Benchmarking is a business process that aims to identify the best practices in the market, through comparison, in order to increase the performance of a company. The concept starts from the measurement between the company and its competitors, direct and indirect, and its application as a management tool must be done constantly. Benchmark, in English, means a benchmark, that is, a standard measure, generally a level of excellence desired by the market, and benchmarking is the measurement process.
Some authors suggest that benchmarking is also carried out outside the company’s area of activity, to identify and adapt successful techniques from other industries. Among the objectives of this process are the identification of improvements and the perception of how other companies achieve a certain performance so that a similar or improved solution can be applied in the company itself.
Types of Benchmarking
The type of benchmarking to be applied varies according to the information available and the type of partnership to be established between companies that are part of the study:
· Internal benchmarking
Process for assessing the internal environment in order to identify good practices in certain departments and adapt them to other areas. Helps reveal internal organization standards and measure sector performance. One of the facilities of this type is the free access to information, as it is within the company itself.
· Competitive benchmarking
The identification of processes and observation of the performance of a company’s direct competitors. More difficult to access information, due to strategic issues of non-provision of data by other parties. Most of the time, this type is carried out by research or consulting companies, in studies sold to one or more companies in the same sector.
· Segment benchmarking
Applied to specific processes within a business sector. From a quantitative point of view, the comparison becomes easier and more noticeable, but it is limited to the sector’s performance.
· Best-in-Class Benchmarking
It acts in the comparison between the best practices worldwide, even if they are outside the industry / sector of the company that is conducting the benchmarking. It is the most suitable type when it comes to seeking innovative processes, although it is the most difficult in terms of identifying and comparing procedures.
· Performance Benchmarking
Process in which reference points (other companies) are established to measure the performance of a company. It is not necessary to visit other companies, which can be done by third parties or consultants.
· Benchmarking of Processes
In the case of companies with production processes, the tool compares the activities between the competition in the search for best practices and results. It is necessary to have partnerships with other companies in order to make visits and understand how such procedures are carried out by other companies.
· Strategic Benchmarking
Help in directing the company, to monitor whether the businesses follow the mission / values established in the strategic planning. Visits to other companies are not necessary, just strategic information that can be provided by the partners.
Benchmarking Example : Xerox Methodology
Created by Robert Camp, one of the main authors in the field, the benchmarking methodology used at Xerox is one of the most popular among managers. It was developed based on a company’s request for a comparison of production costs between Xerox and competitors in the United States.
The process was carried out in five steps:
- Planning: This is where the process base is created. What and how will they be evaluated? Which company process or product is being analyzed, how data will be collected, how to reach certain information, among others. From this, choose the type of benchmarking that best suits the company’s objective.
- Analysis: It is time to look inside the company itself in order to be able to compare it with others. Analyze which indexes should be sought in other companies, determine levels and even make projections.
- Integration: After data collection, it is time to integrate into the company’s existing strategic plans.
- Action: Integrated processes, it is necessary to apply the best practices observed in benchmarking, transforming them into effective actions.
- Maturity: The benchmarking process is constant, but this last stage will only be achieved when all the company’s processes correspond to the best practices in the market, and the company is then the leader in its segment.