Benchmarking occurs when one firm compares itself with another one either within the industry or in broader perspective in terms of processes or operations. In most business context, benchmarking processes can be applied against any given process, product, business approach or function within or outside an organization. Organization often establishe benchmarking initiatives with the aim of measuring time, cost, quality, customer satisfaction and effectiveness. Organizations might do internal or external benchmarking. Internal benchmarking originates from the internal perspective that a process, a function or a product can be improved. Here, organizations collect their own data at various points in time to identify gaps as well as areas for strengthening. External benchmarking on the other hand, compares a firm’s processes and operations with other external firms and establish areas of improvement especially if the other firm is operating just fine (Rolstadås, 2013). If the two firms are in the same industry, the one that is doing benchmarking will use the report from the other firm to identify areas of improvement.
I have once experienced external benchmarking. Here, I was doing my internship and in one time the ICT department was not doing well. The systems were slow customers waited for long in queues and the firm’s reputation was beginning to get damaged. For that reason, the firm was concerned and identified the ICT department as the focus area. Another firm that was about 20 miles from where I worked was doing well and their ICT department ensured faster services. Our organization decided to do an external benchmarking to that other firm. After benchmarking, our company’s ICT officers obtained useful report that was crucial to improving the operations at our ICT department. Our firm identified that the use of mobile broadband resulted in slower internet connections. The other firm was using fiber optic internet connections. Our firm was able to improve after transforming from using mobile broadband to fiber optic as a result of the external benchmarking.
Rolstadås, A. (Ed.). (2013). Benchmarking—theory and practice. Springer.