Benchmarking is the process of comparing the cost, time or quality of what one organization does against what another organization does. The result is often a business case for making changes in order to make improvements.
Also referred to as "best practice benchmarking" or "process benchmarking", it is a process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to make improvements or adopt best practice, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to challenge their practices.
Popularity and benefits from benchmarking
In 2008,a comprehensive survey on benchmarking was commissioned by the Global Benchmarking Network(a network of benchmarking centres representing 22 countries - and for which the founder of benchmarking, Dr Robert Camp, is the honorary president). Over 450 organisations responded from over 40 countries. The results showed that:
- Mission and Vision Statements and Customer (Client) Surveys are the most used (by 77% of organisations) of 20 improvement tools, followed by Strengths, Weaknesses, Opportunities, and Threats SWOT (72%), and Informal Benchmarking (68%). Performance Benchmarking was used by (49%) and Best Practice Benchmarking by (39%).
- The tools that are likely to increase in popularity the most over the next three years are Performance Benchmarking, Informal Benchmarking, SWOT, and Best Practice Benchmarking. Over 60% of organizations that are not currently using these tools indicated they are likely to use them in the next three years.
- When Best Practice Benchmarking is done well significant benefits are obtained with 20% of projects resulting in benefits worth US$250,000.
The full report is free from BPIR.com who undertook the research on behalf of the GBN.
Collaborative benchmarking
Benchmarking, originally invented as a formal process by Rank Xerox, is usually carried out by individual companies. Sometimes it may be carried out collaboratively by groups of companies (eg subsidiaries of a multinational in different countries). One example is that of the Dutch municipally-owned water supply companies, which have carried out a voluntary collaborative benchmarking process since 1997 through their industry association. Another example is the UK construction industry which has carried out benchmarking since the late 1990's again through its industry association and with financial support from the UK Government
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