Finding corporate cost reduction through benchmarking

When considering the procurement process, conducting thorough benchmarking of companies offering near-identical materials can help enterprises save big in the long run. 

It's the same protocol many computer manufacturers look for when choosing whether to power their machines with CPUs produced by Intel or AMD. Affordability needs to be taken into consideration, but quality and performance can't be sacrificed. 

The weigh-in 

Scrutinizing procurement and productivity in a comprehensive manner is a good way for companies to identify ways to achieve corporate cost reduction. However, as with any sector, comparing internal operations with those of competitors is essential for winning market share. 

Take the laundry industry for example. According to American Laundry News, although factors related to geographies and climate have an impact on contention within the linens cleaning economy, because operations among sector participants are relatively the same, benchmarking presents a solid opportunity for laundromats to see whether or not they'll lose business as a result of:

  • Obtaining new washers and driers
  • Expanding facility capacity
  • Installing solar panels
  • Offering patrons the chance to purchase one-time use detergent 

Collecting and using information 

How are benchmarking tasks conducted? The source outlined the tactics used by Textile Rental Services Association, which leverages surveys and other various resources to help laundry companies develop concise, accurate comparisons between them and competitors. Managing Director David Chadsey acknowledged the benefits of business process outsourcing to conduct cost and productivity analysis. Hiring professionals to survey expenditures and output and show where improvements can be made is profitable because they can dedicate more resources to the task and scrutinize a client's competitive pricing in an unbiased manner. 

"I think vendors are a very good source," said Chadsey, as quoted by American Laundry News. "Your chemical vendor doesn't just come into your plant - he's going into other plants that are similar to yours."

Capitalizing on opportunities 

Depending on what industry a business is in, it should consider participating in publicly sponsored initiatives that reduce the cost of conducting certain operations. 

For example, CTBR noted that the Scottish government recently gave £2.2 million to the Carbon Trust's Offshore Wind Accelerator program, which promises to reduce the expenses associated with installing turbines by 10 percent. The move was initiated in the hope of encouraging collaboration between organizations focused on eliminating costs pertaining to activities in Scottish waters. 

Most importantly, strategic benchmarking is about identifying opportunities wherever they may lie. If a new business process, supplier or operation model is recognized, then the analysis was a success. 

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