Benchmarking
What is benchmarking?
Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. It involves measuring various dimensions such as quality, time, and cost to evaluate and improve organizational performance1.
Key takeaways
Benchmarking compares a company's processes and metrics against industry leaders.
It helps identify areas for improvement and best practices.
Benchmarking can be internal, competitive, functional, or generic.
The process involves identifying components, analysing data, setting goals, and implementing changes.
Why is benchmarking important?
- Benchmarking compares a company's processes and metrics against industry leaders.
- It helps identify areas for improvement and best practices.
- Benchmarking can be internal, competitive, functional, or generic.
- The process involves identifying components, analysing data, setting goals, and implementing changes.
- It offers benefits like increased efficiency, clear goal setting, and enhanced product quality.
Benchmarking is a systematic process that allows organisations to:
- Identify performance gaps: By comparing their processes and results with those of leading companies, businesses can pinpoint areas where they lag.
- Set performance targets: Benchmarking provides a reference point for setting realistic and ambitious goals.
- Improve operational efficiency: Studying best practices helps optimise processes and reduce costs.
- Drive innovation: Learning from industry leaders can inspire new ideas and approaches.
- Enhance customer satisfaction: Understanding how top companies meet customer needs can lead to improved products and services.
The benchmarking process
Identify components to benchmark
Analyse the components
Define Key Performance Indicators (KPIs)
Formulate an action plan
Real-world examples
Case study: Apple Inc
In 2020, Apple's balance sheet revealed:
Total assets of $323.8 billion
A decrease in cash on hand
An increase in non-current assets
This benchmarking analysis helped Apple assess its financial position relative to industry standards and competitors, informing strategic decisions about resource allocation and investment.
Disclaimer: The information provided in this business glossary is for educational purposes only and should not be considered as financial advice. Always consult with qualified financial professionals before making investment decisions.
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Table of Contents
What is benchmarking?
Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. It involves measuring various dimensions such as quality, time, and cost to evaluate and improve organizational performance1.
Key takeaways
Benchmarking compares a company's processes and metrics against industry leaders.
It helps identify areas for improvement and best practices.
Benchmarking can be internal, competitive, functional, or generic.
The process involves identifying components, analysing data, setting goals, and implementing changes.
Why is benchmarking important?
- Benchmarking compares a company's processes and metrics against industry leaders.
- It helps identify areas for improvement and best practices.
- Benchmarking can be internal, competitive, functional, or generic.
- The process involves identifying components, analysing data, setting goals, and implementing changes.
- It offers benefits like increased efficiency, clear goal setting, and enhanced product quality.
Benchmarking is a systematic process that allows organisations to:
- Identify performance gaps: By comparing their processes and results with those of leading companies, businesses can pinpoint areas where they lag.
- Set performance targets: Benchmarking provides a reference point for setting realistic and ambitious goals.
- Improve operational efficiency: Studying best practices helps optimise processes and reduce costs.
- Drive innovation: Learning from industry leaders can inspire new ideas and approaches.
- Enhance customer satisfaction: Understanding how top companies meet customer needs can lead to improved products and services.
The benchmarking process
Identify components to benchmark
Analyse the components
Define Key Performance Indicators (KPIs)
Formulate an action plan
Real-world examples
Case study: Apple Inc
In 2020, Apple's balance sheet revealed:
Total assets of $323.8 billion
A decrease in cash on hand
An increase in non-current assets
This benchmarking analysis helped Apple assess its financial position relative to industry standards and competitors, informing strategic decisions about resource allocation and investment.
Disclaimer: The information provided in this business glossary is for educational purposes only and should not be considered as financial advice. Always consult with qualified financial professionals before making investment decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.