Objectives of Industry Benchmarking

by Rick Suttle

Small companies have several key objectives when benchmarking. These objectives can vary depending on what variables or attributes companies want to benchmark. The process of benchmarking starts with studying your major operations, employees and the performances of top competitors. Business owners then determine how well their companies measure up to these competitors. Subsequently, they use their findings to make improvements or to improve upon industry standards.

Evaluating Operational Efficiency

One objective of industry benchmarking is evaluating operational efficiency, according to eNotes' "Encyclopedia of Management." Small companies might study the way larger companies operate, including plant operations, organizational structure and selling methods. In doing so, they can discover certain steps they can take to to cut costs. For example, the top competitor may use robots for packing boxes instead of highly paid assembly workers. The competitor might also use more efficient lighting. Hence, company managers might decide to implement similar functions to save money.

Making Improvements

Small companies also use industry benchmarking to make improvements in various areas of their company. For example, a small consumer products company might find that their competitors' packaging holds up better in warehouses and supermarkets. Hence, company management may use this information to improvement their own package quality. Similarly, companies might find ways to improve service and pricing structures through benchmarking.

Determining Best Training Methods

Benchmarking is sometimes used to improve training methods. For example, a small fast-food restaurant company might study larger competitors to learn how they train workers. Top management might discover that the top competitor is certifying workers on various stations, including the register, food preparation and packaging meals. Workers might be certified after two days of station training and manual reading. Executives can use their competitive findings to implement their own comprehensive training program.

Gaining a Competitive Advantage

Some organizations might be near the top in performance or operational efficiency. Hence, they may execute benchmarking tactics to gain the upper hand on the top competitor. During this process, marketers might decide on new distribution channels, such as the Internet, for selling their products. They might also discover new uses and markets for their products. Hence, the benchmarking company's underlining objective might be eventually to overtake the competitor as market leader.

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