THE ROLE AND İMPORTANCE OF BENCHMARKİNG İN İMPROVİNG ENERGY EFFİCİENCY

Hajizadeh Elshan Makhmud oglu

Prof. Dr., Azerbaijan State University of Economics - UNEC Head of the Center for Energy Economics.

ORCID ID: 0000-0001-5447-9676, E-mail: elshan@hajizada.com

Abstract

The relevance of the selected study is related to the increase in energy efficiency and the expansion of the use of benchmarking technologies in this area. Based on this, the article explores the principles and strategies of benchmarking, substantiates its role and importance in improving energy efficiency. It is shown that benchmarking is a powerful tool for business development with reference to technologies and advanced knowledge used by competitors. Taking into account the growing importance of energy efficiency in the Republic of Azerbaijan, the article also focuses on relevant research in this area. Based on this, the article points out that the application of benchmarking in various sectors of the national economy, especially in energy-intensive industries, can be achieved with greater efficiency. Its wide application will lay the foundation for a sustainable entry and strengthening of small and medium-sized companies in the global market. Along with this, there is a need to improve the national standardization system with the widespread use of benchmarking in the country. In all these approaches, the benchmarking process should also be considered as part of the overall quality management system.

Keywords: benchmarking, energy efficiency, competition, business processes.

JEL: C21, L94, M2, Q4; UDC: 338.24:001:89:620.98:339.137.2 (479.24)

Introduction. In modern times, the sustainable provision of the economy with energy resources, as well as increasing energy efficiency is one of the important indicators of the state's level of development and strategic goals. With this in mind, the countries of the modern world are meeting the growing demands of energy saving and energy efficiency, and are making appropriate investments by developing programs in this direction. Energy conservation and energy efficiency are more important in the sphere of enterprises and organizations. This is ensured through the use of new economic methodologies. One of such advanced methodologies is a benchmarking tool, a system for studying the positive experience of an economic entity based on benchmarks. Given the growing importance of energy efficiency in the Republic of Azerbaijan, the article focuses on relevant research in this area.

Bençmarkinq prinsipləri və stratejiləri: In 1972, the US research consulting organization PIMS concluded that for effective business development, it is necessary to know and study the best practice of other enterprises. In 1979, US corporation Xerox launched a large - scale project called “competitiveness comparison-competitiveness benchmark” to analyze cost and quality in comparison with Japanese products. But conceptual approaches to this issue were already taking root in Japan a few decades ago. Since then, benchmarking began to develop as a comparative assessment tool in the United States, Japan and Europe, gradually integrating into the management system. The most effective examples of active economic development with the introduction of benchmark in the modern period are Japan and the people's Republic of China - the PRC. Previously, these countries were not benchmarking, they relied on simple copying and often even industrial espionage. If Japan was able to develop its own technologies and now actively used the benchmark tool in the field of quality and energy efficiency, PRC enterprises sometimes, as before, copy other products and master the technology, ignoring author and commercial rights [1]. Despite all this, the benchmark method is widely spread and developed all over the world.

Benchmarking-is a systematic and continuous process of benchmark enterprise search in order to study the positive experience of an economic entity. Benchmarking is understood as a set of methodological techniques for market analysis in laconic interpretation [2, p. 14]. The word entered the economy from Geodesy. In a direct translation from English, benchmarking means benchmark evaluation. It also finds its expression as a mark of a level or a check-test point. Benchmarking is a comparative analysis of processes, which involves the identification and adaptation of existing patterns of effective activity of the enterprise to improve its work on the basis of reference indicators. This analysis involves two processes as an assessment and comparison. It is characterized by the fact that the “best” product and marketing processes used by direct competitors and companies in other similar areas are taken as a model to determine ways to improve their products and experience. From this point of view, this istilah sometimes finds its expression as benchmark marketing.

It should be emphasized that a single conceptual apparatus of benchmarking on the theoretical plane still remains not fully formed. In this regard, each researcher interprets its scope in a unique way. However, it is unanimously believed that its concept originated in Japan in the 1950s. Although it was methodically clarified by American Scientists in the 1970s, its interpretation continues to evolve [3].

The quality of benchmarking may be influenced by the observance of four basic principles [5]:

1.Research in the field of business should be conducted by a team with a common vision that has clear goals.

2.When analyzing competitors, it is necessary to take into account as similar processes as possible and the specifics of at least the same business.

3.For the formation of new strategies, one should select Clear, real and measurable information to learn and compare when looking at the indicators of your company and competitors, avoid abstractions.

4.It is not necessary to analyze inaccurate information with no basis.

As a benchmarking process, it aims to improve the situation only in one direction of activity. In order to realize the objectives, the benchmark sets the following tasks [1]:

* analysis of competitors and identification of market leaders;

* analysis of internal resources of the company and their proper distribution;

* comparison of competitors ' working practice and ways to achieve their results;

* formation of a development strategy through market leaders.

