20. Benchmarking

According to John W. Priest, it is a systematic process of identifying the best practice in industry, product and manufacturing setting goals based on results of what competitions has achieved or will in the future and identifying the best vendors.

He emphasizes that the essence of benchmarking is the perception of competition by another prism. Companies usually consider competition as a risk which must be avoided or fight it, eradicated. The purpose of benchmarking is to search for solutions, sources of strength that can be used for the needs of your business.

J. Harrington said that “no company has neither the time nor the resources necessary to learn only on the basis of your own mistakes”. The cheapest source of efficiency improvement is to use the experience of others. Thanks to comparisons of characteristics and analysis of strengths and weaknesses, we can determine the ideal model. It is therefore a process of developing a company which is based on an understanding of the industry leaders’ functioning.

It is worth noting that benchmarking is not just copying of the best competition’s  practice. According to Deming, copying is too risky, because you do not understand why you do it. Adopting is a way.

According to the above quote Witold Jankowski from International Management Institute consideres “kreatywne kopiowanie” (the creative copying) as the best Polish term. Adopting is so important that thanks to it we can get not only information about the capabilities of our enterprise but also approve the directions of development. Created programs are designed to reduce the distance separating the company.

Benchmarking in the design of products is used alone (assuming a hypothetical or actual product model), or in conjunction with the method of QFD. It concerns not only technical parameters but can cover all elements of the product and the customer relationship, such as a warranty, packaging, derivative market, distribution channels, pricing, promotion methods. The aim is to fully illustrate and compare the market environment that affects the buying process.

Benchmarking requires a competitive market information. Thanks to them we are able to evaluate the competitiveness and to better understand the customer’s decisions.

Competitor benchmarking methods usually have to be external and includes: customer surveys, sample buying, stripping and studying competitors products. In combination with data on market shares, distribution channels they can provide important information at products’ implementation.

The practice of benchmarking in product development is important for several reasons:

  • better awareness of customer needs,  preferences and values,
  • better knowledge of competitor’s product,  
  • identify successful product requirements,
  • identify the best vendors and suppliers to use in design when using benchmarking to help identify ideal and marginal values for evaluation criteria, it is important understand that the competitive products are generally evolving.

Comprehensive benchmarking method focuses not only on the products. We can also enumerate competitive benchmarking related to the efficiency of competition’s processes (cost of production analysis), benchmarking processes (when the company learns not only from the companies but also from the outside) and strategic benchmarking (evaluation of alternative scenarios, implement and modify their own actions by adapting successful strategies).