To use a generally accepted definition, efficiency improvement refers to an operation that aims to generate as high profit as possible by having as high revenue and as low expenditure as possible.
In our experience, success is only temporary most of the time if efficiency is improved exclusively with these goals in mind.
What is our approach?
When we talk about improving efficiency and productivity, our starting point is that a company’s activity creates value or added value. From this perspective, nearly anything can be considered value: a product, a service, the profit made; any object, activity, any tangible or intangible result that clients, customers, the company, the staff or the owners consider value.
For this reason, we view improving efficiency as a very complex, multi-faceted activity. It focuses on increasing value, and it means different steps for different companies. For long-term sustainable value enhancement and for maximum results, reviewing and reorganising the processes, the organisation, the activities and many other factors are necessary. The focus is thus not on the figures but on the environment that produces them. This is how to ensure that the results continue to improve in the long run.
Before starting a project, we ask our Clients to answer a few basic questions. These are the following:
- What are the concrete goals of the efficiency improvement project?
- How quickly would they like to see the results?
- How willing is the company management or owner to change? How open are they?
- What are the areas where they would like to see efficiency increase?
- How can efficiency and efficiency increase be measured?
Based on the responses, we see two types of demands and goals:
- Quick profit through additional revenue and cost reduction without having to substantially change
the operation, the organization and the processes. - Creating maximum value (e.g. new products/services, higher quality and higher obtainable price, new customers) and better use of resources by reconsidering the value-generating processes, re-shaping and reorganising the processes and the organisation. This would result in far-reaching cost-effectiveness.
The two demands (strategies) fundamentally differ in their intervention needs and the achievable efficiency gains.
It is important to note that both needs and goals can be equally valid. This always depends on the company’s circumstances, status, and strategy. It is possible that in order to reach optimal additional profit, it is enough to introduce a few well-thought out, customised measures. It is also possible that deeper changes are needed.
Both strategies must define the efficiency goals, measurements and indicators with controlling tools.
The following chart covers the most important elements of the two strategies:
Framework for efficiency improvement consultancy projects
In order to run our efficiency improvement projects efficiently, we offer four project types. The types differ in the level of detail of the project, of the investigations and of the expected recommendations.
QUICK PROFIT: Time-limited efficiency enhancing steps and programmes to achieve quick profit, benefit and value.
SUSTAINABLE PROFIT: Continuous and regular activity and measures to maintain the steps described under QUICK PROFIT and to sustain the results.
MAXIMUM VALUE: The steps described under QUICK PROFIT and SUSTAINABLE PROFIT, plus reconsidering the value-generating chain; redesigning the processes and the organisation (also creating new value).
SUSTAINABLE MAXIMUM VALUE: Continuous optimalisation of the value-generation process (also creating new value). This type includes everything covered in the previous project types. In addition, it includes developing a plan to continuously optimise the results of the MAXIMUM VALUE project, and to create new value.
For the purposes of these projects, the company operation has been divided into six important areas or subfields.
- Company management: the company’s management, the owner’s interest and value
- HR management: internal communication, HR procedures, labour movement, employee satisfaction, incentives
- Core activity: purchasing and suppliers, production, services, trade, quality, logistics
- Client-related activity: distribution, marketing communications, marketing strategy and positioning, market competition and competitors, client relations, support for client-related activities
- Information technology (IT): IT devices, IT tools, IT solutions for organisation, IT services
- Finance: Income, controlling, liquidity and cash flow, monitoring and reporting, planning, forecast, capitalisation
The four types of projects differ in their relevance for the different areas of the company’s operation (the number of stars show how much we focus on the given area under the project type):
Efficiency improvement packages and the depth and complexity of the tasks conducted under each
Naturally, the content and length of all of our projects are unique and tailored to the company’s needs.
In order to come up with efficient recommendations and to inspire our (future) Clients, we would like to make use of our Business Development Monitor evaluating system, originally developed to support company development projects:
- Using questionnaires, the score system focuses on the most important areas of a company (core activity, management, human factor, finance, client-related activity, IT), and within those, additional subfields. A questionnaire has 150 number of questions. The most appropriate answer is selected with a simple click. Evaluating the answers, a summary assessment is produced to present the results in an easy-to-understand manner with graphics.
- Our detailed and targeted questions and the possible choices for answers are thought-provoking, designed to orient, and occasionally even to point the people who fill out the survey to the right direction in important business areas or questions.
- Respondents get a quick, easy-to-interpret feedback about their achievements on the company level. They also find out the level of development of the parts of the company. What are the fortes and weaknesses of the company? How does it compare to companies that are run on a similar level? If information is available, even a comparison of the achievements of different business sizes, industry or national results is possible. In addition to providing a situation report, the results can form the basis for future directions, thoughts, and plans.
- The questionnaire helps us speed up the assessment, and to make it easier and more efficient.
- The system is available to use after a quick registration. It is provided by Friebert and Fritsch free of charge.
If interested or have any questions, please contact us:
Róbert Friebert
managing director/partner
Phone: +36 30 954 6201
e-mail: robert.friebert@friebertandfritsch.com
József Attila Nagy
partner
Phone: +36 20 952 0435
e-mail: jozsefattila.nagy@friebertandfritsch.com
