What is benchmarking ?
Benchmarking is a business process that aims to identify best practices in the market, through comparison , to increase the performance of a company .
The concept starts from the measurement between the company and its competitors, direct and indirect, and its application as a management tool must be carried out constantly.
Benchmark , in English, means a benchmark, that is, a standard measure, generally a level of excellence desired by the market, and the measurement process is the benchmark .
Some authors suggest that benchmarking is also carried out outside the company’s area of activity, to identify and adapt successful techniques from other industries.
Among the objectives of this process are the identification of improvements and the perception of how other companies achieve a certain performance so that a similar or improved solution is applied in the same company.
Types of benchmarking
The type of benchmarking that will be applied varies depending on the information available and the type of partnership that will be established between the companies that are part of the study:
- Internal benchmarking
Process for evaluating the internal environment to identify good practices in certain departments and adapt them to other areas. It helps to reveal the internal standards of the organization and measure the performance of the sector. One such facility is free access to information, since it is within the company itself.
- Competitive benchmarking
The identification of processes and the observation of the performance of the direct competitors of a company. More difficult to access information, due to strategic problems of not supplying data by other parties. Most of the time, this type is carried out by research or consulting companies, in studies sold to one or more companies in the same sector.
- Segment benchmarking
Applied to specific processes within a business sector. From a quantitative point of view, the comparison becomes easier and more remarkable, but it is limited to the performance of the sector.
- Best-in-class benchmarking
It acts on the comparison between the best practices around the world, even if they are outside the industry / sector of the company doing the benchmarking . It is the most suitable type when it comes to looking for innovative processes, although it is the most difficult in terms of identification and comparison of procedures.
- Performance benchmarking
Process in which benchmarks (other companies) are established to measure the performance of a company. It is not necessary to visit other companies, which can be carried out by third parties or consultants.
- Process Benchmarking
In the case of companies with production processes, the tool compares the activities among the competition in search of best practices and results. It is necessary to partner with other companies to visit and understand how such procedures are carried out by other companies.
- Strategic Benchmarking
It helps in the management of the company, to control if the companies follow the mission / values established in the strategic planning. Visits to other companies are not necessary, only strategic information that can be provided by partners.
Benchmarking Example – Xerox Methodology
Created by Robert Camp, one of the leading authors in the field, the benchmarking methodology used at Xerox is one of the most popular among managers. It was developed based on a company request for a production cost comparison between Xerox and its competitors in the United States.
The process was carried out in five steps:
- Planning – This is where the foundation of the process is created. What and how will they be evaluated? What process or product of the company is being analyzed, how the data will be collected, how to get to certain information, among others. From this, choose the type of benchmarking that best suits the objective of the company.
- Analysis: It is time to look inside the company itself to be able to compare it with others. Analyze what indices to look for in other companies, determine the levels, and even make projections.
- Integration : After data collection, it’s time to integrate into the company’s existing strategic plans.
- Action: Integrated processes, it is necessary to apply the best practices observed in the comparative evaluation, transforming them into effective actions.
- Maturity: the benchmarking process is constant, but this last stage will only be achieved when all the company’s processes correspond to the best market practices, and the company is then the leader in its segment.