Many companies develop an inward focus (that is, “not invented here”, “we’ve always done it this way”, etc.) that limits their opportunities to improve. Benchmarking is a technique to measure an organization against other organizations and identify opportunities and approaches to improve. David Kearns, the Chief Executive Officer of the Xerox Corporation, states that “Benchmarking is the continuous process of measuring products, services, and practices against the toughest competitors or those recognized as industry leaders.”
Benchmarking relates to product development by providing an external perspective on opportunities to improve products, technology, manufacturing and support processes, the product development process, and engineering practices. The starting point is to develop a willingness to scrutinize an organization operations and products and be willing to compare them with other organizations without being defensive. This straight-forward methodology consists of the following steps:
The external information gathering phase has been approached in a variety of ways: product examination/reverse engineering to understand technology and manufacturing processes, in-depth assessment of a single benchmark partner, less in-depth data gathering/surveys of a larger number of partners.
These comparative evaluations are not necessarily made with an organization in the company’s same industry segment, but with an organization that performs a similar function. Benchmarking involves identifying relative performance differences and gaining an understanding of the reasons that contribute to a higher level of comparative performance. Once this understanding has been obtained, the organization needs to translate it into appropriate actions to improve its own performance. An organization does not necessarily want to copy approaches taken by other organizations, because they may not be appropriate for its business environment, products, market, or culture.