5 Steps of Every Benchmarking Process and Key Business Benefits of Benchmarking
The benchmarking process helps a company to gain a competitive edge by comparing its practices and performance against one or more similar companies. The benefits of benchmarking lie in its main objective, which is to identify and analyze best practices that will help in improving the overall performance of the business. Such assessments help the […]
The benchmarking process helps a company to gain a competitive edge by comparing its practices and performance against one or more similar companies. The benefits of benchmarking lie in its main objective, which is to identify and analyze best practices that will help in improving the overall performance of the business. Such assessments help the company to become more competitive. But before proceeding further, let’s pause and understand the benchmarking process in simple terms.
What is benchmarking process?
A benchmarking process is a structured approach that requires the collection of data (via a questionnaire), analysis, and reporting. Some of the benefits of benchmarking include the identification of internal opportunities for improvement and the growth of the organization. The benchmarking process generates a report through a detailed analysis, which helps in breaking down the mechanism that makes any superior performance possible. This can further help in tweaking the product’s features to match more closely to competitor’s product and altering customer relationship management to establish more personalized communications with them. The benchmarking process facilitates the examination of things like the amount of production, revenue, employee productivity, expenses, and so on. There are several benefits of benchmarking, but the process needs to be followed perfectly. Following are a few steps that will help you understand the benefits of benchmarking:
Benchmarking Process Steps
#1. Identify the components to benchmark
The first step of every benchmarking process starts with identifying components that have to be benchmarked. This can be a product or a commodity, quantities of a shipped commodity, or an amount of economic output. Once the identification is done, it becomes easy to collect relevant data and then contribute to the desired set of output.
#2. Analyze the components
This step involves data collection and its analysis. This step of the benchmarking process helps in understanding the best practices adopted by the competitors and analyzing the performance gap between the two competitive organizations. Additionally, it is the most effective way to address the discrepancy in performance.
#3. Integrate operational goals
This is one of the important steps of the benchmarking process that involves establishing the goals of operations for organizational transformation. In this step, it is required to communicate benchmarking findings in the organizational structure and develop the plan of actions accordingly.
#4. Formulate an action plan
Now, the next step of benchmarking process involves the development of a plan of action. This requires the construction of specific strategies and tactical decisions that can help to implement new practices. Apart from this, the most important thing that must be done in this step is identifying the factors of barriers to successful implementation of a strategy that is very essential to leverage the benefits of benchmarking.
#5. Incorporate the best practices
At this step of the benchmarking process, benchmarking becomes fully institutionalized. Here the strategies that are being planned to be implemented are realized to bring the change. This step requires the adoption of best practices identified via benchmarking process to eliminate negative gaps of performance. The potential of the benchmarking process is realized only when it is incorporated fully along all the verticals of an organization.
Benefits of Benchmarking
Improve the quality of the product
This is one of the key benefits of benchmarking. By analyzing competitors’ product or service through the benchmarking process, an organization can definitely improve the quality of its own product. Competitors’ products or services can be studied and improvements can be made accordingly.
Monitor organization’s performance effectively
This is one of the noteworthy benefits of benchmarking. Benchmarking helps an organization to calculate and analyze its own loopholes as compared to its competitors and then bring about changes in the strategy and planning.
Maximize sales and profits
A company that uses a benchmarking process improves its operations, functions, services, and products. This helps in increasing the sales and profits of the organization. Customers are also most likely to notice these improvements. This is again one of the benefits of benchmarking that is important for the growth of the business. The benchmarking organization may also promote its improvements through its magazines and company brochures and television ads. These efforts contribute towards increasing sales and maximizing profits.
To Know more about the benefits of benchmarking