Benchmarking is the process pf systematic comparison of service, practice or process.
It means comparison with market leaders to improve ourselves.
It’s learning from those who are best.
We identify where we stand and what to improve.
Benchmarking can be defined as,
1. Identifying
2. Understanding
3. Adapting best practices
In relation to both,
1. Products and
2. Process by which those products are created and delivered
Types of Benchmarking:
1. Internal benchmarking
Here we can compare our past best performance with future or current performance. Or we can benchmark our own best practices from other division and compare with any other division’s performance and outcome.
2. Competitive/Industry benchmarking
Here we compare our performance or process with any of our competitor. But we have to use this benchmarking logically because there may be differences in various things like strategy, customer type, experience, any competitive advantage etc.
3. Activity benchmarking
Here we can compare our process with any other company who may or may not be our competitor (it can be from different industry also). We are comparing process or practices from this kind of company because they can be better than us or best in performing that process.
4. Generic benchmarking
Sometimes, we can be the only one who performs any process or we are first one in that business (Like – Hyperloop by Elon Musk). So we may not find perfect match for comparison then in that case conceptually similar process is sought as a benchmark (Like Coal Extraction Company)