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Benchmarking: what is it about?

Popularized from the beginning of the 1980s by the large American company Xerox, benchmarketing is a practice now frequently used in a qualitative management approach: to draw the best from the practices of other companies on a given subject, while remaining lucid on the limits of these sources of inspiration, such as the issue of Benchmarking. A practice to handle with care for optimal results.

Benchmarking: The main principles

The story of Xerox is, in this regard, quite telling: faced with a problem of inventory management requiring heavy investment, the company then became interested in the practices of market-leading companies, then in the practices of companies in other areas. She thus discovered the virtuous methods of a company selling sporting goods by correspondence in terms of managing its order book.

Benchmarking, also called benchmarking or benchmarking, therefore consists of studying the practices of the best companies on the market, then analyzing and applying them reasonably. It takes an average of 4 to 6 months of study, analysis and application to consider the operation completed. It’s a fact, copying to the best students takes time and a lot of methods!

The 4 main types of benchmarking

We consider that there are four main families of benchmarking:

  • Internal benchmarking offers a comparison between different departments internal to the company;
  • Competitive benchmarking makes comparisons with the most direct competitors of the company;
  • Functional benchmarking makes it possible to compare two similar services within non-competing companies (and which will, therefore, be more willing to exchange their information);
  • Generic benchmarking offers a general comparison (working methods, practices, etc.) between two companies from different sectors. Again, non-competition allows for easier data exchange and rewarding communication.

Benchmarking: Methodology and limits

We generally go through 4 main steps and 10 sub-steps for setting up an effective benchmarking capable of bringing real changes within one or more departments of the company:

Planning:

  • Identification of the benchmarking subject (s)
  • Selection of benchmarking partners: those with whom the company will “compare”
  • Selection of means of information collection

Analysis:

  • Determination of the differences between his company and the benchmarking partners
  • Determination of the performance levels that can be expected to be achieved once the changes have been made

Integration:

  • Communication of analysis results
  • Setting goals

The action:

  • Development of an action plan
  • Implementation of the action plan and analysis of progress
  • Readjustment of the benchmarking according to the realities of the company

Different pitfalls are to be avoided when setting up a benchmarking, in particular related to the size of the company. Among other things, we will avoid making the whole company the subject of this benchmarking, and above all, considering it as a safe investment for better results. The best of benchmarking involves its share of risks, and certainly does not lead blindly: it is better to entrust the operation, either to a professional or to a person of his team have received solid training in the matter.

Finally, make sure that information sharing goes both ways, and therefore choose your benchmarking partner carefully. Otherwise, you will only have provided precious information to more or less competitive companies, without gaining anything, and even having lost money!

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DMT Web Hosting is too concerned about the health and safety of both clients and employees. Our office is closed due to countrywide lock down. You can reach us on +92 300 044 4656, +92 321 112 6660 during the lock down period. We appreciate your understanding and patience.