How Benchmarking Drives Value: Key Focus Areas

Organizational Right-Sizing

Benchmarking helps determine the optimal staffing and organizational structure needed for efficient operations. By comparing a company’s organizational metrics (headcount per function, maintenance technicians per line, production per employee, etc.) to those of high-performing peers, Caravel identifies where there is redundancy or gaps. This ensured that, for example, a multi-plant manufacturer wasn’t carrying 15% more headcount than necessary for its volume, freeing up resources to invest elsewhere. In practice, Caravel’s recommendations on right-sizing often involve both reducing excess layers or roles and adding capability in critical areas. The result is a leaner, more effective organization that can achieve performance goals without overburdening payroll.

Hidden Plant Opportunities

The concept of the “hidden plant” refers to unrealized capacity or efficiency that exists within current operations. Essentially, doing more with what you already have. Benchmarking is essential to uncovering these opportunities because it shines a light on what should be possible. Caravel’s hidden factory analyses compare a plant’s current throughput and yields to both internal benchmarks (e.g. best ever achieved rates, design capacity) and external ones. This analysis often reveals that a facility running at, say, 85% of its theoretical capacity could reach 95% with better practices. That difference might be millions in revenue.

For example, an agrochemical plant Caravel studied was sold out of product and assumed maxed out, but benchmarking quality and process data showed that by reducing variability and minor losses, they could increase capacity >20% without new capital. Indeed, by tackling people, process, and technology issues identified through benchmarking, the plant broke production records and added over $10 million/year in output. Hidden plant capture is one of the fastest ways to create value, and benchmarking provides the map to find it.

Margin Velocity Enhancement

“Margin velocity” refers to the speed and magnitude at which a business can generate profit from its operations, or how quickly it can translate improvements into bottom-line impact. Benchmarking supports margin velocity by pinpointing which levers will yield the greatest and quickest margin gains. Caravel examines factors like product mix, pricing strategy, and cost structure in relation to industry benchmarks. In the polymer film example, by benchmarking product margins against production efficiencies, Caravel identified low-margin products that were consuming valuable line time. By culling or re-routing these and focusing on higher-margin products (and improving their run rates), the company could accelerate margin growth (more profit per hour of manufacturing). Additionally, benchmarking helps set aggressive yet achievable targets (e.g., moving from average 15% EBITDA margin toward a top-quartile 25% margin). Caravel’s work with the global chemical company achieved a margin expansion from roughly 15% EBITDA to over 30% EBITDA in five years, a testament to using benchmarks to drive rapid margin improvement.

Standardization and Assimilation

When companies grow by acquisition or operate multiple facilities, standardization of processes and metrics becomes key to overall success. Benchmarking is the linchpin of standardization efforts. Caravel often creates a benchmarking platform or playbook that defines the standard operating practices, performance metrics, and tools that all sites should use. During acquisitions, this platform acts as a yardstick to assimilate the new plant quickly. The acquired site is measured against the standard on day one, and a targeted plan closes any gaps. Standardization via benchmarking ensures consistency, which in turn makes performance more predictable and scalable. For corporate development leaders and COOs, this is a huge advantage since it means an acquisition can be turned into a high-performing asset in short order by leveraging the proven model. Additionally, standardized benchmarks foster a culture of internal competition and cooperation, where plants can learn from each other and from the “gold standard” playbook.

In all these areas, benchmarking serves as both diagnosis and guide. It identifies where value can be created (or where value might be leaking) and directs the organization’s efforts accordingly. The result: faster improvements, bigger financial impacts, and more sustainable changes.