Benchmarking
Benchmarking is the practice of measuring your own process performance against a defined reference — another team, a competitor, or an industry standard — to find out where the gap is big enough to be worth closing.
The reference point is what separates benchmarking from ordinary reporting. A cycle time of nine days means nothing on its own. It means a great deal the moment you discover that your three other sites run the same process in four.
Most organizations benchmark in three ways: internally, between sites, shifts or teams; competitively, against rivals in the same industry; and functionally, against whoever runs a given process best, whatever business they happen to be in. Functional benchmarking produces the biggest surprises, because it borrows from outside your own industry’s habits.
It only pays off when the comparison is fair. Processes have to be scoped the same way, measured over the same period and adjusted for volume — otherwise the gap you find is an artifact of definitions rather than a real difference in performance.
Benchmarking tells you that a gap exists. Deciding what “good” should actually look like is the harder half of the job.
Related terms
Process improvement · Six Sigma · Standard work · Business process management