benchmarking

Comparison of one company's performance against that of another company, or against an industry average. The concept gained currency during the 1980s and 1990s. It involves the detailed study of productivity, quality, and value in different departments and activities in relation to performance elsewhere.

Three different techniques can be used in benchmarking: best demonstrated practice (BDP), the comparison of units within one firm (for example, the comparison of sales per square unit of one retail outlet with another); relative cost position (RCP), the comparison of each element of the cost structure per pound sterling in firm A with the same element in competitor B; and best related practice (BRP), similar to BDP but with a comparison between related firms who are willing to cooperate to make the necessary data available.