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Process Benchmarking: Definition, Process, and Example

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by Beroe Inc
10 August 2023

Let us start with the process benchmarking definition because understanding the process benchmarking meaning is a crucial first step.

What is process benchmarking?

Process benchmarking constitutes comparing and analyzing your business processes with those processes that are considered the best practices in the industry. When comparing, it is crucial that the nature of the processes be similar so that comparing makes sense. The aim of business process benchmarking is to improve existing business processes so you can compete with the best in the industry. It is used to increase efficiency by finding gaps that exist and ensuring those gaps no longer exist after strategies to fill those gaps have been successfully implemented.

The concept can be better understood with the help of process benchmarking examples. Let us say it takes your company, called ABC to complete a process in 1 hour. Comparing it to a similar industry, you find that the other company, called XYZ, completes the process in 45 minutes. This means it takes your company 15 minutes more to complete that process. With this benchmark in place, you can make improvements similar to company XYZ so you can complete the process at the same time. To make the process of process benchmarking easier, certain companies provide process benchmarking templates so you can effectively benchmark your process and make measurable improvements.

Benefits Of Process Benchmarking

Here are some reasons why process benchmarking is vital for a business:

Helps understand your current position

When you have process benchmarking in place, you know where your business process stands in comparison to the other process that you are comparing it with. This can help you know where you are currently and where you need to go. This is not a bad thing because you can’t do something unless you know something is missing. This clear path enables you to know exactly where you are thereby what needs to be done to achieve your goals.

Enables making improvements that matter

Without process benchmarking in place, you won’t know how much better you can get. Process benchmarking provides you with a specific outcome that you have the goal to achieve and it enables you to know that you can do better. This can be used to set standards and thereby make improvements. Through benchmarking, making improvements that benefit your business overall becomes easier because you know what your aim is.

Encourages planning and aligns goals

Your business won’t grow if you don’t do something about where you are lacking or not doing the best you can. When you have a process such as process benchmarking in place, then you are encouraged to plan because you set goals and ways to achieve them so you grow your business. This enables a thorough look into your process shortcomings and allows you to work on them. This allows for zero confusion to be present.

Helps outline clear roles

Your employees will love what they do when they know what needs to be done. Through process benchmarking, this becomes a doable task. The processes and the people behind those processes are clearly mentioned and analyzed so your employees know their roles in detail. This can help encourage them to work their best for the benefit of the company and they become productive in the process thereby benefiting the overall business.

Components Of Process Benchmarking

There are 5 main stages of process benchmarking and these are as follows.

Plan

Planning is the first stage of benchmarking whereby you determine who you will be comparing your processes against and the metrics you use to do that. If you want to know about various other businesses then you need to plan to collect their data. This phase of process benchmarking is crucial because you need to know what you are hoping to achieve from the comparison. 

Collect data

In this phase of process benchmarking, you want to collect the necessary data required for analysis. How much data is collected will depend on the process you wish to improve. You need to use metrics to measure the process that you want to compare and collect information about how the competitor is doing the same process.

Analyze data

Data analysis is the key step of process benchmarking because it is where you will get into the nitty-gritty of things. You need to analyze how the process executions differ and where you may be lacking in comparison to the other process you are comparing against. A comprehensive analysis is required so you can create an action plan accordingly.

Take action

The plan you made in the previous phase needs to be implemented. This process benchmarking phase needs to be measured. That is, as the process is being done according to the plan, you need to measure it so you can determine whether you have achieved the result you benchmarked or not. If not, then you need to continue to improve the process and make changes until you achieve the result. 

Monitor constantly

Process benchmarking is not a one-time process and it shouldn’t be treated as such either. The aim is to improve continuously. If you have achieved the outcome you wanted to achieve, then it is time to move onto another business process that needs to be worked on. When you continuously do this and improve processes, your business benefits from it.

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