When was the last time you benchmarked your manufacturing operation against your competition? Are you aware of how your revenue stacks up against your peers? If you haven’t used benchmarking, it can be difficult to know how to price your products. Without these insights, manufacturing businesses often rely on assumptions rather than data-driven decisions, which can lead to missed opportunities or misaligned strategies.

Internal vs. External Benchmarking

Manufacturing and distribution organizations use internal benchmarking tools and techniques to evaluate their performance relative to internal expectations.

For example:

• “Are we on track to meet this year’s budget projections?”
• “How does that compare to last year’s performance?”
• “How does this month shape up compared to last month…or the same month last year?”

This internal lens helps leaders identify trends, spot inefficiencies, and make adjustments before small issues become major setbacks.

External benchmarking asks many of the same questions and employs similar tools and techniques to measure performance, but the focus is on business performance relative to competitors, peer groups and broad industries. This outward perspective helps companies understand where they truly stand in the marketplace, not just within their own four walls.

For your business, insights gained through external benchmarking can be worth their weight in gold. Well designed and implemented external benchmarking can help your business understand how it performs in numerous ways relative to competitors and industry peers. Those insights, in turn, can deliver competitive advantages that may help you gain market share and boost profits. Armed with this knowledge, leaders can make strategic decisions with far greater confidence and precision.

Four Strategies for Benchmarking Manufacturing Success

1. Define Success and Set Clear Benchmarking Goals

Define business success, then set your benchmarking goals accordingly. Business goals should propel your business toward a quantifiable end. To understand what success looks like, it’s essential to define your business’ key performance indicators—then, understand what you want to measure, why you’re measuring it and how you plan to use the insights you gain. Clear goals ensure that benchmarking efforts stay focused and meaningful rather than becoming an overwhelming amount of data.

2. Assess Internal Capabilities and Identify Resource Gaps

Identify the internal resources you can apply toward your benchmarking efforts and explore options for outside expertise where tangible gaps may exist. Do you have people in place with the necessary skills to undertake business or financial analyses? Do they have the time and/or capacity to do that? Are they committed to that effort? And will they alone get the job done? Recognizing your internal strengths and limitations early helps you build a more realistic and effective benchmarking plan.

3. Establish Timelines and Maintain Accountability

Establish timelines and keep all parties accountable for completing their assignments on schedule. A structured timeline prevents benchmarking efforts from stalling and ensures that insights are delivered when they are most useful for decision-making.

4. Stay Flexible: Reevaluate and Adjust Your Metrics

Evaluate and recalibrate as needed. Things change, both inside your business and beyond its walls. A relevant success metric for one year, or one quarter, may be upstaged by a newer, more significant metric for the next. Similarly, the competitive landscape may change to the extent that different benchmarking metrics take on greater importance. Keep your benchmarking program nimble, and adjust it as needed to accomplish your business objectives and help you achieve victory. Continuous refinement ensures that your benchmarking efforts remain aligned with evolving goals and market realities.

Corrigan Krause Can Help Your Manufacturing Organization

The Manufacturing Services team at Corrigan Krause can help your team develop and execute a benchmarking plan to help take your organization to the next level. Click here to learn more about becoming a client.