Competitive-Benchmarking.com

What is competitive benchmarking ?

Competitive benchmarking is a process used in many sectors to evaluate and compare products, processes or performances against those of competitors or industry players.

In a business, it is a key activity to stay ahead in a competitive market.

Very often, the benchmarking is used to fill a gap and to solve a weakness. It is the case #1, the first reflex. However, the competitive intelligence may offer an access to something else, it is case #2. An access to the best practices, on something you were doing well, which is not a weakness, but you will get findings to do even better.

Ideally, Benchmarking should be a continuous activity to stay up-to-date industry trends and to do not miss a strategic shift. 

Some people will say that competitive benchmarking and competitive analysis are different. Which is true. Competitive benchmarking is more general than competitive analysis which more specific and detailed. However, apart from this difference in semantics, the method remains the same.

In this article, we will find the general methodology to perform a benchmark in the first case we talked above: Filling the gap.

Methodology

Step 1 : Planning

The first step involves defining the objectives of the benchmarking process and selecting the areas to analyze. This includes:

  • Choosing what do you want to benchmark: For instance, It can be a market share, a customer satisfaction, a process efficiency or a product performance. It can be a product weight, a product cost or whatever. 
  • Selecting the targets: This could be a direct competitor, a market leader, or even an organization from a different industry with similar practices.
  • Defining performance criteria: It’s crucial to choose the key performance indicators (KPIs) that will be used. What kind of data to collect and how. Make sure that these metrics are relevant to your goal.
  • Deciding if you perform this activity internally or if you select a benchmarking partner: Implementing a benchmarking process can be costly and require significant resources. Depending on your goal, your capabilities and the complexity your benchmark requires, you have several options: 100% homemade, internal resources with external software or 100% outsourced. Weigh the pros and cons. Even compare the service providers and their offers. They can be very different. The way that you want to collect and store the data is the big question.

Step 2 : Data Collection

Once the objectives and criteria are defined, it’s time to gather information. This stage is often the most challenging, as it requires:

  • Access to relevant data: This can involve public research, interviews, surveys, annual reports, industry studies, etc. In case of product benchmarking, you will need to source the product, to tear down the product and to have all the necessary equipment and resources with availability and skills
  • Establishing a reliable methodology: It can be surprising, but it is maybe the most difficult part (and sometimes also the most boring). You need to ensure that the collected data is accurate and comparable. 

Step 3 : Data Analysis

Once the data is collected, it needs to be analyzed to identify performance gaps between your organization and those you’re comparing. This stage includes:

  • Comparing the results: This involves drawing comparisons between your organization’s performance and that of the others. That is why a reliable methodology for data collection is key.
  • Identifying gaps: Analyzing where and why your product or organization is underperforming or outperforming (in terms of cost, quality, etc.). The answer is something a bit tricky because it may have multiple factor. Don’t hesitate to consult experts on the topic, internally or externally. A wrong conclusion may lead to big mistakes in the future.
  • Identifying best practices: You may identify multiple gaps. Some are relevant, some and less. It important to score your findings and check how they may affect your goal or your KPI. What is cost/benefit? Is it accessible for your organization? How?

Step 4 : Implementing Improvements

The next step is to develop a plan of action to apply the insights gained from the benchmarking process. Some improvements can be made immediately, and some others requires long term strategies. These strategies should be specific to your organization and consider your unique factors (company culture, available resources, etc.). This is part of project management.

Step 5 : Monitoring and Adjustment

Still part of project management, once changes have been implemented, it’s important to monitor their effectiveness and adjust as necessary. As benchmarking process has a cost, it is good to measure the return on investment. Keep in mind that there are still two questions: What is my ROI using benchmarking activities? And What would I have missed if I hadn’t done this activity? What would be the consequences? According to your conclusion, you may adapt the way you will perform benchmarking in the future. In other words, back to step #1 : Planning – Deciding if you perform this activity internally or if you select a benchmarking partners and how.

