Knowledge Center


Internal, competitive, functional, generic and collaborative benchmarking. Explanation of Benchmarking.



Benchmarking exampleBenchmarking is a systematic tool that allows a company to determine whether its performance of organizational processes and activities represent the best practices. Benchmarking models are useful to determining how well a business unit, division, organization or corporation is performing compared with other similar organizations. A benchmark is a point of reference for a measurement. The term 'benchmark' presumably originates from the practice of making dimensional height measurements of an object on a workbench using a gradual scale or similar tool, and using the surface of the workbench as the origin for the measurements.

Business benchmarking is related to Kaizen and competitive advantage thinking.


use of Benchmarking. Benefits

  • Improving communication
  • Professionalizing the organization / processes, or for
  • Budgetary reasons
  • In outsourcing projects

Traditionally, performance measures are compared with previous measures from the same organization at different times. Although this can be a good indication of the speed of improvement within the organization, it could be that although the organization is improving, the competition is improving faster...

Five types of Benchmarking

  1. Internal benchmarking (benchmark within a corporation, for example between business units)
  2. Competitive benchmarking (benchmark performance or processes with competitors)
  3. Functional benchmarking (benchmark similar processes within an industry)
  4. Generic benchmarking (comparing operations between unrelated industries)
  5. Collaborative benchmarking (carried out collaboratively by groups of companies (e.g. subsidiaries of a multinational in different countries or an industry organization).

Typical steps in a benchmarking process

  • Scope definition
  • Choose benchmark partner(s)
  • Determine measurement methods, units, indicators and data collection method
  • Data collection
  • Analysis of the discrepancies
  • Present the results and discuss implications / improvement areas and goals
  • Make improvement plans or new procedures
  • Monitor progress and plan ongoing benchmark.

Cost of benchmarking

There are costs to benchmarking, although many companies find that it pays for itself. The three main types of costs are:

  • Visit costs - This includes hotel rooms, travel costs, meals, a token gift, and lost labour time.
  • Time costs - Members of the benchmarking team will be investing time in researching problems, finding exceptional companies to study, visits, and implementation. This will take them away from their regular tasks for part of each day so additional staff might be required.
  • Benchmarking database costs - Organizations that institutionalize benchmarking into their daily procedures find it is useful to create and maintain a database of best practices and the companies associated with each best practice.

Limitations of benchmarking

  • Benchmarking is a tough process that needs a lot of commitment to succeed.
  • Time-consuming and expensive.
  • More than once benchmarking projects end with the 'they are different from us' syndrome or competitive sensitivity prevents the free flow of information that is necessary.
  • Comparing performances and processes with 'best in class' is important and should ideally be done on a continuous basis (the competition is improving its processes also...).
  • Is the success of the target company really attributable to the practice that is benchmarked? Are the companies comparable in strategy, size, model, culture?
  • What are the downsides of adopting a practice?

Book: Christopher E. Bogan, Michael J. English - Benchmarking for Best Practices -

Book: Peter Bolstorff, Robert Rosenbaum - Supply Chain Excellence -

Book: Joe Zhu - Quantitative Models for Performance Evaluation and Benchmarking -

Benchmarking Forum
  Benchmarking Graphics
Performing a benchmark basically means comparing y...
  Benchmarking Approaches
Processing a benchmark often means investing a lot...
  Upgrade to ISO9001:2015 from ISO9001:2008
I own a ISO 9001:2008 company and want to upgrade ...
  Benchmarking Websites
In the past I had access to PwC's globalbestpracti...
  Benchmarking Notes of Caution
1. Be sure apples are being benchmarked with apple...
  Hospital Benchmarking
If anyone have review of hospital medical record s...
  Benchmarking for Monopolies?
Reading through the article and the reactions I wo...
  Conditions for Successful Benchmarking
Benchmarking is OBTAINED from the observation of o...
  Benchmarking is One Source of Progress
Benchmarking seems to be one source of progress, i...
  Airlines Benchmarking
If anybody has review of airlines organization ben...
  What is Benchlearning?
Do you have any information about "benchlearning"?...
  IT Process Cycle Efficiency Benchmark
Does any one have an idea for the benchmark 'Pr...
  Benchmarking Benefits
From my experience and study, I found additional t...
  Benchmark in Value Chain Analysis
Benchmarking is a framework based on recommendatio...
  The Role of Benchmarking in Production vs. Quality
I'm in charge of both production and quality in my...
  Benchmarking in Sailing
I'm trying to do benchmarking in sailing, it's the...
  Benchmarking is a Reference Point
The way I see it, benchmarking is a reference poin...
  How should I put together a Peer Group?
How do I determine the right companies to compose ...
  Benchmarking in Community service
I would like to know how best benchmarking can be ...

Benchmarking Special Interest Group

Special Interest Group

Benchmarking Education & Events

Find Trainings, Seminars and Events

Best Practices - Benchmarking Premium
  Best Practices or Next Practices?
C.K. Prahalad says best practices take companie...

Expert Tips - Benchmarking Premium

Top 20 Benchmarking MistakesSign up

Below follows a list that I assembled of the most ...
Usage (application): Checklist of Things to Avoid

How to Avoid Subjectivity in BenchmarkingSign up

The issue about best practices is that they're sub...
Usage (application): How to Correct for Environmental Factors

3 Crucial Elements for BenchmarkingSign up

Benchmarking is a continuous, systematic process f...
Usage (application): Things to Remember when Planning Benchmarking

Avoiding Cognitive Biases During BenchmarkingSign up

To discover correctly what makes a business succes...
Usage (application): Benchmarking Best Practice

How to Select the Benchmarking TeamSign up

One of the most important elements in the preparat...
Usage (application): Benchmarking Implementation

The Benchmarking Applications and CategoriesSign up

You can benchmark any function or character...
Usage (application): What can be Benchmarked?

Avoiding Cognitive Biases During BenchmarkingSign up

During World War 2 the statistician A. Wald was as...
Usage (application): Classical Example

Resources - Benchmarking Premium

What is Benchmarking?Sign up

In this video (with Spanish subtitles) 5 questions...
Usage (application): Benchmarking

Benchmarking IntroductionSign up

Introduction into the concept of Benchmarking by L...
Usage (application): Explaining Benchmarking Approach and Process

News about Benchmarking MethodSign up


News about Benchmarking PerformanceSign up


Videos about Benchmarking MethodSign up


Videos about Benchmarking PerformanceSign up


Presentations about Benchmarking MethodSign up


Presentations about Benchmarking PerformanceSign up


Books about Benchmarking MethodSign up


Books about Benchmarking PerformanceSign up


More about Benchmarking MethodSign up


More about Benchmarking PerformanceSign up


Compare with: SWOT Analysis  |  Strategy Dynamics  |  Malcolm Baldrige Award  |  Game Theory  |  Industry Change  |  Outsourcing  |  CSFs and KPIs  |  Operations Research  |  Relationship Marketing  |  Value Engineering

Return to Management Hub: Decision-making & Valuation  |  Finance & Investing  |  Human Resources  |  Marketing  |  Strategy  |  Supply Chain & Quality

More Management Methods, Models and Theory

Special Interest Group Leader
Tonnis van Dam
Business Consultant

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2018 12manage - The Executive Fast Track. V14.1 - Last updated: 20-9-2018. All names ™ of their owners.