What is benchmarking
Benchmarking is the systematic comparison of your performance and methods against a reference, internal or external, to find where the gap is and what the reference does differently to get there. The aim is not to copy numbers: it is to understand the practice behind the result and adapt it to your own process.
Robert Camp turned the idea into a method, describing it as the search for the best practices that lead to superior performance. On the shop floor it answers concrete questions: is our changeover time good? Is our scrap high for this type of process? Who does it better, and how?
Benchmarking visual map
The map summarizes the types, the steps and the gap calculation using the same example as this article.
The 4 types of benchmarking
| Type | Compared with | Advantage | Limit |
|---|---|---|---|
| Internal | Another line, shift or plant in your own company | Data is easy to get and reliable | Shows nothing outside the company |
| Competitive | A direct competitor | Shows the market standard | Data is hard to get and not always comparable |
| Functional | A company in another sector that does the same function well | Brings new ideas, no competitive conflict | The practice must be adapted to your context |
| Generic | Any organization with an equivalent process | Widens the view of the process | More research and translation effort |
To start, internal benchmarking usually pays off most: if line 2 changes tooling in 18 minutes and line 1 takes 45, the answer is already inside the plant. The other types come in when the best internal result is still far from what the market achieves.
The 6 steps of benchmarking
- Choose what to compare. Start from a problem or a target, usually linked to strategy deployment (hoshin kanri). One process at a time.
- Define the metric and its calculation rule. Without the same definition on both sides, the comparison is worthless.
- Choose the reference. Internal, competitor, another sector or technical literature.
- Collect the data and the practice. A number alone does not teach; observe the method, workstation organization and resources.
- Calculate the gap and explain its cause. See the next section.
- Set targets, act and monitor. Turn the gap into an action plan (for example a 5W2H) and track the metric until the difference closes.
How to calculate the performance gap
Gap = reference value − your value | Relative gap (%) = |gap| ÷ reference value × 100
The sign depends on the metric. For OEE and on-time delivery, higher is better; for changeover time and scrap, lower is better. Always record the unit and the direction of improvement next to the gap.
Example: a press compared with the best line in the plant
Fictional example. A plant has two stamping lines making an equivalent product. Line 1 is ours; line 2 is the internal reference. The set of KPIs uses the same definition on both.
| Metric | Line 1 | Reference | Gap | Relative gap |
|---|---|---|---|---|
| OEE | 62% | 75% | 13 pp | 17.3% |
| Changeover time | 45 min | 18 min | 27 min | 150% |
| Scrap rate | 3.2% | 1.5% | 1.7 pp | 113.3% |
| On-time delivery | 88% | 96% | 8 pp | 8.3% |
| Inventory turns | 6 per year | 9 per year | 3 turns | 33.3% |
The largest relative gap is the changeover: 27 more minutes per changeover. With 6 changeovers a day, line 1 loses 6 × 27 = 162 minutes per day (2.7 hours) that the reference does not lose. That explains much of the 62% OEE and the late deliveries.
The next step is to observe how line 2 does the changeover: pre-staged tooling, fixture-based adjustments, external tasks done while the machine runs. That is the SMED playbook. A realistic six-month target: close half of the gap, taking the changeover from 45 to 45 − 27 ÷ 2 = 31.5 minutes, then reassess.
How to choose the reference and the metric
- Compare like with like: same product or process, same measurement rule, same period. The OEE of a company that ignores micro-stops cannot be compared with yours.
- Pick few metrics: three to five are enough for a first round.
- Prioritize by impact: the largest relative gap is not always the costliest; weigh the effect on customer and cost.
- Align with the management dashboard: if the metric sits in the Balanced Scorecard, the benchmarking result feeds the target.
- Agree confidentiality rules when exchanging data with other companies and avoid sensitive price and customer information.
Common mistakes
- Copying the number, not the practice. A target equal to the reference with no change in method is pressure without a plan.
- Comparing different definitions of scrap, OEE or on-time delivery.
- Choosing only very distant references and discouraging the team; add an intermediate reference too.
- Doing it once. Benchmarking is recurring: the reference improves as well.
- Ignoring culture and context: a practice that works with one product mix or team may need adaptation.
- Stopping at the diagnosis with no owner, deadline or follow-up.
Frequently asked questions
What is benchmarking?
It is comparing your metrics and methods with a reference to measure the gap and learn the practice behind the better result.
What are the types of benchmarking?
Internal, competitive, functional and generic, depending on the reference: another area of the company, a competitor, a company in another sector, or any organization with an equivalent process.
What are the steps of benchmarking?
Choose what to compare, define the metric, choose the reference, collect data and practice, calculate the gap, then set targets with an action plan and monitoring.
How do you calculate the performance gap?
Gap = reference value minus your value. The relative gap divides the absolute gap by the reference value. In the example, 45 − 18 = 27 minutes, or 150%.
Is benchmarking the same as copying a competitor?
No. Copying the number ignores context. Benchmarking seeks to understand the practice that explains the result and adapt it to your process.
How often should benchmarking be repeated?
Usually once a year or at each target review, and whenever the process changes significantly.
Sources
- CAMP, R. C. Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance. ASQC Quality Press, 1989.
- KAPLAN, R. S.; NORTON, D. P. The Balanced Scorecard. Harvard Business School Press, 1996.
- SLACK, N. et al. Operations Management. Pearson.
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About the author
Lean Manufacturing & Behavioral Management Specialist
Over 20 years in the automotive and metalworking industries (GM and Dana), Lean Manufacturing practitioner since 2006. SENAI instructor and mentor in Brazil’s Brasil Mais Produtivo program, delivering consulting, training and audits for 50+ companies, combining quality, productivity and people development.
