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The benchmark is an analysis that compares the performance and qualities of a producti, a service, a fonction or an organisation with what we can find as the best solution on the market.

The benchmark of a process is focusing on compairing the practices of a company with the best practices we can find on the market.

Principles :

The benchmark is build on the principle of a comparative analysis of an item whith the best item one can find on the market. For example, the catalog of a toys retailer is compare with the catalog of the best known toys retailers. The menu of a restaurant is compare with the best menus one can find in the same category.

To be useful, it is important to focus the benchmark on difficult issues or problems. For example, a benchmark is useful when apply on a product line with some very low sales figures or about a process with a lot of defects ( return packages, to many customers on the hot line...).

Different types of benchmarks :

The benchmark can be performed for all types of comparison. The main types of benchmark are :

Benchmark of a product or a service

We compare the products or the services from by differents competitors on a same market. Functions, reliability, usage, attractiveness, price/quality are compared and classified. The consumers groups are regularly publishing results of comparisons between products or services proposed to the consumer market.

Internal benchmark :

In this case, we compare the qualities or the performance of process, products or activities among different locations or entities of the same company. It is often comparisons between different geographical locations or comparisons of the performance from one year to the other (historical).

Benchmark of function or process :

It is an external benchmark between functions or process, identical or similar (HR, accounting, purchasing...) but involving different types of companies not competing on the same market. As an example of function, we have a day off procedure or a recruting activity and as a process, we have the Human Resource Management or hte Purchases management.

Benchmark of performance :

We compare, between competitors, the performance of a marketing offer with revenues and profits. For the processes, the comparison is about the resources that has been used and "burned" to deliver the output. The performance is about efficiency and effectiveness. This analysis is the first step to costs performance evaluation of a process.

Competitive benchmark :

The benchmark is performed for process or functions between different competitors on a same market. Usually, non strategic domains are compared between competitors such as purchasing or accounting but one can compare also more strategic assets.

Benchmark of audits :

In this type of benchmark, the results of the audits from different parties on the same market are gathered and general tendencies are spotlighted. These results are then disclosed to the different partners who brought the initial audit informations.

Benchmark and costs management :

Benchmark has always been applied to economic and financial analysis. These are benchmark of costs, profit center and capital financial yield. To perform such benchmark, the accounting departement are establishing a dedicated accounting model for the purpose of the benchmark in order to neutralize all fiscal or amortization choices.

Costs management is the next step : the benchmark is used in a continuous mode in order to bring the correct data for process improvement and costs reduction. This os cost continuous improvement or Kaizen cost.

Benchmark, Partners of a benchmark and confidential informations :

The data that are used in the benchmark model are coming from companies that compete each others. Collecting the data is a critical issue because confidentiality must be garantee to all participants and the finest way to handle it is that a third party performs the collection, analyse the results and communicate on the results. These results are general information with no confidential area.

Advantages of a benchmark :

Weak points identification
Best practices deployment to strenghen the weak points
Planification of an improvement process from the results of the benchmark

A rigorous approach for costs management and costs cutting 


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