Benchmarking: definition and main types
Benchmarking is the search for the secrets of the success of other companies and their successful implementation in your own company. This name just hides the whole process of search, research and implementation.
Benchmarking has a rather long history. And companies use it for a variety of purposes, including:
- assessing the attainability of goals based on someone else's experience;
- implementation of certain changes;
- business process improvements;
- monitoring competitor activity.
Benchmarking is not launched one-time, it is a continuous process, where not only the result is important, but also the way to achieve it. The main purpose of this process is to detect a discrepancy between your current position and the best position of a competitor. By doing so, you identify the reasons that prevent your business from growing and find ways to remove obstacles.
Benchmarking is popular, easy to implement and not too expensive. However, there are still some difficulties. Thus, it is difficult to find companies to compare, and even if you find a suitable benchmark, it will not be easy to gain access to some non-public information. It will also be difficult to compare actions and consequences, because you do not see the processes from the inside and do not know the competence of the decision makers. And the main difficulty lies in the fact that through benchmarking you will be able to implement existing experience, but not innovation.
There is benchmarking of processes and results. When evaluating results, you compare performance, but its true purpose is to evaluate processes, find and discover everything that is hidden behind the results, and then borrow ideas. Benchmarking activities are not always easy to categorize, as companies' actions tend to be non-standard.
But speaking generally, there are 4 types of benchmarking:
- Internal . In this case, certain indicators are compared within the same company - for example, the level of sales in different stores of the same network. In this case, there will be no problems with obtaining data, because all information is freely available. However, in this case, you are focused on internal success, within your own company, but you will not see the best achievements in the industry. However, you can start with internal benchmarking to understand how this technique works.
- Competitive . If you have access to competitor reports or reviews, then you can compare the processes taking place in related companies. Competitive benchmarking is often carried out in companies associated with the entertainment industry. After all, these companies share information about accidents with others. You can also compare success stories of companies operating in an industry adjacent to you, but not directly competing with you, but operating in a different region (for example)
- Functional . In this case, business functions, certain processes are compared, while companies and even sectors of the economy may be different. Here it is important to compare the nature of the processes. A classic example is administration functions, the subtleties of working with personnel, the sequence of information exchange. When you compare the current processes in your company with those outside the industry, you can find alternative ways to solve problems.
- General . In this case, all innovative solutions and approaches that are used in different companies are explored. Choose companies with excellent reputations and evaluate how they perform, and you will find many interesting methods that you can implement in your own firm.
Benchmarking has survived many newfangled trends in marketing and still remains relevant. This method is easy to understand but requires more planning and analysis time. However, as a result of the introduction of new processes, you will receive qualitative improvements for your company, so the costs are always justified.