Benchmarking is: understanding, purpose, and benefits of benchmarking

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Benchmarking is understanding purpose and benefits of benchmarking

Benchmarking is: understanding, purpose, and benefits of benchmarking

Most of us may have many who don’t understand what it is benchmarking when you hear or read it. In fact, benchmarking is one of the important knowledge to know in the field of management science.

For this reason, on this occasion we will discuss completely around benchmarking, such as its understanding in management science, various types of benchmarking in a company, phase and process in conducting benchmarking, as well as the benefits of benchmarking in the company. For that, read on the article about this benchmarking until it’s finished.

Benchmarking is

Basically, benchmarking is the word uptake from English. Reporting from the Cambridge dictionary, benchmarking has meaning as a benchmark or measuring instrument. Based on the root he said, it can be concluded that benchmarking is a benchmark or benchmark used to assess or compare certain things.

Meanwhile, the general understanding of benchmarking is a standard or benchmark that is used to compare between one thing with other similar things. Simply put, using the benchmark, then various things will be measured by common standard.

Whereas in the field of management science, the definition of benchmarking is an effort to measure policies in a company, products, strategies, programs, and other things by comparing it with other competitors engaged in the same field, so they can get information about how and any part must be evaluated in an effort to improve the company’s performance.

That means, benchmarking is a very systematic way or an effort to assess the performance, product or company process by comparing it with services, processes, or products from other competitors that are considered better than the company.

So, the most important goal of conducting benchmarking is to increase the value of more companies by improving business performance, increasing productivity, improving product quality and service, and other things by using performance from other competitors that are considered better.

Benchmarking types

At present, benchmarking can be divided into two main types, namely benchmarking based on the object and benchmarking based on the subject. This is the full explanation:

1. benchmarking based on the subject

Internal benchmarking.

Internal or internal benchmarking benchmarking is an activity comparing the same activities or processes in a cooperative. Usually, this activity is carried out on companies that already have subsidiaries or branches so that each company in it has the same standardization as the parent company.

Excheral benchmarking.

External or external benchmarking benchmarking is a benchmarking activity that is done by comparing his company with other companies engaged in similar industrial fields. In the type of external benchmarking it is divided into two, namely:

1. Competitive benchmarking.

Competitive benchmarking is a company that compares the company with other competitors or companies that are considered the main competitors.

2. Non-competitive benchmarking

Non-competitive benchmarking is a company that compares the company with other companies, but in different industrial fields. This type of non-competitive benchmarking is also divided into two, namely:

  • Functional non-competitive benchmarking, is an activity comparing the same functions of different companies in various fields of industry
  • Generic non-competitive benchmarking, is the activity of comparing the fundamental business processes that are assessed at each company.
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2. benchmarking based on the object

Based on the object, benchmarking is divided into five types, namely:

1. Strategic Benchmarking.

Strategic Benchmarking is an observation effort on how other companies are able to superior to other competitors in the same field.

2. Process benchmarking.

Process benchmarking is an attempt to observe and also compare various operational activities or operational systems in a company, such as payment systems, customer service, and labor recruitment.

3. Functional benchmarking.

Functional benchmarking is a process in observing and comparing work functionality in competitors in the same industrial field in order to be able to improve work functionality to its company.

4. Performance benchmarking.

Performance benchmarking is an activity of observing and comparing the product performance of goods or services from other competitors, such as prices, product features, technical quality, etc.

5. Product benchmarking.

Product benchmarking is an activity of observing and comparing products from its company with products from other competitors to be able to obtain information related to the strengths and weaknesses of competitor products.

6. Financial benchmarking.

Financial benchmarking is an activity of observing and comparing financial conditions from other companies to get information about competitiveness competitiveness.

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Steps in conducting benchmarking

The first thing you have to do is choose a product, service or department within your company to be used as a benchmark. Second, determine the scale of the business where you have to do a comparison, or in which organization you want to compare your business.

Third, Gimpunlah all information regarding your competitor’s internal performance. Fourth, do data comparison between your company with a competitor company to be able to get information about the gap that is in your company’s performance. Finally, apply all processes and policies carried out by competitors that you value the best value.

After you do a series of steps above, then later benchmarking will show the most significant change. However, the choice is in yourself, want to apply it or not.

The benefits of doing benchmarking.

By conducting benchmarking, there are at least six major benefits that your company can feel, namely:

1. Competitive analysis

By comparing the current company performance with other competitors’ performance, then your company will be able to identify which part you have to improve or repair it. In addition, your company will also get a very strategic benefit of your competitors, and be able to increase the average development of your company.

2. Monitor Performance

You will be able to get the current trend by doing benchmarking activities. So, it will enable your company to apply the trend and get maximum results. For this reason, this benchmarking activity needs to be done regularly to be able to monitor the company’s success in achieving its objectives.

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3. Periodic improvement

In addition, by conducting benchmarking you will also be able to improve business performance sustainably. This is already done from time to time.

4. Planning and Target Determination

After you succeed in conducting benchmarking, your company will be able to determine the purpose and metrics of performance to improve the company’s performance. Later, the target will be a more competitive target, but the company still has to set a realistic target.

5. Increase the sense of ownership

This benchmarking activity must be done by involving every employee in order to obtain all the answers needed. By listening to employee opinions, your company will get a good understanding regarding the role of each individual, so that it will increase the sense of owning within the employee.

Later, pride will arise from employees because their work can have a better impact on the company.

6. Understand the company’s advantages

Benchmarking activities can help identify the position of a company in an industrial field. For that, if you want to increase any field in your business, then benchmarking is one effective way to learn how other competitors can be superior and more successful.

Various obstacles in conducting benchmarking

1. Internal focus

Companies that are too focused on their internal companies tend to ignore the fact that the best process is a process that can produce a much higher efficiency value, so that the vision of the company will be more narrowed.

2. The purpose of benchmarking is too broad

Benchmarking activities require more detailed and specific purposes, and more process oriented, not the result.

3. Unrealistic schedule

Benchmarking activities require high patience, because the engagement process requires more time. However, the schedule carried out too long is also not good, because it shows something wrong in terms of implementation.

4. The composition of the team is not right

There is a need for involvement in everyone who is related and runs various company operational processes in conducting benchmarking.

Conclusion

Based on the explanation above, we can conclude that benchmarking is an activity carried out to assess, measure, and compare the performance carried out by individuals, work units, departments, or certain organizations.

Generally, the purpose of benchmarking is to provide information on organizations related to the current product or performance. So, companies can evaluate and find the most appropriate way to improve the performance or product quality.

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