In this article we will explain everything you need to know about benchmarking: its benefits, advantages and disadvantages, and its process. In the same way, we give some examples so that you can better visualize its stages and operation.
In a market as fast-paced as the one we find ourselves in today, your competitors are working to gain an advantage and time is of the essence. If you want to advance your organization in every possible way, then conducting a benchmarking study is just what you need.
Origin of the term
The term in the English language benchmark comes from the words bench (“bench”, “table”) and mark (“brand”, “signal”). In the original meaning of English, the word is composed, however, it could be translated as a measure of quality.
This practice was born in the United States from the sixties, thanks to the influence of both the Malcolm Baldridge quality award and organizations related to quality management and benchmarking, although it did not become popular until the late eighties.
The benchmarking concept arose from the eighties, when the Xerox company was interested in investigating how it compared its performance in relation to its competitors.
The use of benchmarking has traditionally been limited to business organizations, but currently it has spread to different areas, with the consequent modifications in its implementation.
Now, what is the objective of benchmarking?
Benchmarking consists of taking “comparators” or benchmarks to those products, services and work processes that belong to organizations that demonstrate good practices in the area of interest, with the purpose of transferring knowledge of good practices and their application. According to Casadesús (2005), “it is a technique to search for good practices that can be found outside or sometimes within the company, in relation to methods, processes of any kind, products or services”
Benchmarking is a business management method that seeks to find the best practices inside or outside the company through the comparison of techniques, processes and services of other organizations in order to increase their efficiency and competitiveness.
The main idea is to take the most outstanding practices of other companies and adapt them to your field of work to improve your services. Therefore, it is not necessary that the comparisons are necessarily with companies in your same industry, since in other sectors you can find the ideal solutions that make your performance and productivity efficient.
Benchmarking can be applied to any process, approach, function or product in companies, since its process focuses on measures of quality, time, cost, effectiveness and customer satisfaction. We use it at ideaGoMedia.
Benchmarking characteristics: process and benefits
It has objective purposes
Benchmarking has as its main characteristic its objectivity and is built according to objective rules; that is, there must be a specific reason why organizations are included.
Constantly analyzes trends according to market benchmarks that serve as a guide for the continuous improvement of the process.
It is oriented to good practices
Benchmarking, as part of a continuous improvement program that incorporates feedback processes, has the characteristic of directing its objectives to improve practices to identify opportunities for improvement.
Benchmarking operation: process and benefits
Conduct a benchmark
Benchmarking is used to make a comparative evaluation that helps you detect examples of good practice. It is often confused with competition analysis; however, it is something deeper. And while it is not copying everything that your competitors have or do, benchmarking allows you to implement everything good that they have to improve your own performance.
Improve the productivity of your company
Benchmarking also serves to positively promote the improvement of your work processes and increase the productivity of your company. It helps you identify strengths and weaknesses to find opportunities that allow you to adjust and optimize your procedures.
Reduce business risk
Investing in benchmarking is relevant as it can provide incident response within your organization, especially when it comes to reducing business risk, creating efficiencies and protecting your brand.
Objectives for entrepreneurs and companies
Benchmarking means constant learning and improvement of your company. This implies acquiring knowledge of the best business practices in your sector to implement them in your organization. This will happen through the teamwork that is carried out between the different areas that exist in your company and the comparison with your direct and indirect competitors.
The benchmarking objectives are quite specific:
Make the production processes of your company efficient through the improvement of current processes. This will make each component more profitable.
Increase the quality of your company internally and externally. This means that both members of the company and customers must perceive these changes.
Help you to be a reference within your market, applying the best practices of your industry and become a vanguard organization in the sector to which you belong.
Industries and sectors are constantly changing and in order to maintain your company as a market leader you need to have defined objectives. Benchmarking, then, gives you the opportunity to become more competitive and adapt to trends and behaviors in advance.
Advantages of benchmarking
Create a paradigm shift: nothing is more outstanding than demonstrating that a company’s internal processes can really be improved.
Promote the culture of evolution: a company that does not evolve has an uncertain future. A culture of change forges a system of business values that is adapted to all members of a company to cope with change and understand why it is necessary.
Analyze the competition: Knowing where a company stands compared to its competitors is really important. A benchmarking allows to have a clearer vision of where a company is within the market, specifically of its sector or industry.
Generate a culture of cooperation: benchmarking is a practice that allows you to see companies similar to yours as a learning opportunity and not just competition.
It is an efficient economic practice: although it may involve a good investment of time, benchmarking does not require large expenses on the part of the companies that carry it out. If the requirements are met in order, it is a fairly simple process to perform.
Helps motivate employees: applying many efforts to improve the performance of a company motivates employees to reach a new level of maturity, in terms of productivity in their area and the good use of their time.
The 4 types of benchmarking
1 Internal benchmarking
Here you will not observe your competitors or other companies from different sectors. You will make the comparison between the different departments or areas that make up your organization.
2 Competitive benchmarking
This method is to have the knowledge of the position that a company has in comparison with its competitors. It is ideal for determining and deepening processes, strategies and techniques to achieve business objectives.
Its benefit consists of comparing the current performance of your company with that of your competition to detect possible failures in time and adjust them to the results they seek to achieve.
