Benchmarking is the process of measuring a company’s performance and services against other comparable businesses. Companies often benchmark against direct competitors to identify areas of strength and opportunities for improvement. These findings can help businesses improve workflows, invest in process enhancements or cut costs.
Companies may also choose to benchmark against entities outside of their industry. Examining the practices of businesses outside of one’s own field can help identify new approaches to problems that might not ordinarily be considered.
Benchmarking is typically most effective when evaluating measurable attributes. Common examples of benchmarks include speed of customer order fulfillment, cost of producing a product and customer satisfaction.