Benchmarking

An in-depth study of your competitors to understand the strategies and best practices used by them.

Understanding Benchmarking

Benchmarking is comparing your organization’s processes and performance with those of industry leaders to identify areas for improvement. It helps you understand where you stand and what you can do better.

Why is Benchmarking Important?

Benchmarking is important for several reasons:

• It helps identify weaknesses in current processes and shows how to adopt better practices, which improves performance. 

• It helps organizations learn and implement successful strategies from competitors and industry leaders, so we stay competitive. 

• It promotes a culture of continuous improvement, pushing organizations to find new and better ways to operate.

• It helps in setting achievable goals based on industry standards and best practices.

• Better processes lead to improved products and services, making customers happier and more loyal.

Types of Benchmarking

Each type serves a specific purpose:

• Internal: This compares practices and performance within different departments or units of the same organization. It helps identify best practices internally that can be used across the organization.

• Competitive: This focuses on comparing the organization’s performance with its direct competitors. It shows how the organization measures up against its peers and what can be done to outperform them.

• Functional: Takes as reference the specific strategies or processes of companies in other sectors that are not necessarily competitors.

• Generic: This compares business processes or functions across different industries. The goal is to find and implement best practices that can be applied universally, regardless of the industry.

How to Do Benchmarking

The process involves several key steps:

1. Identify: Start by determining which processes, functions, or performance metrics need improvement. This could be anything from customer service practices to manufacturing efficiency.

2. Select Partners: Depending on the processes and practices you want to improve, you will have to analyze other companies. Ideally, you should choose one to three companies. Always seek to opt for those that are market leaders and that have successful actions in their history.

3. Gather Data: Collect data on your own performance and that of the benchmarking partners. This includes quantitative data, such as performance metrics, and qualitative data, such as process descriptions and best practices. For example, if what you want is a benchmarking analysis of digital presence, you will have to collect online information from companies.

4. Analyze: Make comparisons, see the magnitude of the differences, discover the relationships you can create with your own business and check which factors you can use and which are not relevant to you.

5. Action Plans: Based on the analysis, create action plans to implement them. These plans should be specific, actionable, and aligned with organizational goals.

6. Changes: If it’s necessary to do some adjustments to processes and practices, go for it. This step may involve training, process redesign, and the adoption of new technologies or methods.

7. Monitor and Review: Continuously monitor performance to ensure that the improvements are sustained. Review the benchmarking process periodically to make adjustments and stay competitive. 

Conclusion

What’s better than learning from industry leaders? It is normal not to know where to start, so it is always good to at least know where we stand. By understanding the context, we can take the next step.