This type of process is one of the best known among companies, as it allows observing the operation of new technologies or work methods in other companies. Its implementation is with comparison tests, as well as the determination of all the advantages and disadvantages of direct competitors. They are evaluated from the products, services and processes similar to those of your organization that have been detected as most successful.
This kind of benchmarking is quite useful if your company seeks to position a product or service in the market. The ways of collecting information may be the following:
- Direct: former employees, suppliers and customers (usually a more limited investigation).
- Indirect: indirect ways such as the internet, publications, catalogues, product studies, among others.
- Cooperative: exchange of information between competing companies.
3 Functional benchmarking
Unlike competitive benchmarking, in functional benchmarking it is not only necessary to observe how your competition does it, but also to expand your search range. This includes your indirect competitors and other organizations that do not compete with you in the market. Achieving this requires finding those companies within your sector that are doing things well (or exceptionally).
Ask yourself: what are these mixed-segment organizations doing to achieve such good results? The most important thing is to detect those effective and long-lasting actions. Any company, in the field in which it specializes, that meets its objectives 100% has something to teach you.
4 Generic benchmarking
In concept it can be similar to functional benchmarking, since it focuses on the analysis of operational processes. The difference is that it focuses on comparing the achievements of your organization with the best that exists in the industry or sector, either in related functions or processes. The similarity between different processes and functions in the departments of companies in the same industry helps to adapt systems or create improvement processes.
The 4 stages of benchmarking
This first stage is about defining the following questions:
- What should we compare?
- Against whom should we compare ourselves?
It may seem quite simple. However, this is where the beginning and success of an entire benchmarking process lies, since a detailed analysis is required to identify the main failures in your business processes, determine how they will be resolved and who will be the examples to take into account. bill.
This second stage can be summarized with the action of responding: what is all the information that we must collect? Once they have selected the companies that most closely match the expected business models, it is vital to know what all the data will be required and to which the selected organizations will be subjected.
This third stage requires an analysis of the information gathered, with the aim of finding the recommendations and identifying the best practices to carry them out. The two most important aspects to determine are the following:
- Performance gaps between companies
- Process facilitators for process improvement
The final stage deals with the adaptation, improvement and implementation of the previously identified facilitators. As you now know, the purpose of benchmarking is to introduce the necessary (and most appropriate) changes to increase the performance of your company and improve your productivity.
How to benchmark?
As we already mentioned, the first step is to determine the actions to evaluate and compare them with the previously established objectives. At this same point, they should also determine which companies they will focus on (or the areas, in case it is an internal benchmarking) and confirm the methods of data and information collection.
A good approach to a benchmarking project answers the following questions:
- What do I want to measure?
- Who am I going to measure?
- How am I going to measure it?
Broadly speaking, a good benchmarking must have a reason for being and be related to the area you seek to improve. After determining this aspect, it is necessary to ask yourself what type of benchmarking you will follow (competitive, functional, internal or generic). This step is vital to know if you will make comparisons from your own organization or with another company, inside or outside your industry.
Once these aspects have been determined, the next step is to form a work team. This will be responsible for the organization and management of all benchmarking stages. Having responsible members will help the project to be more objective in terms of the factors they want to improve in the company.
2 Collect the data
Based on the previously established requirements, determine what will be the form of data collection. It can be through telephone questionnaires, email or personal interviews. Consider the level of contact you have in each medium, since it is better to ask some questions or information in person than by phone.
Get detailed information on all the aspects necessary to investigate, clarify and verify the information previously obtained. Another recommendation is that you and your team make site visits to the organization to get a clearer perspective on some processes. This visit will also allow them to analyze behaviors in all areas of the company that they see.
When they have exhaustively reviewed the information collected, it is time to project the results. For this, a deep analysis of the data collected is required, detecting fundamental causes and identifying the facilitators to use for the development of improvement of business processes. Those that are adaptable and ideal for your company will be the ones that go to the next round of selection. It is important that you analyze each good practice to verify that it will be beneficial for your business.
Once you’ve managed to determine more concise information, it’s time to compare current versus projected performance. In this way, they can be more clear about where the gaps are within your organization and it will be useful to determine their causes.
As a final process, they should assess the feasibility of the final enablers. Determining this situation is very important, since from it the best business practices will be obtained. In addition, they will be able to confirm if their processes will truly be better than they currently are or if they will exceed satisfaction or expectations.
4 Take action
The purpose of this stage is to implement the selected improvements, applying the knowledge learned during the benchmarking study. You can divide this step as follows:
- Select improvement projects.
- Determine improvement goals.
- Develop, approve and carry out action plans.
It is important to generate goals and objectives to go after the expected results. In addition, it is vital to always keep your work team motivated so that the changes are taken in the best way.
7 examples of benchmarking
- Tacoronte Cosmetics
- mahou san miguel
- Southwest Airline
Lastly, and perhaps as an extra step, remember to track improvements. You must make a report with all the relevant information from the benchmarking process. This will be very useful for subsequent projects in order to make it a sustained exercise of the company, in order to adopt a philosophy of continuous improvement.
In conclusion, benchmarking is essential, especially in market research, because it provides you with valuable information to make decisions and propose strategies in the short, medium and long term. Contact us now and get information on this topic and other topics to grow your business.