Benchmarking is a technique in which a company measures its performance against that of best in class companies, determines how those companies achieved their performance levels and uses the information to improve its own performance. Subjects that can be benchmarked include strategies, operations and processes.
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Benchmarking is the process of measuring products, services, and processes against those of organizations known to be leaders in one or more aspects of their operations. Benchmarking provides necessary insights to help you understand how your organization compares with similar organizations, even if they are in a different business or have a different group of customers.
Additionally, benchmarking can help you identify areas, systems, or processes for improvements—either incremental (continuous) improvements or dramatic (business process reengineering) improvements.
Benchmarking has been classified into two distinct categories:
- Technical benchmarking — Performed by design staff to ascertain the capabilities of products or services, especially in comparison to the products or services of leading competitors. For example, on a scale of one to four, four being best, how do designers rank the properties of your organization’s products or services? If you cannot obtain hard data, the design efforts may be insufficient, and products or services may be inadequate to be competitive.
- Competitive benchmarking — Compares how well (or poorly) an organization is doing with respect to the leading competition, especially with respect to critically important attributes, functions, or values associated with the organization’s products or services. For example, on a scale of one to four, four being best, how do customers rank your organization’s products or services compared to those of the leading competition? If you cannot obtain hard data, marketing efforts may be misdirected and design efforts misguided.
Excerpted from Jack B. ReVelle’s Quality Essentials: A Reference Guide from A to Z, ASQ Quality Press, 2004, pages 8–9.