Benchmarking

Benchmarking Concept

The term benchmarking originates from the English term benchmark, which refers to the level quotes used in topographical measurements and was introduced in business language by the company Xerox, that defined it as “the continuous process of measuring and comparing our products, services and practices with the strongest competitors or with the companies known as industry leaders”. Therefore, benchmarking in no more than a management process or technique by which the companies or organizations evaluate its processes performance, management systems and procedures comparing to the best performances found in other organizations.

As a rule are used the most successful competitors as a comparison term, even though can also be used companies from other activity sectors. The goal of benchmarking is therefore, to stimulate and smooth organizational changes and performance improvement through the learning with others. The evaluation and comparison process can be made for the organization as a whole or aim only a certain process, department or business unit. Through benchmarking organizations obtain references that allow them to identify ways to improve its internal performances. The principle of this tool is that no company is the best in all areas and that, hence, should follow the examples of those who are superior.

Types of Benchmarking: basically, exist three types of benchmarking: internal, competitive and generic or multi-sectorial.

In the case of internal benchmarking, it is the most used. Consist on comparing the transactions of the company with those of an internal department or of other organizations of the same group. It is easy to implement and the aim is to internally identify which is the best model to follow.

As regard to competitive benchmarking, has as reference direct competitors.

Products and services are compared, as a way to overcome the performance of the competitive companies. It’s more difficult to put into practice because the information about the competitors methods are difficult to obtain.

Relatively to multi-sectorial benchmarking, consists in the comparison with companies from other sectors, but known as presenting better exercise. Since they are non competitor companies, the availability to share information is generally bigger.

Benchmarking deployment: In the deployment of a benchmarking process must undergo the following stages:

  • The first step should be planning, namely the identification of which goals to be achieved and the choice of who should be analyzed.
  • Following begins the gathering of data, analyzing existent public information and the information made available by the company chosen as reference.
  • Follows the analyses to the data and information gathered, determining the performances differences and the identification of the responsible factors for the best results of the referenced company.
  • The last step consists on the adaptation and improvement through the decision-making regarding the actions implemented to improve the profitability and competitiveness of the company.
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