Benchmarking is a measurement of the quality of an organization’s policies, products, programs, strategies, etc., and their comparison with others in its industry. The purpose of benchmarking is to decide what improvements are needed and to analyze how other companies attain their performance levels and how to use the data to increase its own performance.
The first step in benchmarking is to measure organizational performances. Measurement can be accomplished in various ways. For example, it can be measured on how well sales goals are accomplished in regards to the closed sales. The operational efficiency of an organization can also be measured. This involves how well the inventory of the organization is being used, as well as if the organization is using its assets to its highest potential.
Once internal performances are measured, the next step is to compare what is uncovered with organizations similar to yours. This enables businesses to better understand its strengths and weaknesses. Once deficiencies are found, organizations can make improvements.
Benchmarking sheds light on areas an organization needs to pay special attention to. This is how improvements are accomplished, change is adopted and progress is made.