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Bench Marking

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BENCHMARKING ENCHMARKING Report produced for the EC funded project INNOREGIO: dissemination of innovation management and knowledge techniques by Dr Vassilis Kelessidis Thessaloniki Technology Park J A N U A R Y 2 0 0 0 BENCHMARKING Contents DESCRIPTION .....................................................................................................2 1.1. WHAT IS THE TECHNIQUE .............................................................................2 1.2. OBJECTIVES OF THE TECHN
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   Report produced for the EC funded project   INNOREGIO: dissemination of innovation management and knowledge techniques by Dr Vassilis Kelessidis Thessaloniki Technology Park J ANUARY 2000 BBB EEENNNCCCHHHMMMAAARRRKKKIIINNNGGG  B ENCHMARKING I NNO R EGIO project Dr V. Kelessidis Contents 1.D ESCRIPTION .....................................................................................................2 1.1.W HAT IS THE TECHNIQUE .............................................................................21.2.O BJECTIVES OF THE T ECHNIQUE ...................................................................21.3.D ESCRIPTION OF THE TECHNIQUE  / M ETHODOLOGY  / A LTERNATIVES ............31.4.E XPECTED RESULTS  /  BENEFITS  /  PITFALLS ...................................................41.5.C HARACTERISTICS OF FIRMS  /  ORGANIZATIONS  /  SERVICE PROVIDERS ...........6 2.A PPLICATION .....................................................................................................8 2.1.F IRMS  / O RGANIZATIONS WHERE THE TECHNIQUE HAS BEEN APPLIED ............82.2.T YPES OF FIRMS  /  ORGANIZATIONS CONCERNED ............................................82.3.I MPLEMENTATION COST & TIME FRAME ........................................................92.4.C ONDITIONS FOR IMPLEMENTATION ...........................................................122.5.E UROPEAN ORGANIZATIONS SUPPORTING IMPLEMENTATION .......................12 3.I MPLEMENTATION P ROCEDURE .......................................................................16 3.1.S TEPS  / P HASES .........................................................................................163.2.P ARTIAL TECHNIQUES AND TOOLS PER STEP ................................................183.3.R ELATED SOFTWARE .................................................................................20 4.B IBLIOGRAPHY ................................................................................................225.A NNEX .............................................................................................................24 5.1.G UIDELINES FOR B ENCHMARKING C ONTACTS ............................................245.2.C ODE OF C ONDUCT ....................................................................................265.3.B ENCHMARKING T ERMS ............................................................................27  B ENCHMARKING I NNO R EGIO project Dr V. Kelessidis2 1D ESCRIPTION 1.1What is the technique Benchmarking is the process of improving performance by continuously identifying,understanding, and adapting outstanding practices and processes found inside and outsidean organization (company, public organization, University, College, etc.).It was pioneered by Xerox Corporation in the 1979s, as part of their response tointernational competition in the photocopier market, and srcinated from reverseengineering of competitors' products. Its scope was then enlarged to include businessservices and processes. Xerox now benchmarks nearly 240 performance elementsalthough, when they started benchmarking several years ago, considerably fewerelements were benchmarked.Benchmarking of business processes is usually done with top performing companies inother industry sectors. This is feasible because many business processes are essentiallythe same from sector to sector.Benchmarking focuses on the improvement of any given business process by exploiting best practices rather than merely measuring the best performance. Best practices are thecause of best performance. Companies studying best practices have the greatestopportunity for gaining a strategic, operational, and financial advantage.The systematic discipline of benchmarking is focused on identifying, studying, analysing,and adapting best practices and implementing the results. To consistently get the mostvalue from the benchmarking process, senior management may discover the need for asignificant culture change. That change, however, unleashes benchmarking’s fullpotential to generate large paybacks and strategic advantage.The benchmarking process involves comparing one’s firm performance on a set of measurable parameters of strategic importance against that of firms’ known to haveachieved best performance on those indicators. Development of benchmarks is aniterative and ongoing process that is likely to involve sharing information with otherorganizations working with them towards an agreeable metrology.Benchmarking should be looked upon as a tool for improvement within a wider scope of customer focused improvement activities and should be driven by customer and internalorganization needs. Benchmarking is the practice of being humble enough to admit thatsomeone else is better at something and wise enough to learn how to match and evensurpass them at it. 1.2   Objectives of the Technique Benchmarking entails gathering information from one organization to beneficially applyit to another organization. The scope is to improve the processes performed at therecipient organization by applying efficient work processes (work done by people,equipment and information systems). It is a valuable Business Engineering Techniqueand its application not only identifies innovative work processes but also involvesdiscovering the thinking behind innovation.  B ENCHMARKING I NNO R EGIO project Dr V. Kelessidis3 It is a form of comparative analysis. It is necessary to establish some common ground asthe basis for comparison. Usually one identifies one or more functional areas for analysisand selects one or more metrics as a quantitative basis for comparison. These are thencompared with agreed benchmarks derived from recognized sources of best practice.Ultimately, two questions need to be answered: ã   What are the alternatives to our present process? ã   What are the benefits, costs and risks of the alternatives?Benchmarking essentially works to the extent that benchmarks can be agreed and suitablecomparators found for which measurements are also available. 1.3   Description of the technique / Methodology / Alternatives There are five phases for implementation of benchmarking:A.   PLANNINGDuring this phase the organization determines which process to benchmark andagainst what type of organization.B.   ANALYSISFollowing data acquisition, an analysis is performed for the performance gap betweenthe source organization and the recipient organization. An indication of best practiceis then evident.C.   INTEGRATIONIt involves the preparation of the recipient for implementation of actions.D.   ACTIONThis is the phase where the actions are implemented within the recipient organization.E.   MATURITYThis involves continuous monitoring of the process and enables continuous learningand provides input for continuous improvement within the recipient organization.There are, in general, four types of benchmarking:1.   COMPETITIVE BENCHMARKINGBenchmarking is performed versus competitors and data analysis is done as to whatcauses the superior performance of the competitor.It can be, in some respects, easier than other types of benchmarking and in somerespects more difficult. It is easier in the sense that many exogenic variables affectingcompany performance may be the same between the source and the recipientorganization, since we are talking about companies of the same sector. On the otherhand it is more difficult because, due to the competitive nature, data recuperation willnot be straightforward. Difficulties of this type may be overcome if the twoorganizations have for e.g. different geographical markets.
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