the best way to get to "best practices" is to get the best people--that's why the best companies are the best. And as far as learning about how others do things, the Cove is the best place I know of.

Though I am stretching the definition here....

To me: Benchmark to gain insight / not to imitate. It is always nice to know where you stand with regards to competitors/other plants but it seems to drive imitators and "late-comers" mentality. However, I am not totally against benchmarking outside of your core business in order to find creative solution. Think of communicating with customers the same way as Avon (etc.). If you go outside your category you can often create interesting systems that piggyback on the best of the best. But, once again, why would you want to limit yourself by benchmarking to a competitor.

To me: Benchmark to gain insight / not to imitate.

I think both possibilities are fair game. Maybe imitate with further improvement? Remember the Japanese approach? It appears the Chinese are applying this approach, too.

It is always nice to know where you stand with regards to competitors/other plants but it seems to drive imitators and "late-comers" mentality.

That 'mentality' is a common, legitimate business model - especially if you improve upon the imitation with cost or quality improvements.

But, once again, why would you want to limit yourself by benchmarking to a competitor.

True - anywhere you can find a source of improvement is valid.

Assumptions:
1. Every manufacturing factory has to have several major customers to survive. These customers are the market.

2. The customers have their own supply evaluation system, they do the evaluation of their supply performance on a monthly or quarterly basis, and they have the rating data of their suppliers.


Yes, organizations have a growing need to get a clear view on their own qualities and performances with regard to their competitors and eye of their customer. It isn't sufficient any more to have self-assessment report on the status of performance.


So the benchmarking is simply getting the customers’ rating data and using them.

Benchmarking steps:
1. Select a well educated employee from the organization as contact window to do the benchmarking.
2. This person negotiates an agreement with the major customers to get access to the customers’ supply rating data.
Note: the organization doesn’t have to know the customers’ supplier name, so the customer can use letters to represent suppliers.
3. The organization can then use the data to decide its position in market (the customer’s rating), adjust its KPIs, do gap analysis, and take suitable measures to close the gaps.


I think the first step is to identify your problem areas. Because benchmarking can be applied to any business process or function.


I see no reason why the customers would not cooperate, so it is operable.


Yes, it actually requires cooperation with others as benhmarking partners learn from each other where improvements can be made. Otherwise, it's not benchmarking but an industrial espionage. It’s more challenging and more expensive process.


My first question is: is this benchmarking?

Again, it's benchmarking partners.


Second question: how do you think of this?

well, it's moderately expensive process, but most organizations find that it more than pays for itself.

well, it's moderately expensive process, but most organizations find that it more than pays for itself.
Evidence? Data?

Evidence? Data?

You mean something like these:
Xerox: The Benchmarking Story (http://www.icmrindia.org/casestudies/catalogue/Operations/OPER012.htm)

Benchmarking for Best Practices: Winning Through Innovative Adaptation (http://www3.best-in-class.com/bestp/domrep.nsf/pages/1505234FD644DF7B852570C00069E424!OpenDocument)

Best Practices for Benchmarking (http://www.manyworlds.com/exploreCO.aspx?coid=CO11180312234128)

...etc. .... etc. ... etc. ...

I am sure you will find nicely filtered stories of the benefits - or costs - of benchmarking if one sifts through the internet, research and marketing media.

Will it benefit every case? Not always. As you peruse the citations, one of the biggest downsides is inadequate preparation for benchmarking. I think and other is interpretation. What you might interpret as a good idea on the surface simply might not be one. Benchmarking holds many of the same issues as surveys.

Evidence? Data?

Benchmarking is sometimes free. I wrote a procedure and I compared my work for similar stuff available in this forum. I can think of so many people who can benefit from this forum. Thank you, Marc. Two thumbs up!!!:agree1::agree1:

well, it's moderately expensive process, but most organizations find that it more than pays for itself.

You mean something like these:
Xerox: The Benchmarking Story (http://www.icmrindia.org/casestudies/catalogue/Operations/OPER012.htm)

Benchmarking for Best Practices: Winning Through Innovative Adaptation (http://www3.best-in-class.com/bestp/domrep.nsf/pages/1505234FD644DF7B852570C00069E424%21OpenDocument)

Best Practices for Benchmarking (http://www.manyworlds.com/exploreCO.aspx?coid=CO11180312234128)

...etc. .... etc. ... etc. ...

I am sure you will find nicely filtered stories of the benefits - or costs - of benchmarking if one sifts through the internet, research and marketing media.

Will it benefit every case? Not always. As you peruse the citations, one of the biggest downsides is inadequate preparation for benchmarking. I think and other is interpretation. What you might interpret as a good idea on the surface simply might not be one. Benchmarking holds many of the same issues as surveys.

Your third link is broken--it has an extra "HTTP" at the beginning. Nonetheless, of the other two, one leads to an abstract of a paper recounting stuff that happened nearly thirty years ago, and the other is just a "Yay! Benchmarking!" article. The thing I was questioning was the blanket statement that most organizations find that benchmarking pays for itself. There's no reliable evidence that I know of to indicate that the statement is true. I've personally seen (at a large OEM) large amounts of money squandered on it. While there might be some benefit to be derived from benchmarking for some companies on a relatively small scale, I still say the best benchmarking strategy is to recognize that the companies you want to emulate have smarter people and smarter management. Get the best people you can get and let them do their jobs.

Your third link is broken--it has an extra "HTTP" at the beginning.

I fixed it for you and the other readers.

Your third link is broken--it has an extra "HTTP" at the beginning. Nonetheless, of the other two, one leads to an abstract of a paper recounting stuff that happened nearly thirty years ago, and the other is just a "Yay! Benchmarking!" article.

I did not do an exhaustive search, nor do I intend to (that is better left for someone working on their thesis).

The thing I was questioning was the blanket statement that most organizations find that benchmarking pays for itself. There's no reliable evidence that I know of to indicate that the statement is true. I've personally seen (at a large OEM) large amounts of money squandered on it. While there might be some benefit to be derived from benchmarking for some companies on a relatively small scale, I still say the best benchmarking strategy is to recognize that the companies you want to emulate have smarter people and smarter management. Get the best people you can get and let them do their jobs.

My comment on the results of such a search being "filtered" is I doubt you will find any research designed specifically to test the negative (benchmarking may be so expensive that its expense outweighs its benefits). So, there is no reliable evidence that it is not true.

The problem is benchmarking is a broad concept, not a specific methodology like 8D corrective action reporting. Benchmarking can be a full blown project - and yes, those may be difficult to prove to be cost effective. But, it can also be a simple thought of "I noticed that they use this technology in their website and we don't. I can see we are missing a great opportunity." Now, that is pretty cheap. So, generalizing (or debating) - pro or con - on the overall concept is dubious. Its true measure of its benefits goes back to my cardinal rule: "It depends."


I still say the best benchmarking strategy is to recognize that the companies you want to emulate have smarter people and smarter management. Get the best people you can get and let them do their jobs.

Yes, of course. One way people become smarter is look at the mistakes others make and don't do them, look at the things they do right, and do them. One might see that as either "benchmarking" or simply the basis of learning. That is clearly one of the the benefits people find by stopping by the "Cove".

Being an old thread, I have closed the poll