What is Benchmarking?
We have already discussed some definitions of Benchmarking but at this juncture it is important to understand the basic concept of Benchmarking and its purpose. We have seen that in broader sense is comparison of performance. It can take various forms but usually it consists of giving scores to various aspects of product, service or process and then comparing these scores with the leader's scores. The scores are given against certain parameters or identified areas that need improvement (Harper, 2005).
Generally Benchmarking is a practical Management tool for improving performance through learning from best practices and the processes by that they are achieved. In brief, it is a way of learning and making the most of other people's experience and expertise and preventing the duplication of efforts, rather avoiding "reinventing the wheel". The purpose of Benchmarking is to help improve the effectiveness of procedure, product quality and delivery of services. In all it helps the organizations to keep themselves on a pedestal and compare themselves along with their competitors in turn helping them to improve. As a result the organizations could be more creative and innovative in their efforts and could develop a competitive edge over their competitors. Benchmarking could be considered as a strategic tool for building competitive advantage. The major objective of Benchmarking is to know and evaluate the current position of an organization, identify the areas, that needs improvement and work on the ways and means of performance improvement.
Let us now see various types of Benchmarking to understand the concept in a better manner.