Generic Benchmarking

Generic Benchmarking:

For Solving Problems…

and for Life

Introduction

Your organizationвЂ"and you as a leaderвЂ"need to be creative and adaptive in order to be competitive. If you have a problem to solve, you need to come up with a solution that best meets your goals and objectives. To avoid having to reinvent the wheel, you can look for ideas or best practices in many different venues.

Approaches to Benchmarking

A possible first step in identifying potential solutions is to find the best practices of those who have faced and solved a similar problem. Where do you find it? Perhaps you should model your solution on what the best among your competitors has done in a similar situation. This is called competitive benchmarking, and it reflects two problems, one obvious and one subtle. The obvious shortcoming is that competitors are not likely to share and surrender a competitive advantage. Less obvious is that if the problem is more generic than specific to your industry, you have excluded from consideration the majority of organizations, one of which might have discovered the best answer.

Finding the Unexpected (Toyota)

Looking beyond your own industry for the best practice is called generic benchmarking. Generic benchmarking can be done in a number of very different ways. You can look for a single company that is known for having the best practice in the area you are addressing. You may want to look at Southwest for operational effectiveness while providing high quality service, or Coca Cola for brand recognition, or Pfizer for effective mergers and acquisitions. In generic benchmarking, you may want to go beyond looking at one company. For example, you can look for the combination of best practices for an area such as outsourcing by finding thought leaders who have done research on many different outsourcing companies and have compiled the entire set of best practices by looking at a number of companies. For example, you might find research-based articles on the best approaches to strategic outsourcing from developing the strategy to implementation. These might be found in journals from universities (e.g., Harvard Business Review or the Sloane Review); in publications from consulting companies (e.g., The McKinsey Quarterly); or in professional journals in functional areas such as information technology, marketing, and so forth. And often there are books that have been published in certain areas and on certain leaders (e.g., leaders from Dell, Southwest, IBM, GE). Or you can find the best practices that have been researched across an entire industry. For example, you might look at the set of best practices that came from various companies that have buses and trolleys around the world focused on improving productivity. This study might also be relevant to improving productivity in the airlines or for trains. Generic benchmarking could also be used in an area such as finding best practices for change management or transformational leadership. Once again, there are thought leaders who have developed a set of best practicesвЂ"not on companies, but based on benchmarking top performing leaders across many industries. Let’s take a look at a few examples of generic benchmarking.

In the 1950s, Taiichi Ohno from Toyota came to the United States for an extended visit to model the recovery and redevelopment of the Japanese automobile industry on the very successful American automotive manufacturing practices. While in Detroit, Ohno was disappointed with how the Big Three American manufacturers assembled automobiles and found little there to emulate. It seemed that they maintained huge inventories of parts and subassemblies to avoid shutting down the lines that assembled the cars. In this case, even with cooperation among the players in the industry, the best practice was not found among a competitor.

However, Ohno continued his stay in the United States, and frequented supermarkets to buy food and other household needs. What he saw surprised him, particularly in the decade following the disruptions from WWII. American supermarket shelves were so well stocked Ohno concluded, probably reflecting on his visit to the Automobile manufacturers, that there must be a warehouse several times the size of the supermarket attached to it. When he asked to see the kind of warehouse required to ensure the shelves were continuously well stocked, he was shocked to find virtually no onsite inventory of the goods at all. To solve the mystery, the supermarket manager invited Ohno to return late that evening after the customers had left. When Ohno came back, he saw the store taken over by teams of jobbers, representatives of the food distributors who had surrounded the supermarket with trucks from which they were unloading pallets of products to restock the shelves of the supermarket. The following morning when the store reopened, the shelves would be full again, with just the right products, delivered just in time to replenish those purchased the day before.

Ohno returned home with insights he had not expected. While he discovered little he wanted to emulate from the automotive industry, he decided to require Toyota’s suppliers to deliver materials to Toyota’s manufacturing plants just in time to meet their assembly schedules, thereby sharply reducing the inventory required to maintain in order to keep the lines running.

The message should be clear. The problem was not strictly about the automobile industry. It was about maintaining just enough inventory to meet customer demand, and the best practice was outside the automotive industry. Also, the Japanese used their powers of observation to discover the best practice. Daily experiences are a powerful lead to best practices if you can see the commonality between business functions across industries.

Continuously Scanning Outside Your Industry (Xerox)

How else can you find these best practices? Several years ago Xerox was troubled by the time and expense it incurred to move office equipment from warehouse shelves to the shipping dock. A Xerox manager read an article about how LL Bean, the merchandiser for outdoor equipment and clothing, filled orders efficiently. Instead of organizing the warehouse by product category, LL Bean organized it by the frequency with which products are sold and need to be moved to the shipping area. This allowed LL Bean to consolidate trips and minimize the distance from shelf to shipping. Once again, the best practice resided