What is benchmarking and what is it for?
Benchmarking is a strategic analysis applied to the most outstanding companies in the same sector to learn about their best practices, in order to identify them and, as far as possible, apply them to our business. It can also be applied internally for making improvements.
Benchmarking comes from the term benchmark, which means reference, and is essentially studying the competition and seeking inspiration to improve our own company.
1. Objectives of benchmarking
The main goal of benchmarking is to find out how to improve the performance of your work processes by adapting what others (or even your own company) are doing with good results.
For this, indicators or KPIs are established to monitor and analyze the internal processes of our company as well as those of our competitors. Only with comparable targets and understanding of the results can we work correctly with benchmarking.
2. Benchmarking methodology
The basic elements you should consider for using any benchmarking process are:
- Establish the areas of analysis.
- Improve and broaden the knowledge of your own company.
- Try to learn more about your competitors.
- Set achievable and realistic objectives.
- Identify areas for improvement.
- Bring our business strategy closer to the best practices in the market.
- Reduce costs and optimize processes.
- Identify and remove execution errors.
- Improve internal and external communication.
- Create successful and measurable strategies.
3. types of benchmarking
Although the most common use of benchmarking is usually applied to the analysis of competitors, this type of strategy can also be applied in non-competing companies and even within our own organization.
2.1 Competitive benchmarking
Competitive benchmarking, the most common type of benchmarking, studies other companies from the same industry to discover and understand their practices. This will help you identify their strengths and weaknesses, because once you know what works, you can improve and become more competitive.
2.2. Functional benchmarking
Functional benchmarking is becoming increasingly common and is based on an analysis of the processes of successful companies that are not from the same sector, to identify elements/practices that may be advantageous to adopt as our own.
2.3. Internal benchmarking
Internal benchmarking, as its name suggests, is based on the analysis and evaluation of areas within the company itself to compare their performance and thus strengthen all of them with the best practices detected. Basically, we have to try to detect the tasks that are best performed by one department and try to replicate them to other areas.