To achieve the goals and objectives set in the description of the implementation of the benchmark, certain actions must be performed [3]:

* Marketing intelligence - learning competitors ' marketing strategy;

* Actual data analysis-study of methods of doing and developing business from successful organizations;

* Data detection ( fixation) - writing and parallel analysis of all important indicators for the company;

* Competitors ' analysis - an in-depth study of the experience of similar brands and brands;

* Comparison-a mutual comparison of the existing strategy of the company to the strategies of competitors.

Sub-methods can also be added to these methods [2]:

* one-stop benchmarking-enterprises independently collect information about competitors and partners;

* joint evaluation - businesses voluntarily exchange information with each other;

* database-based benchmarking - data is collected in databases on any platform;

* a team of third - party benchmarking-consultant-experts usually collects information from participants anonymously, forms an aggregated report and actively mediates communications;

* group benchmarking-participants meet openly, communicate, discuss their methods, coordinate their actions on the inadmissibility of negative consequences, achieve a compromise, conduct excursions to the enterprise.

The following types of benchmark are distinguished [1]:

* General benchmarking - quantitative and qualitative comparison of production, sales and services by own enterprise with similar activities of the companies that have achieved great results;

* Functional benchmarking - quantitative and qualitative comparison of the parameters of individual functions of the enterprise (processes, operations, methods) with the analogous parameters of more successful colleagues working in the same conditions;

* External benchmarking - comparison of performance or experience of an organization with similar business processes with other organizations;

* Internal benchmarking - a comparative analysis of the various divisions and services of the company in order to identify the best indicators and the most effective business processes within the individual organization;

* Strategic benchmarking - a set of various strategic measures aimed at identifying the strengths and opportunities of the enterprise in order to develop a competitive advantage in the market for the long term;

* Comparative benchmarking - collection and comparison of quantitative data indicating key performance indicators;

* Practical benchmarking - collection and comparison of quality information on how the company works, how people, processes, technologies work;

* Process benchmarking-an assessment of the solution of a specific limited problem.

Along with all this, other types and categories of benchmarking have been identified. Each type of benchmark plays a certain role in itself and allows you to achieve relevant specific results.

The benchmarking methodology combines a number of progressive measures carried out in stages. These stages are broad-spectrum and can be briefly characterized as follows [6]:

Stage 1. Identifying functions and business processes that need improvement;

Stage 2. Determination of analyzed indicators;

Stage 3. Identification of the best economic actors within and outside the studied area;

Stage 4. Evaluation of the collected indicators in the selected direction;

Stage 5: preparation of measurement data;

Stage 6. Leadership, comparison and analysis of own indicators;

Stage 7. Work on errors based on the conducted research;

Stage 8. Application, preparation and finalization.

Benchmarking should not be understood as a blind imitation. Its main task is to learn the best practice and ensure compliance.

It is necessary to distinguish the benchmark from the main indicators of effectiveness. This differentiation is due to the fact that benchmarking is the criteria for comparing a company with others, while the main indicators of effectiveness are the target indicators that are determined according to the strategy adopted by a company. The difference, on the other hand, is also that the main indicators of effectiveness are internal work, more focused on the characteristics of the company and the result of the agreements of management and performers. And benchmarking is always a look from the outside, a description of the activities of already existing competitors or benchmark companies. Moreover, in practice, often come across situations where companies transfer benchmarks indicators to key efficiency indicators. That is why it is advisable to first conduct benchmark, and then, on its basis, determine the main indicators of effectiveness.

Benchmarking as a research method has a number of important advantages and also relevant disadvantages. As its advantages, the following can be distinguished:

* rapid increase in product quality by properly analyzing competitors ' preferences;

* the possibility of preventing the occurrence of difficulties and loss of profits by studying someone else's unsuccessful experience;

* creation of information, technical and financial infrastructure for business expansion;

* optimization of all functional components of the business by applying the best solutions of competitors;

* review of budget allocation and thus achieve financial competitiveness;

* minimal financial and temporary costs for the analysis and application of received data.

As a reference assessment, benchmarking provides an opportunity to save time and money in the enterprise, to apply the best products and technologies of competitors, including avoiding mistakes of others. Rapidity, multifunctionality, low cost make benchmarking an almost ideal tool. However, its shortcomings are also presented. The main thing here is that there is always a need for good professionals who can understand what information is really useful and what use does not give clear advantages to the business. It should also be borne in mind the difficulty of obtaining objective indicators and the fact that some competitor strategies may not be suitable in the current situation. Therefore, it is important to have a competent and professional analyst who is able to select appropriate development strategies in this sphere and eliminate schemes that are clearly not working.

