Advantages of Standardization

Standardization is the process by which a company makes it methods, especially its production processes, uniform throughout its organization. Standardization helps cut costs by eliminating duplicated effort and allows a company to take advantage of economies of scale when purchasing supplies. However, some advantages may be lost when a company decided to standardize its operations. Disadvantages Loss of Uniqueness If a company builds up a customer base that values its unique niche products, or if the company serves a specialized market, standardizing its processes may mean it loses some of its former customers. For example, if a restaurant builds its reputation on a varied and exotic menu, then changes to a standardized menu to provide a more predictable customer experience, its former customers may defect to competitors who provide more variety. Loss of Responsiveness. When a company expands into new markets, especially in foreign markets, standardization may work against the firm. While it may be cheaper for a restaurant to buy its trademark hamburgers in bulk, if it expands into a new market where people buy chicken much more often, its standardization measures may make it slower to respond to market conditions and end up costing money. Unsuited to Some Aspects of Business Standardization may be advantageous in some areas of business, such as production, but some aspects of a business should be tailored to the customers' needs. Customer service, advertising, distribution and product pricing must be driven by local market conditions to be successful. Stifles Creativity and Response Time Standardization has the potential to get a business into a rut. Standards, once implemented, soon become the status quo and may become entrenched in the corporate culture, making them hard to change when change is needed. However, market conditions often change, and companies that change quickly are best positioned to take advantage of them. Standardization may also stifle creativity, particularly in product design.