Company Biography
In January of 2002, John Ferrer and his wife Deborah started their own corporation, a large custom furniture
manufacturer located in Boston, MA. Their initial accounts were in the Northeastern region of the United States,
and they annually observed a constant profit increase. By March of 2006, they were able to grow the company
enough to go from five distribution and manufacturing plants to 10 to allow shipping to 48 states. Although they
have two retail stores, one located in Phoenix and one in Boston, their primary source of revenue is online catalog
sales. They have 10 manufacturing plants and distribution centers throughout the country.
John and Deborah’s corporation is known throughout the industry for its exceptional customer service and
superior quality. The contemporary designs lend themselves to a younger market, and the customer base is
predominantly upper-middle class because it is one of the highest priced furniture companies in the market. Part
of the appeal of John and Deborah’s brand is their consistent involvement with the local communities to create
green gardens. They have also been a major contributor to organizations that build houses for people in need.
One of their primary strengths is their vertical integration. They have a team of in-house designers saving the
company design costs and allowing the flexibility to rapidly change designs as the market changes. Their products
have been featured on several prominent home design and gardening shows and have been endorsed by several
well-known designers.
Because of the recent housing market sales decline (8% from 2005–2006), home renovations have slowed
significantly. This has impacted the amount of furniture and fixture sales and continues to impact revenue.
Furniture sales in the United States have decreased significantly, and John and Deborah have recently been
discussing the possibility of global expansion.
Another potential threat to their company is that many higher-end brands have been marketing aggressively and
creating lines for popular retail stores. These allow the lower-income consumers to have access to high-end brands
at a much lower price point. So far, these lines have been incredibly successful and have significantly increased
profits for competitors. Many of these competitors have also had great success in the global marketplace with
these lower cost replicas.
John and Deborah know that it is time to seriously consider expanding their business. They want to be able to
make it through the economic crisis and rely on other ways to increase sales and business. They are open to
looking into the global market, but they want to be sure that it is the right move for the business. They have
requested an advisory board meeting next month in which you will present the global marketing strategy. As the
market strategist, you will play a key role in helping the board decide if this is the right move for the company.
The Problem
You are sitting in Deborah Ferrer’s office. After the customary small talk, Deborah sits forward and states, “I am
very impressed with the work that you have done as the strategic marketing manager. Since John and I started this
company in Boston, we have seen continuous growth, but nothing like what we have seen since you started.
However, the housing market is really starting to impact our profits. This last quarter’s numbers were not looking
good.”
You reply, “The crisis has really hit us hard. We have some stiff competition, too, with the other brands creating
retail knock-offs.”
She counters, “We’ve had great success with your strategies in the domestic markets, but we do need to think of a
new approach and strategy. I have complete faith in your abilities to take this company exactly where it needs to
go. I must say that we are really counting on you, and I know that you will follow through.”
“I will make sure that we do well. Do you have any new projects for me?” you ask.
Deborah smiles and says, “You know me well. I do have a new project for you. I sent you an e-mail just before our
meeting. I’m curious if expanding in a global market would be a good move for our company. I would like you to
look into this for me.”
“Our team is definitely up for the challenge,” you say with enthusiasm.
Deborah shakes hands with you warmly, and you make your way out of the meeting. As you drive out of the
parking garage, you think about your success with the company. You cannot wait to get started.
Why Use Benchmarking?
There is much to be gained through information sharing or benchmarking.
Benchmarking allows for the reduction or elimination of trial and error. When
organizations use benchmarking, they can then tailor processes that are
already in use to fit within their organization, thus saving time and money.
An example of this could be a customer service process. Some organizations
route their calls to subject-matter experts by screening calls through prompts
at the beginning of the call. In organizations that are not complex in nature,
the routing may not be productive.
Time is money for most organizations. Therefore, by using benchmarking,
organizations can speed up the process improvement. When process
improvement has already been implemented in a different organization, the
process can easily be replicated as long as the appropriate groundwork has
been done. Careful analysis must be done to assess the change and how it
will be accomplished.
Another benefit of benchmarking is the ability of all organizations to have
excellent standards of production and quality. This activity does not decrease
competition but rather increases competition as value is added to the
product.
Organizations need to analyze the change carefully. Implementing change for
the sake of change is not efficient nor is it effective. Change should only be
implemented when a benefit will be recognized that will allow the
organization to achieve its goal(s).
The steps involved in benchmarking adhere to a logical pattern as follows:
1. First, the organization must identify a process that needs to be
changed or improved.
2. Then, the organization looks to other organizations that excel in the
same or similar process.
3. It is beneficial if the organization can look to the best in class
organization.
4. Contact is made with the organization.
5. Usually meetings are held between both organizations to allow for the
discussion and study of the process in question.
6. Once the information has been procured, the organization takes the
necessary time to analyze the data that are gathered from the
meetings.
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Why Use Benchmarking?
7. Once the analysis is complete, the organization can determine how to
change or improve the process in question.
By using these steps, an organization can understand how a successful
benchmarking process that will result in positive changes a product, process,
or a department within. These changes can show the organization how
increases in productivity are possible. Organizations need and want to be on
top in their industry. Benchmarking is the process that will propel an
organization to the top of its industry.
One major concern of benchmarking is that it cannot be used to set goals.
