Benchmarking for Best Practices

Benchmarking (also "best practice benchmarking" or "process benchmarking") is a process used by organizations to evaluate various aspects of their processes in relation to best practices, usually within their own business sector. This allows organizations to develop plans on how to adopt such best practice.  The typical goal is that of increasing some aspect of performance. Benchmarking may be done once but is often treated as a continuous process in which organizations continually seek to improve their practices.  The bottom line goal is profit improvement through cost reduction and increased sales via enhanced sales.

The steps in benchmarking are:

1.        Identify a target population with which to compare.  The targets are usually star performers within the same business sector but not always.  Companies with an element of customer service, for example, may look outside to see how other unrelated businesses handle related tasks.  Aspects of customer service in the online travel industry can be related to customer service in the automotive insurance industry.

2.        Identify the key measures of productivity to be benchmarked.  Problem areas or opportunity areas are prioritized.  The units may be such things as calls per hour, order to delivery lead times, various costs per unit of operation, advertising cost per unit revenue, throughput per unit time, and so on.

3.        Gather the data from the target population and the internally.

4.        Analyze the data.

5.        Take action for improvement.

Consulting organizations and some governmental agencies (DOE) accumulate and process data to build databases that can be used for benchmarking studies.  These experts also provide the skill necessary to do the job efficiently.

Benchmarking consultants and industry segment collaborations work to provide the interested business a wealth of information upon which to compare their internal practices.  And hopefully build to improve their business practices to that of the benchmark best practice standards.  You should carefully select consultants based on their specific experience in your business segment and business operations.