"There are lies, dammed lies, and statistics." No doubt you've heard it before, but the fact remains that in business, all of us need to know how to use numbers in a way that makes sense of all the information that we're exposed to on a daily basis. How can we do this? Read on for a quick understanding of the basics of benchmarking.
What is benchmarking? A good definition is that benchmarking is the process of measuring products, services, and practices against the toughest competitors or highest standards of quality. Another definition is "the search for and implementation of best practices. The adoption or adaptation of best practices allows an organization to raise the performance level of its products, services, and businesses processes to leadership levels." From this, you can see that a Benchmark is a measured, best-in-class achievement that is used as a reference or standard for comparison.
How is it used? We've already seen that it helps you identify best practices. But what do you do once the process is complete and you have the performance scores? When scores meet or exceed the benchmark (best practices score) in a particular area, you have a strong tool for your marketing department. It can help you identify waste as in cases where you use more resources (space, energy, materials, etc) in your business processes. And it helps show where you have performance gaps and areas for improvement.
How do you do it?
1. Make up a list of your organization's processes, procedures, products, and services.
2. Learn what best practices benchmarks are available for your industry. Sources for this are professional organizations you belong to, the Internet, technical/trade publications, and the library. Just be sure that this information is current and reliable.
3. Find out what the process was that these organizations used. How did they do it? What did they measure? How did they use the results? Can you replicate these processes in your benchmarking efforts?
4. Use the list from step 1 and this information to write a plan describing what you are going to measure and how you are going to do it.
5. Measure and compare your own performance against these best-in-class metrics.
6. Compare, analyze, and learn about performance gaps (and about places where you've exceeded the benchmark!).
7. Develop an action plan to correct deficiencies.
8. Implement the plan and monitor progress and success.
9. Repeat the entire process on a regular basis.
Time to go crunch some numbers!
Benchmarking definition is from Business Process Benchmarking: Finding and Implementing Best Practices, Camp, Robert C., 1995
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