Benchmark in improving energy efficiency: Based on the starategic nature of the strengthening of energy security, some countries of the world provide such increasing requirements as energy saving, energy efficiency, develop programs in this direction and implement appropriate capital investments. Sustainable provision of this is carried out with the expanding application of the Institute of energy audit with the help of the formation of a number of concepts and the use of economic tools and mechanisms in the modern time. Of course, the use of benchmarking technologies also increases its importance. Thus, in the current development sphere, benchmarking is considered one of the main tools to support and continuously improve activities in the field of energy conservation. Benchmarking is used as an integral part of the management system in energy planning. The research results performed by its methods provide valuable information for conducting objective energy analyzes in this direction. Depending on the level of energy efficiency, enterprises gain ratings as a result of the benchmark. According to this rating, tax incentives, credit rates, subsidies and other incentives may be applied. This encourages them to save energy and increases the energy efficiency of enterprises, cities, regions and countries in general [4].

In the provision of energy efficiency, two types of benchmarking are preferred, external and internal. External benchmarking is considered to be more important, focusing on the creation of energy-saving facilities, equipment, products and services. Internal benchmarking is aimed at intra-organizational facilities in order to promote better practice of implementing energy-efficient measures [7]:

Energy efficiency benchmark involves the collection and analysis of data to evaluate and compare the efficiency of use of energy resources. The comparison is more efficient in industries with high energy consumption. Indicators of energy efficiency make it possible to compare the current situation in the company with other companies in the industry. The goals of energy efficiency are determined on the basis of data from the most successful companies. It should be emphasized that the establishment of the Institute of energy audit in the Republic of Azerbaijan is of great importance. In this regard, the law “on efficient use of energy resources and energy efficiency” was prepared and adopted in the country. The adoption of this law gave impetus to the implementation of international standards, progressive norms and requirements in the use of energy resources, the development of energy efficiency and energy audit services. Taking a look at all these topical issues, the essence of energy audit and the efficiency aspects of the application of this institute in the Republic of Azerbaijan have become the subject of analysis.

If we look at the history of the benchmark and its formation, we can see that the system of rating and comparison of energy efficiency indicators of enterprises and Holdings is still widespread in Europe, the USA, Japan and the PRC. For these purposes in Europe, the en16231:2012 Energy Efficiency Comparison methodology standard has been approved. This standard includes important demanding stages such as goal setting, process planning, data collection, verification, analysis and creation of reporting materials [8, 9]. Proceeding from this, there is a need to develop an appropriate standard in the Republic of Azerbaijan.

Energy is the main sphere of human economic activity as a large set of natural and artificial subsystems that serve the transformation, distribution and use of all types of energy resources. Therefore, benchmarking in the energy sector should be considered as the collection and analysis of data on the assessment and comparison of the effectiveness of the use of energy resources.

Result. Benchmarking is a powerful tool for business development by finding new ideas and focusing on the technologies and advanced knowledge used by competitors. Moreover, by improving this tool, it can be used in an infinite number of ways to strengthen internal organization and increase the efficiency of its activities. Its use in various sectors of the economy, especially in the energy sector, can be accompanied by greater efficiency. The development of benchmarking is also important in expanding the openness of business and increasing its efficiency, which is also very important for the Azerbaijani economy. This will further pave the way for mastering and improving the business, keeping pace with the Times of small and medium-sized companies and their entry and strengthening to new goals in the world market. At the same time, the solution of issues related to energy conservation and energy efficiency in the country will become more successful with the widespread application of the law of the Republic of Azerbaijan “on efficient use of energy resources and energy efficiency” in the legal field. At the same time, there is a need to improve the national standardization system with the wide application of benchmarking in the Republic. Of course, the country's realities must be taken into account in the preparation of this standard. The benchmarking process should also be considered as an integral part of the overall quality management system.

Literature.

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3.Camp S.R. Legal industrial espionage: Benchmarking of business processes: technologies of search and implementation of the best methods of work of your competitors. Moscow: Balance-Business Books, 2004, 416 p.

4.Sviderskaya O.V. Fundamentals of energy saving. Moscow: Tetra Systems, 2016, 176 p.

5.Hainish S.V., Klimova E.T. Benchmarking at the enterprise as a change management tool. Moscow: URSS, 2017, 144 p.

6.https://stalwood.ru/1090146/menedzhment/etapy_provedeniya_benchmarking - Stages of benchmarking.

7.http://www.up-pro.ru/library/strategy/benchmarking/benchmarking-energy.html - Benchmarking in the energy sector.

8.http: //www.muredatabase.org - The main open source of information on EU energy efficiency policy.

9.http: //www.odyssee-indicators.org - the main open source of information on EU energy efficiency policy.

226.The role and importance of benchmarking in improving energy efficiency ENECO, Journal. Baku: № 2 (10) 2022. P 52-58. 0,6 pp.