Competitive benchmarking is a direct competitor-to-competitor comparison of a product, service, process, or method. Functional benchmarking is a comparison to similar or identical practices within the same or similar functions outside the immediate industry.
Step 1-Determine processes to be benchmarked This step involves defining as accurately as possible the process to be benchmarked. It is the cornerstone of the entire benchmarking process. An incorrect identification at this stage could result in a waste of precious resources at later stages.
Step 2: Deciding the Benchmarking Organization (Whom to Benchmark) – The next step in the process is to decide the organization whose processes will serve as the benchmark. Obviously some companies, such as direct competitors, will not be available as places to gather certain types of benchmark data.
Step 3. Gather data. The third step involves creating a plan for collecting data from selected targets, conducting site visits, and creating a site visit report. Upon finishing step 3, our organization will have complete, accurate and relevant data with which to compare its own processes with “the best of the best.” Step 4. Analyze for gaps.
Step 5-Determine future trends During this step, your team will examine your organization's past performance in relation to its competitors, forecast potential change in your industry and project future performance, both with and without the proposed benchmarking changes.