Bench Marking

Benchmarking

Benchmarking is a continuing process of measuring products, services, and practices against your strongest competitors. More simply stated, it means using the best companies as the yardstick against which your company measures itself. If your company comes up short, than improvements must be made to ensure that your products are just as high in quality as those of your competitor.

There are two types of benchmarking. The first, competitive benchmarking, entails benchmarking against direct competitors in the marketplace. This can include comparing specific numerical or statistical measurements--return on assets used, market share, etc. The more detailed information that can be obtained about a competitor, the better.

The second method, noncompetitive benchmarking, can take two forms. The first is measuring your company against the best companies in the world, regardless of industry. Companies such as 3M, Coca-Cola, and General Electric are considered to be trendsetters and leaders in quality, so companies from nearly every industry study them and copy their best practices. Business analysts note that noncompetitive benchmarking is a broader--and sometimes more useful--instrument of quality control. By only benchmarking against competitors, a company only ensures it will be as good as that competitor. By benchmarking against the best companies in the world, a company can aspire to be as good as those companies and can surpass the competition in its own industry. Additionally, companies may find it easier to gain access to information about companies they do not compete with because they are not seen as a threat to the well-being of the company.

The second type of noncompetitive benchmarking is internal benchmarking, which involves comparing functions or processes in different departments within the same organization. Internal benchmarking is often seen as a logical starting point for a business