The process of benchmarking has been quite useful for organizations in the past few years. It can be defined as a procedure to compare your business performance against various industry-relevant reference factors. This is a very powerful way for self-assessment that can lead to better performance in the coming times. Connect with some of the leading benchmarking service providers to understand more about it. Let’s have a look at the different types of benchmarking that can improve your business performance in the future.
What is the Major Difference between Benchmark and KPI?
Do you think that benchmarking and KPI are the same? Actually, both terms are completely different.
- Benchmarks are basically the reference points like products, operations, or processes that are used to compare against the competitors or industry’s best practices. Benchmarking is generally used to compare quality, consumer satisfaction, and costs.
- KPIs are the monitoring and decision-making tools that are used to calculate the performance of an organization as compared to the organizational goals. KPIs keep a check whether the team, project, department, or organization is on the right path to attain organizational objectives or not. You can also consider them as a warning signal, flagging up the situations that might require corrective actions.
What are the Different Types of Benchmarking?
Benchmarking can be broadly divided into internal and external categories. Internal benchmarking is done to analyze the practices and performances of your business unit to another company’s same business unit. External benchmarking is used to compare business performance with other companies or through different industries.
- Process Benchmarking – Process benchmarking is all about understanding your current standing in terms of processes and performance as compared to your competitors. The data for comparison is collected through interviews, surveys, and market research.
- Product Benchmarking – This is one of the best benchmarking tools so far. In this an organization analyses the product of the competitor to understand its production process and components. They then release a better product within some time in the market.
- Strategic Benchmarking – This type of benchmarking compares business strategies, business models, and business approaches with an aim to strengthen your company’s strategic planning and set business priorities. The main idea is to understand the strategies of successful companies.
- Performance Benchmarking – This method involves analyzing your company’s performance in terms of outcomes and comparing them with a competitor’s outcomes. This can also be on a functional basis like HR, Finance, and Marketing.
- Global Benchmarking – Global benchmarking is an innovative way to analyze your current standing in the international market. In this, the comparison is done with the competitors in international markets.
These are the different types of benchmarking techniques that can help a company get a reality check on its performance and standing in the market. Companies should use the analysis to improve their products, processes, and performance in the coming time. However, benchmarking is not a magical tool. You need to strategize smartly in order to gain maximum benefit from this analysis. You must always rely on reputed benchmarking service providers for the best results.
