By definition, benchmarking is basically a tool that business uses, where they compare their own performance, product, services, strategies with that of their competitors. In general, it is a very effective tool because when you start comparing yourself with your competitors, you will be able to understand, in only a matter of time, where your business stands. An abrupt thought would suggest something like “Just compare yourself and wherever you are weak, start working on that area”
So far we have had a very raw view of Benchmarking, let us now move towards a more professional and practical way of achieving benchmarking and benefitting from it. Truth be told, in this time period of extensive competition, comparisons is not really easy. First off, when you want to compare yourself with another business, we need to see what things are we actually comparing. An easy and obvious one would be product; besides that, a business also needs to compare the motivation and treatment of its employees versus that of its competitors, value given to the product (as in, when the product is going through production stage, how much effort is put to develop it, keep it in good shape and how carefully it is treated in order to make sure it is in best shape when delivered to the customer), ethical approaches, relationship and channeling with suppliers, environment and conditions of factories/working areas etcetera, on and on. The list could be very long, however, the problem is, that we do not have information to all those things. In fact, to most of the things, we do not really have information. Sometimes we could go on about making assumptions, but assumption can ever be so true. One good piece of information that we can access is their financial position, which we can get from stock markets. Again, In the real world, even this will have some problems. Business are very sharp when it comes to presenting their financial data, sometimes it can have slightly inaccurate information, but most times the presentation is tricky. In any case, the overall idea can be quiet close to reality. So 2 things that you can immediately know about a business is their financial strength and the work on product. Another thing that could be compared is the supplier, although it may require a little bit of effort. Furthermore, a customer in disguise, could be used to understand their ethical approaches and customer servicing capabilities.
Once you have collected information, the idea is not just to start pushing the business to achieving those. In fact, the business needs to carefully analyze which of the following can be achieved without sacrificing the financial and human resource related requirements of other departments of the business. So the idea here to try to get to as many benchmarks as possible, without messing up the flow of operations, the management of finances and creating additional costs are unbearable. Even above all of this, is that the business should make sure that it is not losing its identity in the pursuit. Sometimes, the idea of achieving a benchmark can be deceiving and businesses start to lose their true self and start pursuing the career of a competitor. Surely, being strong in competition is severely important, that can be agreed upon a thousand times over, but keeping the true objective of the business in mind, is just as important.
So the overall conclusion that can be derived from the theory of benchmarking is understanding the position of your business against competitors and work on all the suitable areas where your business is weak. Just clearly understanding where your business excels, versus where the competitor’s businesses excel can help in making smarter decisions.