How benchmarking is useful for business

Benchmarking is a strategic management tool that allows companies to set goals and measure productivity based on the best processes in the industry. It consists of measuring the performance of the company’s products, processes, or services against those of other companies considered to be the best in their class in the industry. By breaking down what makes some companies outperform and comparing them with those of the company itself, you can identify internal opportunities to implement changes that lead to significant improvements.

This could mean, for example, adjusting the features of a product or service to more closely match a competitor’s offering, changing the scope of services offered, or implementing new business management tools.

This could mean, for example, adjusting the features of a product or service to more closely match a competitor’s offering, changing the scope of services offered, or implementing new business management tools.

How to carry out a Benchmarking process?

  • It is essential that before choosing the type of analysis you want to carry out, you define what exactly is the purpose for carrying it out: what process do you want to improve? Are you looking for continuous improvement or a dramatic change? Are you looking to become a world-class company? ?.
  • Based on the above, determine which are the best-in-class companies to benchmark against.
  • Collect information about the internal performance of your company, remember that in order to compare something, you need to have quantitative data available to study. That means breaking down internal processes to calculate performance metrics. Quantify everything, because only quantifiable information can be accurately compared.
  • Carry out the relevant studies to collect the information of the companies with which you are going to compare.
  • Compare data from both organizations to identify gaps in your company’s performance. The evaluation will point out which changes make a difference.
  • Define the changes you will implement and adopt the required processes and policies.
MUST READ  110 Top SEO Tools That Are 100% Free

Types of Benchmarking that exist and when they should be used

Strategic benchmarking

It is used when companies require a general performance improvement. Strategic Benchmarking examines the long-term strategies and broad approaches that have enabled high-performing employees to succeed. It involves considering high-level aspects such as core competencies, developing new products and services, and improving capabilities to cope with changes in the external environment. Changes resulting from this type of analysis can be difficult to implement and take time to materialize, therefore it is only recommended for realigning strategies that have become inappropriate.

competitive benchmarking

It is used when companies want to consider where they stand in relation to the performance characteristics of key products and services. This type of analysis is usually done through trade associations or third parties to protect confidentiality. It is recommended to evaluate the level of performance in key activities and areas in comparison with others in the same sector.

Process benchmarking

As its name indicates, it focuses on the improvement of key processes and operations. To carry it out, reference partners are sought that carry the best practices in similar industries. It involves mapping processes to facilitate analysis and comparison. It is used to improve key processes in a short time.

Functional benchmarking

Companies are looking to benchmark with partners from different business sectors to find ways to improve similar functions or work processes. It can lead to innovation and dramatic improvements. It is considered more appropriate to improve activities or services for which there are no counterparts.

Internal Benchmarking

It involves analyzing reference operations within the same company. For example: if it is a company with branches in different countries or cities. This type of analysis has several advantages, for example: it is easy to access sensitive information and requires less time and resources. However it is important that whoever conducts the analysis is as objective as possible as real innovation may be lacking and performance is less likely to improve in this way. It is considered an appropriate method if in branches of the same organization there are very different results derived from good and bad practices.

MUST READ  5 important points to create a competitive advantage

External benchmarking

It is done by analyzing third-party organizations considered best-in-class, thus providing insider information for those looking to stay ahead of the curve. It is an analysis that can consume a significant amount of time and resources. Its implementation is recommended when seeking to find examples of good practices to apply in a company with bad practices.

International Benchmarking

When there are few national companies with which to buy within the country, it is appropriate to analyze the best in other parts of the world. Globalization allows this type of analysis to be carried out more easily, but it still implies investing time and resources to implement the strategies found appropriately, since cultural differences can mean that what works in one part of the world is not recommended in another. in other. It is best to use this type of analysis when aiming to achieve world-class status.

Subscribe to our list

Don't worry, we don't spam

Key Benefits

Benchmarking has additional benefits in addition to assisting businesses in becoming more efficient and profitable.

  • Increase employee understanding of internal structures, costs, and processes.
  • It encourages team building and cooperation in order to be more competitive.
  • Elevate familiarity with key process performance metrics and indicators and improvement opportunities across the enterprise.

In summary, the benchmarking process will help your company’s collaborators to understand how even a small part of a company’s processes or products can be the key to success, just as the contributions of each employee can lead to a big change.

We will be happy to hear your thoughts

Leave a reply

Texas Business Knowledge
error: Alert: Content selection is disabled!!
Shopping cart