Proc. Benchmarking: What is it?

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Process benchmarking compares specific business processes to industry standards, allowing companies to streamline and improve their operations. Types of benchmarking include manufacturing processes, data collection practices, performance indicators, and efficiency reviews.

Process benchmarking is a business function that compares specific processes against a leading company or industry standard. Rather than using comprehensive benchmarking techniques such as financial ratios or statistical analysis, process benchmarking allows companies to create a more streamlined and detailed review of business operations. This business function usually consists of a mechanism that selects work procedures or business processes that could be improved by comparing it with an industry standard. Companies often use process benchmarking, as it allows them to focus the management review process on the key business functions that need improvement.

Some specific types of process benchmarking include comparisons of manufacturing processes, data collection practices, performance indicators, and productivity and efficiency analyses. Manufacturing Process Comparison allows companies to review individual processes related to the production of goods or services. These reviews may include analyzing each stage of a manufacturing process or processes related to a specific product. Manufacturing process benchmarking can help companies compare their manufacturing processes to another company and determine what significant differences exist. Improving the production process by limiting the waste of physical or financial resources can help companies create a competitive advantage in the economic market.

Process benchmarking can also be used to review the data collection practices of a business process. Reviews of data collection practices often include determining how quickly a company can gather information about specific business functions and make decisions based on that information. Companies reviewing their data collection practices may do so if they need to replace an existing information collection system or implement a new system for a business process. The increasing use of corporate technology has forced companies to stay current on information technology and how they can use this technology to improve or advance their data collection practices.

Performance indicators are calculated using statistical or mathematical business formulas. Companies often use performance indicators specific to their industry to determine how business processes perform under current economic conditions. Process benchmarking can use indicators related to financial information, number of goods produced, employee hours spent in the production of goods or services, and various other indicators. These indicators can be reviewed on a monthly or quarterly basis to compare them to previous indicator calculations or industry standards.

Efficiency reviews are usually an internal benchmarking process that companies use to determine how well business functions are operating against pre-established expectations. Companies often set various goals or objectives for their business functions. Once the actual numbers from business operations are calculated, companies compare the actual numbers to the expected numbers to determine the efficiency of the business process when executing the operations.

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