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NorthlakeBookstore:BenchmarkingforPerformanceEvaluationIntroductIonInSeptember2004,WendyWiley,theNorthlakeBookstoremanager,wasconsideringtheimplicationsofashockingdevelopment.ForthefirsttimeinhersevenyearsastheBookstoremanager,textbooksalesforthisfallhaddecreasedfromthepriorfallsales.Thesalesdecreasewasapproximately$180,000,or3%ofannualtextbooksales.Wendywantedtoaddressthisproblembeforeitgotworse.Shefoundthatthissalesdecreasewasduetotwoemergingtechnologyproblems,possiblyofequalmagnitude:1)thestudents’increasinguseofonlinetextbookvendors,and2)theprofessors’increasinguseofonlinetextbookpublishers.Wendyreportedthebadsalesnewstoherboss,ChuckIrwin,theViceChancellorofFinanceatNorthlakeUniversity.Aftercommiseratingwithher,ChucktoldherthathewasnotsurprisedbythissalesproblemandthatsheshouldconsiderhowtodealwiththeseemergingtechnologiesinhernextperformanceevaluationreportbycomparingtheperformanceoftheNorthlakeBookstoreagainstcompetitorsusingbenchmarkinganalysis.ThisanalysiswouldhelpWendyfindthestrengthsandweaknessesoftheBookstore.Additionally,ChuckwantedWendytodevelopafewkeyrelatedshort-termperformancegoalsandrelatedmeasuresthatcouldbeusedinfutureperformanceevaluations.Hewantedtodiscussthesituationattheirmeetingnextweek,whichwastheannualreviewoftheBookstore’sperformanceforthepriorfiscalyear2004(July2003throughJune2004).AbenchmarkinganalysiswasrequiredbyChuckfortheannualreviewofallthenon-academicdepartmentsunderhismanagement.Northlakeisaprivateuniversity,locatedinamajormetropolitanareaintheMidwest,withanannualenrollmentof12,700students,mostlyundergraduates.Northlakeisquitedependentuponstudenttuition,whichtypicallyaccountsfor60%ofitstotalrevenues.However,theChancellorwasconcernedbecausedonationsandgiftstotheUniversityweredown,possiblyduetouncertaineconomicconditionsanderraticstockmarketperformance.PriortobecomingtheNorthlakeBookstoremanager,Wendyhadspent15yearsinretailsales,mostrecentlyasaWal-Martsalesmanager.Shewasanoutgoing,supportiveindividualwhoreallylikedbeingaretailsalesmanagerandenjoyedworkingwithheremployees.Shestronglybelievedincontinuousimprovementofanysalesdepartmentthatshemanaged.Despiteherextensiveretailexperienceinthefor-profitsector,thiswasherfirstexperienceworkinginanacademicenvironment.Wendyoccasionallybecamefrustratedworkingwithfacultyduetotheirlateorinaccuratebookorders.However,shelikedhelpingstudentsandenjoyedworkinginanacademicenvironmentwithoutallthepressuresofafor-profitbusinesswithaggressivesalesandearningstargetslikeWal-Mart.IMAEducAtIonALcASEJournALChinaCaseCompetition20091ISSN1940-204XHughGroveUniversityofDenverTristyHillestadUniversityofDenverLisaM.VictoravichUniversityofDenvernortHLAKE’SHIStorIcALPErForMAncEMEASurESToprepareherbenchmarkinganalysisreportrequiredfortheupcomingannualperformanceevaluationoftheBookstore,Wendyhadcollectedincomestatement,productline,andotherperformancemeasuresforthelastthreefiscalyears.Toaidevaluation,shesummarizedthevariousBookstoreoperationsintofiveproductlines:textbooks,suppliesandsundries,clothing,softwareandaccessories,andcomputers.Thetextbookproductlineincludednewtexts,usedtexts,classnotes(coursepacks),andgeneralreferencebooks.Thesupplyandsundrylineincludedschoolandofficesupplies,electronics,food,sundries,greetingcards,andmiscellaneouscampusdepartmentsales.Theclothinglineincludedallinsigniaclothing,gifts,andmemorabilia.WendyknewsheneededtoactfasttothoroughlyanalyzealltheinformationneededfortheBookstore’sannualbenchmarkinganalysisthatChuckandtheChancellorrequired.ShehadalotofhistoricalinformationandwasIMAEducAtIonALcASEJournALChinaCaseCompetition20092table1northlakeuniversityBookstoreIncomeStatements200420032002ActualSales%ActualSales%ActualSales%sales11,110,607100.0%9,201,132100.0%8,765,163100.0%CostofGoodssold8,052,26072.5%6,760,73073.5%6,616,75175.5%Grossmargin3,058,34727.5%2,440,40326.5%2,148,41324.5%Laborexpenses1,398,99612.6%1,168,31312.7%1,091,19312.4%operating-Utilities50,4770.5%73,9820.8%35,4660.4%maintenance38,4410.3%35,0190.4%33,9590.4%Rent132,1291.2%136,0851.5%132,6321.5%postage&printing25,7240.2%23,9880.3%25,0970.3%telephone9,4290.1%8,9700.1%9,5300.1%outsideservices21,8550.2%13,5990.1%13,1700.2%insurance6,7130.1%6,6720.1%6,2450.1%Consumables182,0281.6%154,1101.7%133,9831.5%travel15,9440.1%21,6270.2%3,5090.0%totaloper.expenses1,881,73416.9%1,642,36417.8%1,484,78116.9%operatingincome1,176,61410.6%798,0398.7%663,6327.6%otherincome163,0341.5%79,8530.9%79,1760.9%netincome1,339,64712.1%877,8959.5%742,8088.5%otherPerformanceMeasures200420032002Facultyoverallsatisfactionsurvey4.053.923.73CustomerQueingtimeatRegisters(inminutes)1.22.12.3%ofCoursepacksavailableFirstDay97%96%95%%oftextbooksavailableFirstDay99.6%99.5%99.4%textbooksell-through(totalsold/totalavailable)78%76%74%GrossmarginReturn:inventory(GmRoi)2.52.01.8Cartonsprocessedperemployeehour3.33.73.8DaystextbooksinReceivingarea1087wonderinghowtoanalyzethisfinancialinformationforherbenchmarkinganalysisreport.BEncHMArKInGBenchmarkingistheprocessofidentifyingsuperiorperformanceofotherorganizationsforpro