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Benchmarking Analysis

Benchmarking Analysis

Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests or best practices from other companies. Dimensions typically measured are quality, time and cost. In the process of best practice benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compares the results and processes of those studied (the “targets”) to one’s own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful.

Many types of benchmarking exist; the most commonly recognized are:

  • Process — evaluates specific business processes (e.g., purchase planning, e-procurement, service delivery). Process maps are used to facilitate benchmarking.
  • Performance — compares product and service as a way to assess the organization’s competitive position against same-sector peers. Focuses on costs, technical quality, ancillary service features, and performance characteristics (also called competitive benchmarking).
  • Strategic — seeks to evaluate the organization’s strategic maturity against others across various sectors. Focuses on general approach to the development and management of core competencies, innovations, and change strategies.

Benchmarking analyses often rely on both quantitative and qualitative measures to generate meaningful results. Quantitative analysis can provide metric-based outcomes, while qualitative comparisons often reveal best practices. The benchmarking process usually encompasses four steps:

  1. Planning.
  2. Analysis.
  3. Action.
  4. Review.

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