Benchmarking Types and Stages



3 Steps of Benchmarking
Benchmarking is the practice used by business when it is looking at its production and marketing processes and comparing them to those used by its competitors. This comparison will identify areas where efficiencies are lacking and where new methods will improve on what has been done in the past. It will identify the ways and means of improving its own operations.

Where a business is newly set up, benchmarking will help to show the best way to carry out certain things such as, production and management, as well as the overall general running of the business to establish an advantage over competitors.

The following are the steps involved in benchmarking:

  1. Identifying the process or practice that is to be set up or improved in your business.

  2. Look at all the benchmarking sources as regards the processes or practices that your business if doing, or will need to be doing.

  3. Carry out those processes or practices by implementing them into the planning and operation of your business.


Source to Study for Benchmarks
There are a number of sources that you can study in order to establish the best practice or best processes to be used in your business.

  1. Media - Electronic and print media, such as, journals etc. This could include information from the Bureau of Statistics Reports, articles in newspapers and information contained in business reports or company annual reports.

  2. Competitors - From competitors in the same industry. This would isolate areas of best practice and the most efficient processes that can be adapted or built into your own operations. You need to remember, however, that just because a process is successful in another business, does not necessarily mean that it will improve your own. You have to take some care in assessing the suitability of these best practices before implementation.

  3. Outside Industry - Organisations or businesses outside your industry. Just a simple detailed study of other businesses outside the industry in general can isolate strategies and practices, which can be incorporated into your own operation for improvement.

  4. Inside Industry - Businesses in the same industry, but in another market. You can source information from businesses that are outside of your market area, but are of the same type.


Questions for Analysing your Business Processes
To benchmark correctly you need to analyse your business processes with some detail.

Some questions you should consider when you are undertaking this task include:

  • Which areas experience the most problems?
  • Which areas are crucial to your business success?
  • Which areas are currently the most successful?
  • Which areas are the most profitable?
  • Which areas do you find the most costly?
  • What needs to be done for improvement?

These questions need analysing and require full answers in order to pinpoint specific problems and work out how to correct the situation.


It is a Process Reinvention Technique
After you see how other businesses operate, you may have questions about your own efficiency and come to the conclusion that it is time for an overhaul. It's possible you may have seen another business processing loan applications faster than yours, or perhaps they shipped their orders out faster. Maybe you wondered whether you could copy the other firm's advanced and more efficient system. The fact is - you can.

Benchmarking is a process reinvention technique that transfers an efficient work process from another business to your business. That is, if another business has a superior stock control procedure in plan, your business can copy it with benchmarking.

It obviously requires the permission and cooperation of the other business. You can put together a plan for the use of the superior system without having to steal it from your competitors.