Operations Management — Operational Benchmarks

STEP #3

Benchmarking is a continuous process that provides organizations with the opportunity to compare their internal and external best practices to those of other organizations. The resulting differences become targets for process improvement to bridge performance gaps.

Most industry benchmarks and best practices are published by consulting firms and industry associations and are not available for free. Following are some free sources you can turn to as well as some tips on locating key data in articles.

Benchmarking Reports

TIP: You can find benchmark information in industry reports such as Standard & Poor's NetAdvantage. For example, if your service company was a fast food restaurant, you could find the following information in the Restaurants Industry Survery, Oct. 2006

According to the National Restaurant Association, average menu prices increased 3.0% in 2004 and 3.1% in 2005 - so you have justification in suggesting that your restaurant raise their prices
The greatest beneficiary of the shift toward product development and away from price discounting is industry titan McDonald's. Today, the world's largest fast-food chain sells its premium salad offering for more than $5 - here you have the industry leader charging premium prices
Most common promotion is the weekly or monthly special. According to the National Restaurant Association’s 2000 Quickservice Operator Survey, 82% of respondents said they engaged in the practice - justification for you to suggest your company deploy monthy specials
Check the Key Industry Ratios & Statistics section for valuable information

Best Manufacturing Practices - Center of Excellence from the Office of Naval Research.

The Best Manufacturing Practices Program was created in 1985 to help businesses identify, research, and promote exceptional manufacturing practices, methods, and procedures. Its objective is to empower defense and commercial customers to operate at a higher level of efficiency and effectiveness.

Best Practices, LLC

Consulting practice founded by people from Harvard. Free report excerpts, table of contents and study snapshots provide helpful information regarding the structure of a benchmark study. The reports cover various subject areas and industries.

CAPS (co-sponsored by Arizona State University W. P. Carey School of Business and the Institute for Supply Management)

CAPS Research publishes several benchmarking reports each year that provide purchasing and supply management professionals with information about the most recent performance metrics.
The eC3 program provides a cross-vendor, cross-industry measurement tool for eProcurement activities that focuses on key performance indicators, identifies recurring eProcurement activities for future measurement, and allows participants to compare their current performance against other participants, regardless of industry sector.
Registration is required but most content is free

Industry Week - Benchmarking articles

Check the Ranking tab for a list of the Top 50 Manufacturing companies.
Check the Leadership & Strategy tab and select Benchmarking or Best Practices to read about the latest key metrics and articles. Be creative, dig through these articles to find metrics for your company or get ideas of metrics that you can use to compare your company to industry benchmarks.

ABI/Inform

To find articles about benchmarking, select the Advanced tab
These subject terms relate to benchmarking:
- benchmarking or benchmarks
- performance evaluation
- balanced scorecard
- best practice
- business metrics
- business process reengineering
- performance evaluation
- world class companies
Type any of the above terms in the search box and from drop down box select subject
If you use multiple terms, m ake sure you OR the terms
On the next line, from the drop down box, select NAICS codes and Browse the codes to select your company
Example: Benchmarks or benchmarking - Subject
2nd line AND NAICS code 7221 (full service restaurants)
Select the date range of your choice and then you could sort by relevance.

Operational Ratios

Efficiency ratios can be important indicators of how a company manages its business. Examples are: Inventory Turnover and Days in Receivables. definitions of the most commonly referenced ratios and how they are calculated.

Dun's Industry Norms and Key Business Ratios
BUS REF HF 5681 R25 I525
RMA Annual Statement Studies
BUS REF HF 5681 .B2 R6
Almanac of Business and Industrial Financial Ratios
- Organized by SIC code, these books provide aggregate industry data against which to benchmark your company's financial performance.