Benefits of Benchmarking

Benchmarking offers several advantages:

  • Organizational Improvement: It encourages organizations to systematically look for ways to improve their practices. As a result, your employees develop their knowledge and learn new practices. It is a competitive advantage for employee retention.
  • Increased Competitiveness: By adopting best practices, organizations can become more efficient and competitive.
  • Cost Reduction: It helps identify more efficient processes or technologies that can reduce costs.
  • Innovation: It opens new avenues for innovation by identifying solutions used by your competitors or in other industries or organizations.
  • Risk mitigation: It prevents organizations from missing market or technology shifts and helps proactively identify potential threats and new developments.
  • Customer satisfaction: By improving your products or processes, your customers will see your commitment to staying on top. In addition, quickly identifying customer needs and expectations will give you a competitive advantage.
  • Quality improvement : Quality is perhaps one of the most important differentiators. By adopting best practices and sometimes learning from the mistakes of others, you can ensure that you meet or exceed customer expectations.

Limitations and Precautions

Although very beneficial, benchmarking also has some limitations:

  • Difficulty in Accessing Data: Information on internal practices of competitor companies can be difficult to obtain.
  • Excessive Imitation: Blindly copying others without understanding the specifics of your own organization may lead you in the wrong direction and make the wrong decision. Take a step back and think twice before implementing.
  • Intellectual Property: Be careful when you find insights. Before implementing these solutions in your product, check that they are not patented. If so, you may be able to find a way around it.
  • Costs and Resources: Implementing a benchmarking process can be costly and require significant resources.

In summary, benchmarking is a powerful tool for improving your performance by learning from others. However, it should be implemented thoughtfully and adapted to the specific context of each organization in order to fully benefit from it.

Some example of product benchmarking

  • Specifications analysis : Evaluate and interpret a product’s specifications to understand its features, capabilities, performance, and overall value in order to identify areas for improvement or differentiation in the market.
  • Performance testing : It refers to the process of evaluating a product’s functionality, durability, and efficiency under various conditions
  • Perceived quality : it plays a crucial role in how consumers view and interact with products. While it may not always align with actual quality which can be objectively measured through specific performance attributes. 
  • Design analysis : It contains a wide range of attributes : materiel, weight, stiffness, fastener, manufacturing process, packaging with others parts. Coupled with an in-depth teardown, it will be the basis for the investigation that follows.
  • Material inspection : This inspection type confirms the composition or material grade of a substance. XRF analyzers, spectrometers, chemical tests are commonly used. In addition, techniques like tensile test, hardness test or Structural inspections can be performed.
  • Costing analysis : Product costing refers to the process of calculating all costs associated with manufacturing a product. The goal is to determine the total cost of production, which includes both direct and indirect costs.
  • CO2 footprint calculations : Those calculations provide valuable insights into the environmental impact of a product. Carbon footprint can be considered following there perspectives :
    • Craddle to Gate : Raw Material Extraction, Production, Manufacturing, Transportation and Distribution
    • Craddle to Grave : Including the Usage
    • Craddle to Craddle : incluing the End-of-Life and recycling

Other types of Benchmarking

Benchmarking can be used in other ways than comparing ourselves to our competitors. Sometimes it is interesting to look outside and get fresh ideas from other departments within your organization or from other companies.

  • Internal Benchmarking : Internal benchmarking involves comparing the performance or practices of different units or departments within the same organization. This can be useful for identifying inefficient or underperforming processes in certain parts of the organization, or for promoting the sharing of best practices across the enterprise.
  • External Benchmarking : External benchmarking is broader and involves examining best practices across industries without being limited to a specific function. This type of benchmarking can provide new and innovative ideas by observing effective practices from very different industries.

Looking for a benchmarking service provider?

If you are looking for a benchmarking service provider to perform your competitive analysis, have a look at this website : www.good2last.com