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In every industry, Cost Benchmarking
is at the heart of good governance
Benchmarking is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies.

Also referred to as "best practice benchmarking", this process is used in management where organizations evaluate various aspects of their processes in relation to best-practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event but is often treated as a continuous process in which organizations continually seek to improve their practices.

  • Benchmarking is recognised as being one of the best management tools to measure performance  
  • Benchmarks are often measured by studying the results of other company operations that have best practices put in place to achieve exceptional results. The goal of benchmarking is to improve your processes to strengthen company performance, enhance customer satisfaction and increase revenue.
  • Benchmarking is therefore a critical part of the supply chain management process 
  • Benchmarking is one of a manager's best tools for determining whether the company is performing particular functions and activities efficiently, whether its costs are in line with those of competitors, and whether its internal activities and business processes need improvement

  • Find out what others are doing in your industry.

  • Find out what your current performance is vis-à-vis your peers, your industry and are you below or above that mark. 

  • Identify and understand the gap in performance to peers and work out how you close the gap and improve.

  • Benchmarking results can look convincing on paper but will lead to wrong conclusions if the data is too shallow (not deep enough) or is incompatible (apples and oranges).

  • The tricky thing is a sufficient deep dive into comparable data and a like-for-like peer group comparison.

  • Robert C. Camp. Benchmarking: The Search for Industry Best Practices that Lead to Superior Performance. Quality Press, 1989.
    Written by Dr Robert Camp, universally regarded as the founding father of the benchmark process, this bestseller is quite simply the definitive reference on the topic. 

  • McNair, C.J., and Kathleen H.J. Leibfried. Benchmarking: A Tool for Continuous Improvement. Harper Business, 1992.

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