Benchmarking

We explain what benchmarking is in quality control and what its objectives are. In addition, we tell you what the steps are to do it.

What is the benchmarking?

He benchmarking It is a technique for measuring and comparing company performance which consists of finding and comparing certain variables, indicators and coefficients (called benchmarks in English) that are representative of the quality of the competition's performance, and try to emulate or adopt them within an organization, to learn from the success of others.

The origin of the term benchmarking (always written in italics, since it is an Anglicism) dates back to the Anglo-Saxon topographers and surveyors of the 19th century, who made marks on stone to indicate the levels of the land and in each of them they located an angular iron, as bank (“bench” in English), to position a leveling bar and ensure that the measurement was correct.

This practice was taken as a metaphor for business comparison in quality control, starting in the 1960s, when the first successful organizations dedicated to quality management emerged in the United States. The popularization of the term took place almost 20 years later, largely thanks to its adoption by the Xerox company, and since then it has been used in different contexts, such as in the public sector and in others outside the organizational world.

In summary, the benchmarking It is a method of continuous improvement of organizations, which proposes the search and incorporation of existing good practices outside or even inside the company especially in what has to do with processes and methodologies.

See also: Business management

Objectives of benchmarking

The purpose of benchmarking is to identify the company's improvement patterns, based on a specialized measurement and comparison with other companies or sectors. More simply put, its purpose is Compare the organization's processes and functions with those that have been successful in other companies to offer greater and more detailed insight into the positive changes and innovations that could be made.

It is a technique that provides the necessary guidance to organizations to know in what or in what way to change which is essential to adapt to competitive markets.

Importance of benchmarking

He benchmarking It is an innovative and useful technique not so much for the comparison it proposes, but for measuring the impact that these comparisons can have on the behavior of organizations.

It is an ideal method to track, formulate and copy (all within the law, naturally) the successes of other companies whether they are competitors or even from another productive branch. This allows the relocation and often release of resources within the company, to move towards more efficient models and seek new sources of competitiveness.

Types of benchmarking

Essentially, the benchmarking could be:

• Benchmarking functional. It focuses on the comparison and improvement of specific processes within the company, locating the best possible practices, operations and functions.
• Benchmarking competitive. It focuses on the comparison of the company's general and specific indicators with those of the leading organizations in its sector, as a study of the competition.
• Benchmarking internal. It focuses on the internal aspects of the organization, with a view to identifying and replicating good practices relevant to one area, to allocate them to other areas or to different business units of the company.

Steps to do benchmarking

According to the American Robert C. Camp (1935-), responsible for the processes of benchmarking of Xerox, all process of benchmarking must be done according to the following steps:

• Planning and data collection. It is the initial phase that consists of planning the study of benchmarkingfor which it is essential to identify what aspect of the organization will be studied (what, who and how) and what is the product of the business function. The company's processes must be documented and its performance evaluation systems verified, to, from all this, identify comparable companies, depending on the type of benchmarking to which one aspires. Once this is determined, you can proceed to choose a data collection method and a set of available sources.
• Data analysis. It consists of the study of what was collected in the previous step, to determine the current performance gap: the distance between the desired goal and the present situation. This procedure must occur alongside a careful understanding of the company's processes.
• Goal setting. It consists of planning the path and effectively communicating the objectives to be achieved to the different areas of the company involved. The latter is key, since it will take your cooperation, commitment and support to make the changes.
• Establishing functional goals. It consists of the translation of the findings of the benchmarking into functional and applicable goals, that is, concrete changes in methods and practices, which can then be carried out, hand in hand with periodic and controlled measurement that allows an evaluation of achievement.
• Supervision of the process and recalibration of the benchmarks. It consists of preparing management reports that reflect the success of the process and allow updating the benchmarks initials regarding the changing market. In this way, the process of updating and continuous improvement can be institutionalized and guarantee the maturity of the organization within its specific field.

Examples of benchmarking

Below are two simple examples of application of the benchmarking:

• First example. An appliance store realizes that its competitor, despite being in a worse geographical location, is taking over the area's audience. Management decides to apply a process of benchmarking to evaluate public preference, and invest in a set of surveys to determine the most attractive areas of the competing business, which turn out to be: 1) product presentation, 2) modern payment methods and 3) credit plans offered. These indicators were broken down and transformed into short-term objectives.

These three indicators are then compared with those produced by the initial store and a marketing specialist is hired to redesign the windows, print new promotional material and plan the relaunch of the store. In addition, investment is being made in the modernization of collection devices and new installment credit plans are being negotiated with a local bank. In this way, the relaunch of the store is successful and its sales exceed previous margins, given that it also has a better location than the competition.

• Second example. A local publisher begins to lose sales massively to a newly arrived transnational company. Although their audience is loyal and constant, sales tend to decline, so they make a benchmarking focused on the product, and determine that: 1) competing books have better and more attractive designs; and 2) competing books use cheaper paper and therefore cost less, although they are less durable. These indicators are transformed into medium-term goals for change.

Then, the publisher decides to invest in new designs, realizing that its books are outdated for the new sensibilities of the young public. They relaunch collections, redesign covers and, preserving the traditional quality of their products, invest in a pocket collection with economical paper. Thus, they manage to attract both the young and traditional audiences, and their sales once again recover volume.

Continue with: Strategic, instrumental and control actions

References

• “Benchmarking” on Wikipedia.
• “Benchmarking: what it is and how to apply it to your industry” at IEBS Business School.
• “What is benchmarking” in the Aula CM Online Marketing Dictionary.
• “Benchmarking (government)” in The Encyclopaedia Britannica.