Competitive Benchmarking is the continuous process of comparing yourself against the top players in the industry, specifically of your niche. Competitive benchmarking helps us answer important questions about the company’s performance in reference to that of its competitors or are there other businesses in the industry which seem to be performing better than you, if so, how are they able to achieve that growth and what are the possible vital points which you can learn and adapt into your own business. The field of competitive benchmarking is customizable, which means it can be diversified into different departments or channelized into observing any one of them, particularly.
Benchmarking creates a baseline for understanding the current market and competition and provides a starting point to measure against in future. It also helps in delivering essential insights and establishing goals which will guide you in maintaining consistent efforts. In today’s world, when the business environment is highly competitive, to remain as a powerful contender, we need to understand that benchmarking performance measurement is a useful way to identify organizations which perform significantly better than others and therefore might have best practices. Things you should consider benchmarking are products and services, features and functions desired by customers, a business process which is the basis for business process improvement and re-engineering. The result of competitive benchmarking is to establish and validate objectives for the performance measures that guide the organization.
Types of benchmarking
There are four types of benchmarking according to famous researchers, them being Internal benchmarking, which focuses on comparison among similar operations within your organization. Competitive benchmarking which focuses on what is seen as the best practice compared to what the top competitors have employed. Functional benchmarking is the process of comparing methods with companies having similar operations in the same function outside your industry and lastly, Generic Process benchmarking, which compares work processes to others that are innovative and exemplary.
The process of benchmarking
Although there are a variety of steps to achieve successful benchmarking, a systematic approach is necessary to approach best in class processes according to multiple research papers. The six-phase process to complete proper benchmarking, the phases include planning, data acquisition, analysis, integration, action and maturity. The first phase is to determine what processes must be improved to achieve the organization’s mission, categorizing items to be benchmarked by their importance will allow a benchmarking team to determine their priorities, before establishing baselines and defining overall objectives. Once the team is ready to acquire the data, multiple options exist, including conducting a questionnaire or site visit in the data acquisition and analysis phases.
When minding your metrics, always remember the goal that you are looking to achieve, all parameters come with a purpose so don’t pick one metric just like you won’t pick one goal. The internet is filled with free resources focused on metrics which can be easily used and identified by any business professional at a point where developing improvement plans will be a lot simpler,