Benchmarking is the process of determining how well a company’s products, services, and practices measure up against others. Benchmarking partners can be internal (against other company units), competitive (against competitors within the same industry), or functional (against “best in class” or “best in breed” within any industry). It is the highest level of performance that fully meets customer requirements.
Benchmarking enables a company to identify the performance gap between themselves and the benchmarking partner, and to determine a realistic improvement goal (some set higher goals) based on industry practices.
It helps achieve process improvement, measurement, motivation, and a management process for improvement. The use of benchmarking is not normally associated with cost cutting or a quick fix. Benchmarking should be integrated with an organization’s process improvement process.