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| Benchmarking is the process of establishing a relevant point of comparison, either internally or externally. The comparison may be anecdotal (eg. Hiring and training policies) or measurable (inventory turns). Benchmarking sets the standard, or target to be attained through process improvement. Benchmarks help to communicate what is possible to internal team-members who may not have an external focus. There are many sources to gather benchmarking data, including direct observations and published information. A few common sources follow: |
 | Plant visits - Many companies provide plant tours led by knowledgeable managers who will communicate performance measurements. Many companies are willing to share their success stories, even with teams visiting from competitors. Some metrics can be roughly calculated from observations during a plant tour, such as WIP inventory levels. A tour of a Toyota auto assembly plant is striking in that regard. |
| Company Publications - Company publications, especially at the local level, often have information about employment levels and production output. Rough measures of productivity (units/hour) can be calculated by dividing the annual production output in units by the total number of employees, times 2,000 (2,000 is the approximate annual hours worked per person). |
| Industry Publications - Trade journals and publications such as Industry Week http://www.iwgc.com offer feature articles which often contain performance metrics. |
| Third Party Studies - These are a valuable source due to their objectivity and detail. An automotive example is the Harbour Report http://www.harbourinc.com |
| Books - Many books have benchmarking information. One example is "Lean Thinking" by James P. Womack and Daniel T. Jones The book has detailed case studies on lean manufacturing examples with hard benchmark data. |
| Public Financial Reports - Public financial reports (SEC filings and annual reports) are readily available and provide financial benchmarks. |
| Product tear-downs - There is no substitute for tearing down a competitors product in order to make cost and quality comparisons. In 1997 a Midwest appliance manufacturer initiated a competitive teardown of refrigerators and found its product to be 40% heavier with 70% more parts than the best-in-class refrigerator of the same size - a shocking revelation in a brutally cost competitive market. |
| Performance measurements, or metrics, are at the heart of Best Practices research. Commonly used metrics are defined on the metrics page. |
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