Benchmarking is the process of comparing your business processes and performance metrics to industry standards. Benchmarking assists in helping set meaningful targets, gaining insight on trends across industries, determining what improvements are needed, and helping to enhance overall performance.
On its basic level, benchmarking puts business performance into perspective. In a management context, businesses use benchmarking to identify the areas that are being underperformed or over-performed. With benchmarking, organizations are better prepared to make data-based decisions about improvement initiatives, while simultaneously revealing those success stories that can form the basis of future campaigns. Benchmarking compares how cost, time, and quality are used between different organizations. The result is often a business case for making changes to lead to greater improvements.
The widely accepted benchmarking process, developed by Robert Camp, who wrote one of the earlier books on benchmarking, consists of a 12-step approach:
I. Select the subject
II. Define the process
III. Identify the potential partners
IV. Identify the data sources
V. Collect the data and select the partners
VI. Determine the gap
VII. Establish process differences
VIII. Target future performance
X. Adjust the goal
XII. Review and recalibrate