BENCHMARKING:

A CONTINUOUS PROCESS OF MEASURING OWN VITAL FACTORS AGAINST OWN PAST OR LEADERS OR COMPETITORS

Benchmarking is the process of comparing Benchmarking tools are simple or complex ratios (indicators) Indicators are made up of business results such as revenue, costs, added value, etc.

Issues: Identifying indicators, availability of data, comparisons at enterprise level vs. own past results or between enterprises.
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BENCHMARKING EXAMPLES

Performance of wood furniture manufacturing in two different enterprises e.g.

Comparing similar factors in the same or different enterprises e.g.:

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KPI change in given industrial sector over time Comparing performance of key industrial sectors in a region or country Comparing performance of regions or countries
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how materials are purchased how suppliers are paid how inventories are managed how employees are trained how payrolls are processed how fast new products get to the market how quality is managed

BENCHMARKING CONCLUSION

Important tool for entrepreneurs, consultants and policy makers Difficulties in obtaining data Sensitivity of entrepreneurs to releasing data Data validity verification Incentives for entrepreneurs taking part Cultural differences

It is a critical technique for making organizational transformation easy It requires a certain threshold of organizational willpower companies unable to muster the willpower to compare themselves with its past and with the world's best cannot implement any quality approach benchmarking demonstrates the requisite willpower or its absence
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SUMMARY:

Benchmarking is a Process! Benchmarking is not a goal in itself but helps identifying areas requiring further analysis and improvements. Extensive and systematic comparison using more than one variable. Trend implementing a benchmarking approach.
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Pharos Benchmarking Objectives

Obtaining information about absolute and relative change of major business indicators for the current date compared to some reference date in the past. Presenting this information in easy way for analysis such as radar graph and time series graphs. Providing trend identification and analysis tools by using simple variable averaging method. Allowing flexibility in defining any desirable averaging period within interval of 1-12 months. Using actual data available in Pharos and Produce Plus enterprise databases for obtaining objective results.
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Objectives

Minimizing possibilities for subjective judgments by individuals due to diversity of qualifications methods and errors. Avoiding questionnaires, sensitive proprietary information, its processing, human errors, incompetence as well as delays in getting results. Obtaining benchmarking results easy, simple and quickly at any moment of time. Supporting presenting only relative change figures in percent in business reports avoiding revealing sensitive key performance indicators Facilitating public discussions of performance management issues and knowledge distribution.
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7 Indicators

Net Profit (Pre Tax) Expenses Overall Sales Revenue Overall Added Value Overall Added Value per Employee Labor Ratio (Produce Plus) OEE (Overall Equipment Efficiency, ProdPlus)

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Formats

Radar Chart Time series

Period Averaged

Brief Summary Report Detailed Summary Report

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Reference Benchmarking: Added Value per Employee

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Reference Benchmarking: Net Profit

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Reference Benchmarking: Expenses

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KPI Change: Absolute & Relative

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Pharos Benchmarking: Definition of parameters

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Reference Benchmarking: Summary

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Conclusions

Pharos Benchmarking is simple and effective tool The source data is real enterprise database not questionnaires or third party interviews It presents both absolute and relative values of change Available for entrepreneur in continuous improvement process by mouse click at any time Relative improvement reports can be easily presented to prospective investors, banks or important customers The report is be additional validation to business proposal Benchmarking helps evaluating business development scenarios, decision consequences, innovations, strategies Excellent educational and business gaming tool The benchmarking reports can be used for support of policy making for clusters, regions, countries Can be used for multiple enterprises (XML reports) Can be further extended with benchmarking indexes
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