What is benchmarking?

Benchmarking is the process of measuring the performance of a company’s product or service, or processes against those of other businesses. The goal of benchmarking is to identify internal opportunities for improvement.

Through benchmarking you can study top performers to discover what makes that top performance possible, and then by comparing that process to how your business operates, you can implement changes that will yield significant improvements.

However, benchmarking can also be done with your own company by comparing for example one exercise with another.

There are different types of benchmarking: competitive, internal and functional. The common objective of all three types is to help companies look outside their own organisation or the current period, to their competitors or to other sectors.

Competitive benchmarking

Competitive benchmarking seeks to measure the products, services, processes and functions of the main competitors in order to make a comparison with our company and to be able to detect and carry out improvements that surpass those of our competitors.

Internal benchmarking

Internal benchmarking is carried out within the same company. It is usually carried out in large companies with different departments or in company groups consisting of several companies. In the process, a department or area is identified as an example to be followed for its good results in order to carry out a benchmarking with the other internal departments of the company.

Functional benchmarking

Functional benchmarking identifies the best practices of a company that is excellent in the area to be improved. It is not necessary that this company is a competitor or even belongs to the same sector.

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