What is Benchmarking?

To gain the full benefits from benchmarking, a certain level of understanding and planning is required. It is important to establish just what benchmarking is not before understanding what it is.

Benchmarking is not primarily a mechanism for determining resource reductions, although this may occur through adopting benchmarking disciplines. Benchmarking is an objective-setting process, establishing operating targets based upon the best possible industry practices and is a critical component for success in every business. Benchmarking therefore should be standard practice, carried out at regular intervals.

Why benchmark?

Without benchmarking, business organisations do not have the information necessary to operate efficiently and therefore may be out of control.

Benchmarking processes related to purchasing are especially useful in determining efficiency levels at the outset and on an ongoing basis. It is not enough to measure current performance against previous performance, without reference to the market, as the market could have undergone changes and any internal improvement could actually be a drop against the market. The point here is that it is vital to select a benchmark that is independent and reflective of the market.

Many buyers form, or belong to, a consortium exchanging price information but this requires time and effort to establish and maintain, especially when the membership of the consortium changes. In many cases the information is useful but cannot be used as purchasing profiles and logistics vary from contributor to contributor.

It is far more effective and efficient to outsource the benchmarking process to a reliable specialist. Outsourcing in this way will provide reliable information when needed, allowing the buyer to operate effectively, efficiently and with due diligence. Planned implementation of credible independent benchmarking enables those responsible for procurement to be in control, quantify and improve performance levels, thereby justifying their contribution and professionalism.

Benchmarking certification

Benchmarking is an ongoing process and we award certification for given periods for all our clients. This certification verifies that their purchases have undergone independent assessment against current best market prices.