Most businesses know they require improvement, the hard part is finding out where. The best way to get around this problem is by benchmarking. Benchmarking involves the measuring the performance of one’s business against that of others in similar markets and entails:
- Establishing standards to help you achieve the best relationships with your customers and the best results within your business
- Observing how others attain these standards
- Applying the knowledge gained to achieve and maintain those standards
Consistently researching other businesses will give you an awareness of the best practices currently in use and how they might be applied to your firm.
A benchmark review will help you to determine how well each aspect of your business is doing, discover the areas that need improvement and develop a plan to achieve these improvements. Improvements can include:
- Less wastage and more efficient processes
- Improved understanding of customers’ needs
- More satisfied customers and improved customer retention
- Greater insight into competitors
- Greater emphasis on innovation and continuous improvement
- Better firm reputation and increased marketing power
- All of these benefits, of course, eventually trickle down to the bottom line and show up as improved profits
Below are some suggestions of key areas that can be benchmarked in order to improve business managing processes.
Customer related areas:
- Quality of product
- Accuracy of invoicing
- Timeliness of delivery
- Speed of service
- Stock levels
- Stock turnaround times
- Quantity of waste or rejects generated
- Cost of sales/ sales per employee
Benchmarking can take different forms other than comparing your company to similar businesses. Benchmarking by comparing your own business procedures against the procedures of other parts of your business is often very successful. Comparing specific procedures with those of a company from an unrelated industry has can also lead to new and creative kinds of procedures.