A few years ago, my manager asked me to do product benchmarking with similar products available in the market offered by the competitors. The purpose was to make sure that we offered the best product to our clients and to be able to compete with other companies that offer a similar kind of product.
The scope was to extract the best features of the other products available in the market and measure our product’s performance. Quality, cost and time also had to be measured.
I analyzed different products offered by the competitors and realized that there were some great features that our product did not have. During the analysis, I also observed that there are distinct features that make our product unique.
What I have learned from my experience is that several steps need to be followed to perform benchmarking. From selecting the product to implementing the targeted goals, along with continuous improvement. The following are major steps that need to be performed during benchmarking.
- Select a product
- Assign resources and create a team
- Identify the critical areas (if you don’t want to benchmark the whole product)
- Define / Adopt a process to benchmark
- Identify the competitors who offer a similar product
- Identify the data sources
- Collect ion of the data
- GAP Analysis
- Target future goals and performance measures
- Share the report with management and get management acceptance to work on targeted goals
- Establish targeted goals
- Develop action plans
- Maturity / Continuous Improvement
- Review and continuous improvement
Always identify the areas that you really want to benchmark that are critical to the operations of the company and then prioritize them. You can do the activity step by step. This will increase the effectiveness of the process while reducing the time, effort, and cost of the entire process. You should know the strengths and weaknesses of your product, so you can better benchmark it. A process should be defined that will be followed during the benchmarking activity.
Future goals and performance measures should be defined realistically. They should follow the SMART principle. They should be specific, measurable, attainable, relevant and time-bound. The goals can be achieved throughout the year and should be reviewed at the end of each quarter, as well as during the quarter if necessary.
The report that is presented to management should not only contain the benchmark findings, but it should also contain the methodology and strategy for improving the process. The same methodology and strategy will be utilized to develop the improvement plan. The report should include the critical success factors for strategic direction. The goals and strategies should be reviewed and updated continuously to achieve long term benefits.
Team selection to perform benchmarking is an important aspect of the process. Different elements or factors should be considered for team selection, such as knowledge, efficiency, credibility, communication skills, team players and project management skills. The team structure, and roles and responsibilities should be defined clearly.
Tools and Techniques to perform Benchmarking
Several techniques are used in the process, such as formal and informal conversation / meetings with different people, focus groups, marketing research, SWOT analysis, qualitative & quantitative analysis, reverse engineering, quality control variance reports, financial ratio analysis, surveys, process mapping and process performance measurements.
Different tools and techniques are used to analyze the benchmarking data, such as statistical analysis through check sheets, histograms, scatter diagrams, and pareto diagrams The purpose of the activity is to identify the gaps, understand the reason for the differences and prioritize the items.
What are the benefits of product benchmarking?
- Identification of strengths and weaknesses
- Comparison of where you stand versus competitors
- Provides an idea where an organization stands, and the organization can adopt change and develop an action plan
- Identification of the areas requiring improvement
- Helps set future targets and critical factors involved in improvement of the product
Benchmarking is a continuous process that is used by organizations to improve their products. It helps organizations not only to improve their product but also helps them stay competitive. It forces an organization to be receptive to and adopt changes. It allows you to evaluate your business performance and create strategies to enhance the overall business.
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