Benchmarking-beverage industry

Benchmarking-beverage industry

In today’s competitive economy, companies have to constantly improve their way of doing business to remain competitive. One way of doing this is benchmarking which is a contemporary management technique that involves identifying and adopting best practices in the industry for the purpose of business improvement. This essay discusses benchmarking as a contemporary management technique and why and how it would be a positive force in helping PepsiCo to achieve its critical success factors. 

Benchmarking is a management technique whereby a company attempts to continuously improve its business process by learning the best practices from successful companies in the industry (Kyro, 2003). An entity then evaluates its own business processes, studies and adapts the best practices according to its capabilities. Benchmarking is also a process of continuous improvement in the core activities of a company for the purpose of improving the competitive performance of a company. The technique involves comparing the business processes of an enterprise with that of its competitors with the aim of identifying the best ideas and processes that could contribute to efficiency in an entity (Jetmarova, 2011).

Entities use benchmarking for different purposes including:

  • A tool to improve quality
  • To detect and evaluate the leading competitors
  • To develop competitive products and services
  • To understand the market and position of an entity in the market
  • To attain competitiveness (Jetmarova, 2011).

The management technique could be used by any entity in any industry to achieve competitive advantage. PepsiCo is a beverage company that is the second largest globally in terms of market share and in 2017, the company reported over $63 billion in net revenue. The beverage company employs more than 285,000 people across the world and boasts of more than 22 brands each generating more than $1 billion in retail sales in 2017. Benchmarking is a management technique that could benefit PepsiCo in different ways and also help the company attain its critical success factors. The company could perform an internal benchmarking to assess the performance of different processes or departments or perform an external benchmarking to establish and compare performance within the industry. Currently, PepsiCo uses the SAP benchmarking to help provide the company with a more detailed business case and help in achieving key performance indicators to more than 50% of their business case (Hardy, Marcinek & Mathuria, 2013). Instead of performing its own benchmarking, PepsiCo uses the SAP benchmarking service provider to perform both internal and external benchmarking.

One way in which benchmarking could be a positive force in enabling PepsiCo to attain its critical success factors is by establishing performance baseline value sources. By comparing the business processes of PepsiCo and that of its competitors, PepsiCo will be able to identify and establish value sources in terms of the key performance indicators (Kyro, 2003). For instance, the beverage company could analyze its key performance indicators and compare them with those of other industry leaders in order to develop better indicators. The company could also set these performance indicators and attempt to attain them for the purpose of improving quality and efficiency.

Another way in which benchmarking could help PepsiCo to achieve its critical success factors is through opportunity identification and prioritization. Doing benchmarking will enable the beverage company to identify some of the best practices in the industry when it comes to production, operations and marketing, and prioritize the most efficient business processes. With information on some of the most successful business practices, PepsiCo would be able to identify key areas of improvement and an opportunity to implement the necessary changes. It will also help in identifying what to achieve and the extent at which the company can achieve these goals.

Benchmarking could also benefit PepsiCo in terms of supporting an on-going performance management. Since the company sets both short term and long term goals and implements strategies of implementing these goals, bench marking could help in supporting performance management (Hardy, Marcinek & Mathuria, 2013). The information collected through benchmarking could help in assessing the past performance of the beverage company and compare it with the current performance. In addition, it could help in comparing performance of PepsiCo with that of its competitors. Further, the information could help in identifying areas that the company needs to perform better.

Benchmarking could also be a positive force in enabling PepsiCo to achieve its critical success factors by measuring and comparing specific indicators that contribute to organizational success. For instance, the company could use benchmarking to measure staff retention, service delivery, customer service, innovation, brand awareness, or even debt management to assess how effective the company is in achieving success through specific indicators (Jetmarova, B. (2011). Benchmarking could help to highlight the most urgent or important indicators and processes that are in need for improvement for better achievement of the critical success factors.

In conclusion, benchmarking is a contemporary management technique that could have several benefits to entities that want to adopt the best practices in the industry. For PepsiCo, benchmarking could help to establish performance baseline value sources, identify opportunities and priority areas, support performance management, and measure and compare specific indicators. 


Leave a Reply