A continuous and systematic process of comparing products, processes and methods with competitors, the latest trends in the field, or overall trends. The purpose is to find ways to improve one's own activities in order to be the best.
The concept of benchmarking, which can be loosely translated as a comparative study, originated in the 1970s at Xerox. The philosophy of benchmarking was based on two simple ideas:
The purpose of benchmarking is to compare the internal reality of a company with its external environment. Differences often highlight deficiencies within the organization and indicate the direction for improvement. However, benchmarking is not just about catching up with the competition; it is also about surpassing it. The goal is to strive for excellence and to be a leader in the industry.
At a practical level, benchmarking is performed on multiple levels. The simplest form involves comparing internal processes or teams within the organization. This allows for evaluating the performance levels of teams or processes within the company. Benchmarking is often linked to another activity related to company development: best practice sharing, which involves sharing the best practical approaches within the organization. Internal benchmarking is particularly relevant in large corporations where teams or processes might be physically distant, making direct communication challenging.
External benchmarking, which is more common, is carried out with specific objectives in mind. The purpose of comparing with the external environment may not always be the same - it can aim to catch up with or surpass the competition, though catching up is the most frequent reason for this type of benchmarking. However, obtaining information about the competition may encounter certain legal limitations.
Another form of benchmarking is industry-focused benchmarking. In this case, not only direct competitors are examined, but the overall state of the industry in which the company operates. It often looks at the latest trends and forecasts for the industry's future.
When a company seeks to improve internal processes or environment, a strategic audit is used, focusing on the best performers in the market regardless of the industry. This way, experiences can be transferred between sectors. For instance, Six Sigma was transferred from the electronics industry to the automotive industry and later to other sectors, such as the food industry.
To conduct benchmarking effectively at any level, a disciplined approach is necessary. Benchmarking is a team effort, and the team should regularly engage in activities related to benchmarking performance.
The benchmarking process typically involves several steps. Firstly, the situation in which the company finds itself is assessed through analysis. The reality within the company is described using appropriately chosen metrics. Next, the subject of benchmarking is determined, and tools are selected to gather external information. A partner may also be chosen to assist in conducting the benchmarking. Subsequently, benchmarking takes place - external data is collected and analysed to identify shortcomings and set a strategy for their improvement. After benchmarking, the company defines specific goals and means for improving the situation and begins implementing them. The implemented measures are then examined to assess the achievement of goals, lessons from the implementation are recorded, and the success of the benchmarking process is evaluated.
