Blog and Ideas
November 6, 2013
By Jorge Chávez

Benchmarking in Business

Benchmarking improves performance by identifying and applying best demonstrated practices to operations and sales.

Benchmarking in Business

The process
of determining who is the very best, who sets the standard and what that
standard is, is called Benchmarking.

Benchmarking
improves performance by identifying and applying best demonstrated practices to
operations and sales. Managers compare the performance of their products or
processes externally with those of competitors and best-in-class companies and
internally with other operations within their own firms that perform similar
activities.

How Benchmarking works:

Select a product, service or process to benchmark
Identify the key performance metrics
Choose companies or internal areas to benchmark
Collect data on performance and practices
Analyze the data and identify opportunities for improvement
Adapt and implement the best practices, setting reasonable goals and
ensuring companywide acceptance

Companies use Benchmarking to:

Improve performance. Benchmarking identifies methods of improving
operational efficiency and product design
Understand relative cost position. Benchmarking reveals a company's
relative cost position and identifies opportunities for improvement
Gain strategic advantage. Benchmarking helps companies focus on
capabilities critical to building strategic advantage
Increase the rate of organizational learning. Benchmarking brings new
ideas into the company and facilitates experience sharing

Companies
benchmark because they have to measure their performance against their
competitors in business. If a company didn't do this they wouldn't have a goal
to reach or not aspire to reach.

Jorge
Chávez is Senior Editor at Mijo! Brands of Mexico.

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