Benchmarking is the process of comparing the cost, cycle time, productivity, or quality of a specific process or method to another that is widely considered to be an industry standard or best practice (Wikipedia 2009).
- Internal Benchmarking - Comparing a process in one function with that of another function or comparing the same function across locations.
- Competitive benchmarking - Comparing with direct competitors, either locally, nationally or worldwide. The organization may not be viewed as a direct competitor when comparing with other organizations outside the local market area.
- Functional benchmarking - Comparing processes to other organizations with similar processes in the same function, but outside the industry.
- Generic benchmarking - Finding organizations that have best in class processes and approaches from which one may learn and translate to improvements at one's own organization.
Steps in Benchmarking
- Review, refine and define existing processes to be benchmarked
- Determine what to benchmark
- Form a benchmarking team
- Identify benchmark partners
- Collect and analyze benchmarking information
- Evaluation organization's performance versus benchmark partner
- Determine how upgrading practices will impact the organizations
- Establish new strategic targets
- Implement improvements and a system to monitor progress
- Do it all over again