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Key Facts

  • In the face of current crises and challenges, companies are increasing their transformation efforts in order to remain competitive.
  • Benchmarking offers an objective means of comparison with competitors.
  • Creating value through growth, increasing operating margins, reducing costs and optimising operating resources pave the way to a lean organisation.

The list of current challenges and global crises affecting markets and companies is long. On the one hand, this leads to a certain degree of uncertainty, but at the same time also to pressure to change. The transformation of business models and processes is therefore becoming increasingly important in order to remain competitive in the long term.

Identifying business areas with savings potential and creating a lean organisation are two key factors that can be used to realise value increases and find starting points for transformation. Benchmarking is a reliable and objective way of doing just that.

Performance improvement and value creation do not result from the activities of normal day-to-day business. Benchmarking in itself is just a method to find out what these activities should look like. In fact, many common benchmarks do not necessarily reflect the true nature of the organisation, the market or the point in the business cycle. Therefore, the key question is: what are the right data points and industry experience that can be used to gain real insights into a company's unique situation?

What is Benchmarking?

In addition to baselining, benchmarking is another systematic method of measuring and evaluating a company's performance against proven industry standards. This is done by comparing a company with others. Benchmarking enables companies to identify weaknesses as well as potential for growth and improvement using objective criteria.

Data & analytics is a central component of the benchmarking process. On the one hand, data is required about the processes and performance of the peer group and, on the other, about the company itself. Both internal and external data sources can be used to obtain this data. This data is then analysed and compared in order to identify differences and potential for improvement.

Benchmarking provides an initial idea or indication of where there could be potential for improvement. However, it alone does not provide a sufficient basis for identifying measures. Rather, further insights and analyses are required to determine why a company either does not meet or exceeds the benchmark. Only with this knowledge can value-adding measures be identified.

Benchmarking: With reference groups for objective comparison

An important point of measurement and comparison in benchmarking is the so-called peer group. This reference group has similar characteristics, such as industry affiliation, number of employees and turnover. To draw meaningful conclusions, it is important to define a peer group that has valid comparative data.

Analysing the peer group provides information on direct competitors and also quantifies potential for improvement. The comparison with quartile ranges of comparators, for example, allows an insight into the performance of a company in direct comparison with others.

In this way, a comparable and objective view is established against which a company can measure itself and at the same time a basis is created against which future developments can be assessed.

Building a lean organisation

An important aspect of benchmarking is the identification of weak points and potential for improvement. Based on this, processes can be streamlined and made more efficient. The aim is to build an organisation that can secure competitive advantages in an increasingly competitive market.

Identify and quantify potential for value enhancement

In order to quantify the potential for operational or financial performance improvement, benchmarking can be used to analyse various areas of the company and identify hidden potential for value enhancement. In addition to benchmarking itself, financial and operational analyses as well as comparative studies that examine what other companies in the sector do differently also help.

Conclusion: Benchmarking as the basis for a learning organisation

Benchmarking not only creates an objective opportunity for comparison with the peer group and thus the direct field of competitors, but also leads to a better understanding of one's own organisation and its strengths and weaknesses. This makes it clear where there is potential for improvement and which processes and procedures are already efficient and add value.

At the same time, benchmarking offers the opportunity to learn from other companies and their best practices. This can even lead to new partnerships and business opportunities.

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