What is benchmarking

Benchmarking is a process of continuous evaluation to achieve a competitive advantage. It measures a company's products, services and practices against those of its best competitors or other acknowledged leaders in their fields. It can be a specific area such as the benchmarking of the new product concept against the competing products (Rudolph, 2000), the company's technology against the most technically advanced company, the company's innovation strategy against technology predictions. But mostly there are multiple measures in benchmarking.

Benchmarking can be at different stages of the product development project, for the overall product development project and the product development programme. There can be short-term and long-term benchmarking; for the short term, Hultink and Robben (1995) identified product-level measures such as speed-to-market, launched on time, development cost; in the long term, customer acceptance (met revenue goals, market share goals and unit sales goals, percentage of sales by new products) and financial performance (attaining goals for profitability, margins, return on investment). Four factors were equally important for short-term and long-term success: customer satisfaction, customer acceptance, meeting quality guidelines and product performance level. Finally benchmarking must be related to possible improvements; there is no point in extensive benchmarking in areas where the company or personnel cannot make improvements because of lack of people, knowledge and assets. Benchmarking and continuous improvement need to be linked. Zairi's (1998) comment is worth remembering when benchmarking the impact of its application is more for changing attitudes and behaviours and raising commitment through better education, awareness and inspiration from model companies. Benchmarking is perhaps the best means for servicing the human asset by continuously supplying new ideas to sustain superior performance levels.

Over recent years benchmarking has become a fashionable tool for many organisations. Like many such tools, one has to question the rigour and objectivity with which many benchmarking exercises are carried out and, in turn, the value that is captured from these exercises. Benchmarking is not a tool (the many methods suggested for benchmarking are tools), but it is a method of increasing knowledge and skills of all people involved in product development from the top management to the junior team member, so that product development is more effective and efficient.

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