Benchmarking - Why Timing is Important
The following article was originally featured in the Farm Futures.com blog publication on January 6, 2015.
When considering benchmark data, the three important items to consider are applicability, accuracy, and timeliness. The Benchmarking Part 2 article discussed accuracy. Now let's explore the importance of timeliness of benchmarking data.
Internally, a 90-day, 180-day or even a 1-year delay in data used for benchmarking is commonplace. Attempting to measure business performance using internal company data over 12 months old is of minimal use. Your business and your industry can change quite a bit in two years.
"Don't end up comparing your business performance against old data."
Benchmarking against yourself could be as simple as looking for trends in your business, say on a monthly or quarterly basis. Alternatively, you could compare this year's performance to last year's performance to help understand the impact of any changes in the market or changes you may have implemented internally. Benchmarking against yourself is equally as important as benchmarking against other industry participants.
Overall, the key to the timeliness of benchmarking is trying to use the most recent benchmark data available to account for seasonality, changes in economic cycles and other historical impacts that may not always be present, like a drought or shortage of raw materials.