Benchmarking - learning from the best

It has always been necessary for companies to continuously improve their competitiveness, because quality, efficiency, and cost disadvantages compared to competitors lead to the loss of market share and revenue. Under the term "benchmarking", a process is understood in which a company gains suggestions for developing improvements through comparison and develops measures to implement them. The following article aims to introduce you to the basic ideas of benchmarking.

The goal of benchmarking is to identify differences and areas for improvement, as well as to derive competitive objectives. Therefore, as part of the benchmarking process, an attempt is made to compare one’s own performance with that of the benchmark company and to achieve improvements by adopting successful solutions and innovations. Therefore, in an ideal situation, successful solutions from benchmark companies are adapted to take into account individual company-specific characteristics and are further improved through the adoption of additional proprietary solutions.

The benchmarking process usually follows the following sequence:

1. Selection of comparison objects

First, the own weaknesses and critical success factors must be identified. This can affect individual processes (e.g., manufacturing, sales) but in extreme cases the entire company. Subsequently, a suitable comparison object must be selected, whereby it is important that sufficient information can be obtained about the comparison company and that the own economic and organizational framework conditions generally allow the transfer of the concept pursued by the comparison company.

For comparison purposes, companies from within the same industry (market leaders) as well as the best companies from other industries are considered. The selection of the (external) comparison company is based regularly on the following research:

• Knowledge of successful competitors
• Articles in professional journals
• Industry knowledge of the business trustee
• Company homepages
• Published annual financial statements, business reports, etc.
• Special information providers (business chambers, Statistics Austria, professional associations etc.)

In addition to external comparison companies, corporate subsidiaries are of course also in question. While easier information acquisition and the transferability of solution concepts are to be cited as advantages, the lower innovation potential compared to external comparison companies is, however, also to be pointed out as a disadvantage.

2. Information gathering and comparison phase

After selecting a suitable comparison company, the next step is to find out as much as possible about the processes and success factors of the comparison company based on the available information. In practice, obtaining information is often the biggest problem. Often only publicly available information (publications from business chambers, professional associations, annual reports, etc.) will be available. In practice, it is especially noticeable that the Internet is often the most important source of information. In this context, informal contacts can also be very valuable. Your financial advisor can also, of course, taking into account his/her professional confidentiality obligations, provide targeted tips based on his/her experience and industry knowledge.

It is important that, as part of the comparison phase, targeted research is conducted to identify the improvement potential identified. The solution approaches of the comparison companies are compared with those of the company itself and analyzed with regard to their advantages and disadvantages.

3. Implementation phase

The findings from the comparison phase should ultimately be applied to one’s own company and concrete improvement measures should be developed. It should be taken into account that solutions from other companies can only rarely be simply copied. It is therefore important to develop one’s own solutions that correspond to the specific framework conditions and structures of one’s own company. It is also important that measurable target goals are established during the implementation phase, which can subsequently be reviewed to ensure their achievement.

In conclusion, it should be noted that benchmarking should be a continuous process within quality management, which will become even more important in times of ever-faster changing technologies and competitive situations.

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