Benchmarking - Sources of information

From CEOpedia | Management online

Rhe following types of Benchmarking can be distinguished: internal (where standards for comparison are based on the same company, external (also known as competitive, in which solutions used by the enterprise with the same industry, functional (as a comparison of selected companies in completely different industries, non-competitors).

Sources of information

For full use of benchmarking methods to improve organization, it is necessary to use a wide range of sources and methods of gathering information. List of sources of information are presented in the following table.

Tab.1. Methods and sources of information for benchmarking

Stage type of benchmarking
Internal external and functional
Identification of the benchmarking subject
  • Opinions of employees
  • Meetings
  • Polling
  • Internal reports
  • Analysis of the documentation,
  • Direct observation and analysis of processes,
  • Analysis of different types of indicators, such as the frequency of complaints, warranty claims, the number of repairs, etc.,
  • Consultation with retailers
  • Opinions of experts from outside the company,
  • Publications.
The search for model processes
  • Opinions of employees,
  • Direct observation and analysis of processes,
  • Polling
  • Internal reports
  • Analysis of the documentation,
  • Internal reports
  • Benchmarking associations
  • Commercially available database,
  • Professional associations
  • Fairs and exhibitions,
  • Chambers of commerce,
  • Opinions of employees,
  • Brainstorming,
  • Specialized publications,
  • Business intelligence institutions,
  • Consulting companies
  • Materials of scientific conferences,
  • Personal contacts with potential partners,
  • Own database
  • Advertising.
Gathering of information characterizing the standard processes
  • Direct observation and analysis of processes,
  • Meetings
  • Network diagram flows,
  • Internal reports
  • Analysis of the documentation,
  • Internal publications,
  • Opinions of employees
  • Carry out direct observations during visits,
  • Interviews conducted with employees of other company,
  • Analysis of shared documentation
  • Polling,
  • Conferences with members of other company,
  • Polling of customers of other company,
  • Internal publications
  • Available literature.

Examples of Benchmarking - Sources of information

  • Internal Benchmarking: Internal benchmarking is a process by which organizations compare their internal functions, processes and practices with those of other departments within their own company. For example, a company may compare the performance of its sales team with other sales teams within its organization to identify areas of improvement.
  • External Benchmarking: External benchmarking involves comparing a company with its competitors in the same industry. For example, a company may compare its pricing methods, product offerings, customer service levels and other operational processes with those of its competitors.
  • Functional Benchmarking: Functional benchmarking involves comparing a company's operations with those of different companies, even if they operate in different industries. For example, a company may learn best practices in customer service from a retail company, and then apply these practices to its own operations.
  • Non-Competitive Benchmarking: Non-competitive benchmarking involves comparing a company's performance with organizations that are not direct competitors. For example, a company may compare its operations with those of a company in a different industry that has achieved success in a certain area.

Advantages of Benchmarking - Sources of information

Benchmarking is a useful management tool that can provide organizations with valuable insights and improvement opportunities. Here are some advantages of benchmarking:

  • It allows organizations to compare their performance against other companies in the same industry or in different industries in order to identify best practices and areas for improvement.
  • It allows organizations to identify gaps between their performance and the performance of their competitors and determine how to close those gaps.
  • It helps organizations identify new products, services and processes that they can use to improve their own performance.
  • It provides an objective way to measure performance and helps to ensure that goals and objectives are being met.
  • It helps to identify areas in which the organization needs to make improvements and identify potential solutions.
  • It allows organizations to stay abreast of the latest industry trends and develop strategies to remain competitive.
  • It helps organizations to identify potential strategic partners, customers and suppliers.

Limitations of Benchmarking - Sources of information

Benchmarking, while a useful tool for identifying areas for improvement, is not without its limitations. The following are some of the sources of information available to companies when conducting benchmarking:

  • Internal sources - Benchmarking requires the use of existing data within the company. As such, if the company does not have reliable data or lacks the skills to use it effectively, the accuracy of the benchmarking process may be compromised.
  • External sources - While external sources of data can provide useful insights, the company may not have access to the same level of detail as its competitors. Additionally, the cost of obtaining such data can be prohibitive.
  • Time constraints - Benchmarking requires a significant amount of time and resources to be effective, and if the process is rushed, the results may be inaccurate.
  • Quality of data - Benchmarking relies on the quality of data for accuracy. If the data is not up-to-date, or does not accurately reflect the company’s performance, the benchmarking process may be compromised.
  • Comparability - It is important to ensure that the data being used for benchmarking is comparable across different companies or industries. If the data is not comparable, the benchmarking process may not provide accurate results.

Other approaches related to Benchmarking - Sources of information

In addition to the above types of benchmarking, there are several other approaches to benchmarking that can be used to obtain useful information and insights. These include:

  • Process benchmarking: This involves comparing processes and practices within and outside the company, and identifying areas of improvement. The focus is on understanding the differences between the processes, and identifying what works best.
  • Industry benchmarking: This approach involves comparing the performance of various companies in the same industry in order to identify best practices and areas of improvement.
  • Performance benchmarking: This approach compares performance across different industries, to identify areas of improvement.
  • Quality benchmarking: This involves comparing the quality of products and services across different companies, and identifying best practices.

Overall, benchmarking is an important tool for businesses to identify areas of improvement, and to identify best practices from other companies and industries. By using benchmarking, businesses can gain insights into what works, and what doesn't, and can use this information to enhance their own performance.

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Author: Krzysztof Wozniak