Benchmarking is the ability to identify best practices and working methods using comparative analysis based on certain indicators, as well as apply them in their activities in order to improve the functioning of the company.
The goal of benchmarking is to improve your capabilities. By studying successful work practices, analyzing what makes such high performance possible, and then comparing these processes with how your business works, you can implement changes that will lead to significant improvements.
Internal and External Benchmarking
Internal benchmarking is a process of comparative analysis of best practices and methods of work within an organization: divisions, departments, business processes, products, and more.
External benchmarking is a process of comparative analysis of best practices and methods of work outside the organization: companies of the same industry, companies of different industries, between industries as a whole.
Benchmarking is carried out within the framework of competitive analysis, but its main difference is that you take only reference practices for analysis, those that bring the best results, usually 2-3 are enough, although the number may vary depending on your goals and the state of the industry.
There is no single typology of benchmarking since the analysis can be carried out in almost any field of activity. For example, we can highlight the following:
Strategic Benchmarking is the study of competitive strategies, their implementation plan, and strategic decisions made. Understanding why a competitor’s strategy is more successful than yours will allow you to be more competitive in your industry.
Business Process Benchmarking is a type that applies to both internal and external analysis. You study business processes to find the most successful approach, identify weaknesses in your problematic processes and improve them for more efficient and cost-effective application. Based on the results of this study, you can also decide on the introduction of new business processes.
Product Benchmarking is this type can also be applied to both internal and external analysis. Product Benchmarking is the study of the processes of developing new products or improving existing ones. You analyze competitors’ products to identify strengths and weaknesses, as well as to find new solutions in the production of your products.
Marketing Benchmarking is the study of competitors’ marketing activities: advertising campaigns, marketing research, software, working with social networks, sites, and more.
The benchmarking process can be broken down into many small steps for a more visual picture, but there are a number of general steps.
- Objective. Since benchmarking can be applied to almost any field of activity (product, process, strategy, and so on), it is first necessary to analyze the internal environment of the enterprise to identify the most problematic areas and direct your efforts to improve them. Create a benchmarking implementation team.
- Plan. Record the results of the internal analysis and determine your next steps to achieve your objective. You should set specific actions, deadlines, responsible persons, choose leading companies to compare their practices, performance indicators, all those necessary elements that will be needed during the study.
- Action. At this stage, you must implement what you have intended in the plan. Here you also collect information: surveys, site research, social networks, open documentation on the Internet, and much more.
- Analysis. When you have enough information, you need to study it, compare it with your indicators and conclude. It is best to record all the data in the form of a report. It is also necessary to propose a plan with reference points based on the data obtained methods to correct your initial problem. Benchmarking makes sense only when you can implement changes and improvements in your company.
- Monitoring. The plan will not be valid if its implementation is not controlled. You will be able to find out the effectiveness of changes if you only track the indicators. Monitoring can be carried out for a short or long period of time, depending on the desired results.
Currently, there are a large number of benchmarking software that allows you to record results, conduct analytics, and process huge and complex amounts of information.
If you want to improve your business, benchmarking is a way to understand what needs to be fixed and how you can succeed, relying on the experience of best practices and techniques.
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