Benchmarking is the procedure in which the performance of different business are compared including cost, cycle time, productivity, or quality to another that is widely considered to be an industry standard benchmark. It involves administration identifying the top firms in the industry and then comparing the performance values including quality-of these businesses with those of their own business. Fundamentally, benchmarking provides a picture of the performance of your business and helps you realize where you are in relation to a particular standard. The outcome is often a business case for making changes to make improvements. The phrase benchmarking was initially used by cobblers to calculate people's feet for shoes. They would place someone's foot on a "bench" and mark it out to make the outline for the shoes. Benchmarking is most used to compute performance using a precise indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others.
Also referred to as "best practice benchmarking" or "process benchmarking", it is a process used in supervision and particularly strategic management, in which organizations calculate different aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to build up plans on how to make improvements or adjust to particular best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a nonstop process in which organizations continually look for to improve their practices.