What is benchmarking in the context of procurement?

Benchmarking in the context of procurement refers to the process of finding industry standards and averages. This practice involves collecting data on various performance metrics from different organizations within the same industry to assess how well one's own procurement processes compare with peers. By establishing these benchmarks, organizations can identify areas for improvement, optimize their procurement strategies, and set realistic performance targets.

This approach enables organizations to understand competitive positioning and make informed decisions based on reliable data. It helps not only in strategic planning but also in justifying procurement choices and investments based on industry performance. Consequently, organizations that engage in benchmarking can enhance their efficiency and effectiveness in procurement by learning from the best practices established by others in the marketplace.