Business Bench-marking is a concept that is widely accepted by big organization.
It is an approach for setting goals and productivity measures based on best industry practices. Bench-marking developed out of the need to have data against by which performance can be measured.
What should the criteria be?
If a company needs 6 days to fill a customers order and the competitor in the same industry needs only 5 days, so 5 days does not become the standard if a firm is an unrelated industry can fill orders in 4 days.
The four day criterion becomes the benchmark even when at first this seems to be unachieved goal.
The process involved in filling the order is then carefully analyzed, and creative ways are encouraged to achieve the benchmark.
Types of Benchmark:
- Compares various strategies and identities the key strategic element of success.
- Compares relative cast (or) possibilities for product differentiation.
- Focuses on support function such as market planning and information system, logistics, human resources management and so on.
- The bench-marking procedure begins with identification of what is going to be bench-marked.
The superior performers have to be selected. Data need to be gathered and analyzed which become the basis for performance goal.