Benchmarking

A means of quantifying the relative performance of companies or divisions (such as regional distribution companies). Summary performance indicators, such as output per worker, are often used to identify trends, determine baselines, and identify reasonable targets—based on a sample of comparable firms. Performance scores can also be based on more comprehensive production or cost models, using econometric or data envelopment analysis. Studies vary in levels of sophistication and ease of interpretation, but all can provide important information regarding the relative performance of firms who face comparable production conditions. Another approach, process benchmarking, involves detailed analyses and comparisons of company operating characteristics in the vertical production chain. In addition, customer surveys are often used to monitor customer perceptions regarding service quality, reliability, and responsiveness to customer complaints. See yardstick regulation, comparative competition.