Benchmarking is a way to evaluate processes, performances, and strategic
methodologies. Each team member of the organization needs to understand
their role in achieving individual and organizational goals. When each team
member understands the processes used to achieve a goal, there is a greater
likelihood of the accomplishment of the goal.
Benchmarking should not be viewed as spying. Benchmarking is a process by
which organizations can keep a pulse on what the industry is doing, as well as
what and how they are doing as it relates to productivity. Japan is a great
example of the benefits of benchmarking. They have used benchmarking to
surpass many industries in electronics, automotive, and motorcycles. There is
a lesson to be learned here about the benefits of benchmarking and how it
leads to becoming the best in class.
By using the insight and organizational strategies of their organization,
leadership is able to discover innovative methods for improving productivity,
whether it is in production or customer service.
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What is Benchmarking?
In the simplest terms, benchmarking is learning from others. It is a process
in which one uses the knowledge and experience of someone else. The
process allows the organization to follow the leads of others and look for new
ideas and processes that could prove to be beneficial by mimicking the
experience of others.
Benchmarking is the analytical process of looking at the strengths and
weaknesses, both inside and outside of the organization. This assessment can
provide the results that are needed to identify areas that need improvement.
An organization should also recognize, through this analysis, the things that it
is doing right.
With careful analysis, organizations may find that only minor changes need to
be implemented in their processes to recognize increased productivity.
Organizations can also compare their processes against industry-wide
practices. Much of this information is available for companies to share their
best practices. This sharing of information allows organizations to evaluate
and share lessons learned. Through the sharing of information, organizations
stand to gain fresh ideas and new processes. There is much to gain through
collaboration between organizations.
Benchmarking also allows for trending. For example, the latest trend for labor
productivity is to work four 10-hour days a week. The analysis shows that
productivity decreases during that last 2 hours of the day. A new trend may
be implemented that shows shorter workdays can increase productivity.
Another type of trending is using technology to work smarter. Organizations
have used benchmarking to determine how technology works for them. The
concept of telecommuting started with increased technology and a question if
one could be more productive by working from home as opposed to the
office. This idea has worked for many industries. As the United States moves
away from manufacturing locally, and with the availability of technology,
working remotely may be become a more dominant trend in many industries.
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Types of Benchmarking
The following are three broad categories of benchmarking:
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Process benchmarking: This type of benchmarking analyzes the daily
operations of an organization to look for potential changes that could lead to
increased productivity, cost reductions, improved quality rates, or improved
customer service. This review usually occurs at the company's lowest levels.
Processes such as customer complaints, billing, order fulfillment, or
recruitment are areas where benchmarking can provide fresh ideas for
productivity improvement. When process improvements are recognized,
performance improvement quickly follows.
Performance benchmarking: With performance benchmarking, an
organization can compare its performance results to other organizations
within the industry. This comparison can be done in the areas of reliability,
quality, speed, and other characteristics of products or services.
Strategic benchmarking: Strategic management focuses on long-term
results or the actions of top management within the organization. Strategic
benchmarking looks at how organizations compete across the industry. It is
interesting to note that the Japanese use this benchmark technique more
frequently than their U.S. counterparts.
The following are specific types of benchmarking that can be used by organizations:
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Competitive benchmarking: This is a type of performance benchmarking
that focuses strictly on competitors versus the industry as a whole. The
measurement is performance, products, and/or services. This type of
benchmarking uses a process called reverse engineering, where competitors'
complete customer path is reviewed. The comparison can be made with direct
or indirect competitors that are in the same industry. What makes this
method so difficult is that competitors are not usually willing to share their
entire path. Without an understanding of their complete process and
customer path, lack of information makes analysis very incomplete;
therefore, this type of benchmarking can be the trickiest one to practice. It is
much easier to get information for collaborative and cooperative
benchmarking.
Cooperative benchmarking: This is when organizations choose to request
best-in-class organizations to come in and evaluate their processes. The
information flows only one way: from the best-in-class organization to the
requesting organization. The best-in-class organizations are usually not direct
competitors. Data sharing is not usually involved; only information that is
related to processes is shared.
Collaborative benchmarking: This method allows information to flow in
many ways and to be shared between organizations during brainstorming
sessions, which may or may not be a benchmark activity. In some instances,
Types of Benchmarking
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these sessions may only involve data sharing and not focus on the processes
that are within the organization that led to the data results.
Internal benchmarking: This allows an organization to identify its best inhouse practices that can be replicated in other departments throughout the
organization. A by-product of internal benchmarking is that employees have
the opportunity to gain more knowledge about the organization.
Conclusion
Benchmarking is not something that should only be done when productivity is poor.
Organizations that are financially sound recognize the importance of benchmarking
and the positive results that could occur by reviewing its processes. Time is
important to all organizations and forecasting is an important tool used by all
organizations. Looking for ways to be creative and innovative will help the
organization to achieve high efficiency and effectiveness, which will show in the
bottom line.
Benchmarking is not an easy task nor should the process be taken lightly.
Benchmarking is not an easy way to make improvements. It requires significant
analysis and time to realize the full benefits. It takes times to change processes,
especially when many processes are involved or people are involved. Change is not
easily accepted and therefore, the resistance factor must be incorporated in the
expectations and time line. Benchmarking is very beneficial for determining best in
class practices and determining if and how those practices can be incorporated.
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