ABOUT BENCHMARKING
Benchmarking can be defined as a process for improving performance by constantly identifying,
understanding and adapting best practices and processes followed inside and outside the company
and implementing the results. The main emphasis of benchmarking is on improving a given
business operation or a process by exploiting 'best practices,' not on 'best performance.'
Simply put, benchmarking means comparing one's organization or a part of it with that of the other
companies. Companies can adopt one or more of the following types of benchmarking
Strategic Benchmarking: Aimed at improving a company's overall performance by
studying the long-term strategies and approaches that helped the 'best practice' companies
to succeed. It involves examining the core competencies, product/service development and
innovation strategies of such companies.
Competitive Benchmarking or Performance Benchmarking: Used by companies to
compare their positions with respect to the performance characteristics of their key
products and services. Competitive benchmarking involves companies from the same
sector.
Process Benchmarking: Used by companies to improve specific key processes and
operations with the help of best practice organizations involved in performing similar work
or offering similar services.
Functional Benchmarking or Generic Benchmarking: Used by companies to improve
their processes or activities by benchmarking with other companies from different business
sectors or areas of activity but involved in similar functions or work processes.
Internal Benchmarking: This involves benchmarking against its own units or branches for
instance, business units of the company situated at different locations. This allows easy
access to information, even sensitive data, and also takes less time and resources than
other types of benchmarking.
External Benchmarking: Used by companies to seek the help of organizations that
succeeded on account of their practices. This kind of benchmarking provides an opportunity
to learn from high-end performers.
International Benchmarking: Involves benchmarking against companies outside the
country, as there are very few suitable benchmarking partners within the country.