Benchmarking is a process that identifies best practices in relation to both the product and processes the products are created and delivered. The goal of benchmarking is to gain a deeper understanding of an organization’s current position in relation to its best practices and to identify areas of performance improvement.
Benchmarking involves looking outward to scrutinize how others achieve their performance levels and to understand the processes they use.
Essentially, benchmarking aims to explain the processes that facilitate outstanding performance. When you use what you learn from benchmarking, it will help improve functional performance in the organization or in key areas of the business.
Applying benchmarking involves four key steps:
- Understand current business processes
- Analyze the business processes of others
- Compare own business performance with that of others analyzed
- Implement the steps necessary to close the performance gap
Benchmarking will help your organization define best practices, identify improvement opportunities and create a competitive environment within the organization. Organizations using benchmarking to improve its functions, operations, products and services will likely increases sales and profits.