BENCHMARKING
Benchmarking is a process of measuring the performance of a company’s products, services, or processes against other businesses which are best in industry. Its purpose is to identify opportunities for improvements in your business.
The Benefits of Benchmarking
Improve performance. Benchmarking identifies processes of improving operational efficiency and product design.
Understand relative cost position. Benchmarking reveals a company’s relative cost position and identifies opportunities for improvement.
Gain strategic advantage. Benchmarking helps companies focus on capabilities that are critical to building strategic advantage.
Increase organizational learning. Benchmarking brings new ideas into the company and facilitates experience sharing.
Step-by-Step Benchmarking
Benchmarking is a simple, but detailed, SIX-step process:
Select a product, service or process to benchmark
Identify the key performance metrics
Choose best-in-class companies or internal areas to benchmark
Gather information/ data on performance and practices
Analyse the data and identify opportunities for improvement
Adapt and implement the best practices, setting reasonable goals and ensuring companywide acceptance
** Before you benchmark any process/ product, you need to have quantitative data available to analyse
Why you should consider benchmarking in your company:
Business Benchmarking have one key goal in mind: to identify gaps in performance and explore opportunities to improve, whether that means making processes more efficient, reducing costs, increasing profits, boosting customer satisfaction, or whatever. Ultimately, what drives companies to benchmark is the need (or want) for improvement.
Benchmarking is not a magic bullet for improving performance – it’s a part of the solution, not the complete solution. The complete solution requires you to set clear strategic goals, identify your critical business questions, design KPIs that help you answer those questions and track performance against your goals, and compare performance using benchmarking.
I certainly wouldn’t advise a company to focus all their attention on benchmarking at the expense of tailored, carefully designed KPIs. But, when viewed as part of the complete performance management picture, benchmarking provides a useful way to glean valuable performance-boosting insights.
There are more practices to business success i.e. Balanced Scorecard, PORTER’s Five Forces, SWOT Analysis, Core Competencies & many more on the list.
Where to go from here:
If you would like to more tools to business success, check out my articles on:
Things that will impact Your Sales Growth after lockdown in 2020
PORTER’s Five Forces – a framework to analyse your industry
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