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A benchmark is a point of reference for a measurement. Benchmarking is process of comparing one's business processes and performance metrics to industry bests or best practices from other industries. It does this by capturing performance metrics and comparing their values with a comparable set of previously recorded measures. This comparison set can be taken from a variety of sources--e.g. from within the same organization at a different times, from competitors, from similar processes within the industry. Typical dimensions measured are quality, time, and cost.
Benchmarking models are useful to determining how well an activity, process, business unit, division, or corporation is performing compared with other similar organizations. Benchmarking aims to achieve maximum effectiveness of learning from the best and helps to move the organization from its current state to desired “best practice” future state.
To be implemented successfully, there must be active engagement of management, clear objectives, and ongoing effort.