How do you benchmark and learn from the best practices of other organizations in your industry or sector?

2 Types of benchmarking

When it comes to cost management, there are various types of benchmarking you can use, depending on your objectives, scope, and resources. Internal benchmarking looks at how performance, processes, and practices compare within your own organization, such as between different departments, units, or teams. Competitive benchmarking is about comparing your performance with that of direct competitors in terms of market share, customer satisfaction, or profitability. Functional benchmarking looks at how performance compares with other organizations that perform similar functions or activities in terms of quality, productivity, or efficiency. Lastly, generic benchmarking compares your performance with that of other organizations that are recognized as leaders or best in class in any industry or sector in terms of innovation, culture, or sustainability.

3 Steps of benchmarking

Benchmarking is not a one-time activity, but rather a cycle of continuous improvement. To successfully conduct a benchmarking project for cost management, you must define your objectives and key performance indicators (KPIs) to measure success, identify benchmarks to compare yourself with, assess your performance in comparison to those benchmarks, implement improvements to close any gaps and seize opportunities, and monitor and evaluate the impact and outcomes of the improvements. Additionally, it is important to communicate and celebrate the results and learnings.

4 Challenges of benchmarking

Benchmarking can be difficult, and it's important to be aware of and overcome the associated challenges. Finding reliable and relevant benchmarks is key to success, as you have to make sure the benchmarks are comparable, credible, and current, and that they share the data and information you need. Overcoming potential barriers or biases that may prevent you or your organization from accepting or adopting the best practices of others is also essential. Additionally, it is necessary to balance standardization and customization when adapting and applying the best practices of others to your own context and needs. Lastly, confidentiality and ethics must be respected when collecting and using data, following appropriate guidelines and protocols.

5 Tips for benchmarking

If you want to make your benchmarking project more effective and efficient, it’s important to start small and simple by focusing on one or a few aspects of cost management. Involving and engaging stakeholders, such as customers, employees, suppliers, and partners, is also essential. Additionally, you should look for both the best practices and the mistakes of others, so that you can understand the reasons and factors behind them. Keeping an open mind and being curious about different perspectives and approaches can also help. Lastly, you should review and update your benchmarks and performance regularly in order to keep learning and improving.