Benchmarking Definition - What is Benchmarking?
Updated: Nov 3, 2021
Benchmarking allows enterprises to gain a competitive edge by adjusting, growing and thriving through change.
First of all, what is benchmarking? Benchmarking can be defined as a process of measuring products, services, processes as well as practices and comparing them to those of competitors, industry peers or other global businesses.
The aim of benchmarking is to identify opportunities for improvement and further understand what changes are necessary for the enterprise to enhance its performance. This can mean reducing costs, permanently increasing profits, but also recognizing trends in industries and markets at an early stage.
Implementing benchmarking and studying other businesses can lead to various insights as well as discovering if there is a performance gap between your business and similar companies. Findings from breaking down why other companies perform better and what makes the superior performance possible, should help you to decide which measures are necessary to improve your own performance significantly.
Ultimately, results and findings from the benchmarking process should drive change in your company: This could mean, for example, that the material of a product or component needs to be adapted, the service portfolio should be expanded, or the implementation of a new software should be considered to increase efficiency in operations.
In general two kinds of improvement opportunities are considered: continuous and dramatic improvement opportunities. Continues improvement is incremental and involves small alterations to create a steady progress. Dramatic improvements – as the name suggests – are more drastic and require large changes which often means re-engineering entire business processes.