Industry practices refer to the common procedures, methods, standards, and behaviors typically adopted by companies operating in the same industry. These practices are often formed based on collective experience, accepted strategies, regulations, and industry standards. They can span a wide variety of areas, including:
- Operations: Standard procedures for production, delivery, quality control, etc. For example, in the automotive industry, lean manufacturing is a common practice to reduce waste and increase efficiency.
- Human Resources: Hiring practices, training procedures, common benefit packages, etc. In the tech industry, for example, providing flexible working hours or the option to work remotely has become a common practice.
- Marketing and Sales: Common marketing strategies, sales techniques, pricing methods, etc. For instance, many consumer goods companies use a mix of online advertising and in-store promotions.
- Finance and Accounting: Accepted methods for budgeting, financial reporting, etc. Many industries follow the generally accepted accounting principles (GAAP).
- Regulatory Compliance: Methods for ensuring compliance with laws and regulations specific to the industry. For example, pharmaceutical companies must comply with strict FDA regulations regarding drug testing and approval.
- Environmental, Social, and Governance (ESG) practices: Many industries have accepted practices related to sustainability, social responsibility, and corporate governance. These may be driven by both regulatory requirements and consumer expectations.
It’s worth noting that while industry practices can provide useful guidance and benchmarks, they shouldn’t stifle innovation. Companies can and do find success by deviating from industry practices when they have a strategic reason to do so.
Example of Industry Practices
Let’s consider the restaurant industry as an example.
- Operations: One common industry practice is to use a just-in-time inventory system to ensure freshness of food and reduce waste. The daily menu may be adjusted based on the availability of fresh produce.
- Human Resources: It’s common in the restaurant industry to have a mix of part-time and full-time employees, with workers often hired on a seasonal basis during busy periods. Additionally, tips often supplement wages, especially for front-of-house staff like servers and bartenders.
- Marketing and Sales: Many restaurants make use of social media to showcase their dishes and advertise special promotions. They might also participate in local food festivals or events as a form of community outreach and marketing.
- Finance and Accounting: Restaurants typically track key metrics such as food costs, labor costs, and average sales per cover to manage their finances. They also use point-of-sale systems to track sales and taxes.
- Regulatory Compliance: Restaurants must adhere to health and safety regulations, which include regular inspections of their premises. They also need to comply with licensing laws if they serve alcohol.
- Environmental, Social, and Governance (ESG) practices: Many restaurants are increasingly focusing on sustainable practices, such as sourcing locally grown produce, minimizing food waste, and reducing energy consumption.
It’s important to note that while these practices are common, they aren’t universal – every restaurant is unique and may adopt different practices based on its specific business model, target market, and strategic goals.