Benchmarking is a process used by companies that want to compare and improve their performance. Rather than just comparing data from your own business to others in the same sector, the statistics can be used to improve processes and ultimately, improve profits. Identifying areas which need improvement can reduce losses, or maybe change the work processes so that you increase productivity levels. Ultimately, benchmarking has many advantages for your business.
The main advantages
One of the main benefits of benchmarking, if carried out correctly, is to outperform your main competitors. Once you have learned how competitors work and their best practices, you can adopt those methods in your own company, perhaps even improving them.
Involving others in the company in the benchmarking practice will help them to realise that they can perform various duties in a different way, making improvements as they change processes. For many companies, this is introduced as a continuous improvement strategy, which employees can become involved in, leading to improved employee engagement.
The reduction of waste during a benchmarking exercise will improve the company’s profits and cash flow, which has long term benefits for the company.
Customer satisfaction is the ultimate goal for most companies, and benchmarking helps to improve the customer experience. By improving processes, you will find that the quality of a product will benefit and so too will the customer’s satisfaction.
When a benchmarking process and a continuous programme of improvement are in place, you will discover that any problems or deficiencies in the company’s processes will become apparent immediately. A management accounting service will generally have a benchmarking system in place to monitor all departments. With continuous operation, benchmarking becomes second nature, so everyone in the company is continuously looking for improvements in the practices and processes of a business.
Gaining experience and duplication
Rather than starting from scratch to identify areas of weakness in the business, benchmarking will use the information from other companies so that you can easily identify efficient procedures and working methods. Once this has been done in one area, it is relatively simple to duplicate the process across the company.
Setting targets
Although benchmarking encourages you to aim for improvement, make sure that objectives are achievable. If members of the company can identify improvements, they will gradually become more enthusiastic and be eager to search for areas of improvement.
Benchmarking is a complex process. If you would like to discuss the benefits of benchmarking, please contact us to hold an informal chat.