SPEED is in demand

Realize measurable results, improvements quickly, efficiently and directly. Who can say no to that? The initial Corona shock has been overcome, but the aftermath is far from over. It hits companies hard and through no fault of their own. Almost worse is the uncertain future - which is also depressing the mood of employees. Most companies are forced to respond to this crisis with cost-cutting programs and reorganizations. Where is the hidden cost and optimization potential? How can they be tapped quickly?

Wait and see is not an option

From today's perspective, life with Covid-19 must become normal. The road to this goal is rocky. For many companies, it is a matter of maintaining their performance, protecting investments, enabling innovation and flexibly responding to major fluctuations in demand. Responsible management must quickly find sustainable answers to these challenges and act with an open mind to the future despite the current uncertainties. To ensure the long-term success of a company, strategy, processes and structure must be coordinated. It is crucial to recognize the right adjusting screws according to Pareto, 80:20.

The first step is a potential check of the business processes, from which the options for action are derived, prioritised and the results-oriented catalogue of measures is drawn up. The involvement of many years of experience and broad practical knowledge in combination with our own employees guarantee successful implementation. The aim is to implement the urgent and important measures promptly and to remain fit for the future.

One approach we recommend is based on the SPEED productivity program: systematic increase in productivity with the involvement of those directly responsible. Advantages are:

Quantified potential for improvement that can be implemented in the short term

• Pragmatic and practice-oriented approach
• Focus on clear priorities
• Application of proven methods and tools (Du Pont scheme, BeSen, SpedAn etc.)
• Immediate increase in productivity
• Intelligent use of internally available employees
• They limit the financial exposure and risk

Focus on pragmatic quick wins

The costs in administration and operations are often a large part in the company. They consist of personnel, material and other costs such as rent, leasing, etc. as well as indirect costs such as depreciation, interest, taxes, etc. For short-term savings, usually only the personnel, material and individual other costs are relevant. Where are the right levers?

The search for a needle in a haystack

The more complex production systems, supplier networks or indirect areas are structured, the more difficult it is to find hidden cost drivers and starting points for rapid optimization. This can be achieved by means of a systematic assessment along the lines of a police dragnet used to search for suspects. As in this case, certain characteristics are used as search criteria that either apply or do not apply. We use a similar procedure in our cost-efficiency approach in eight weeks.

50 % of costs are hidden

Companies looking for starting points to reduce their operational costs often face similar challenges when it comes to identifying hidden costs in their processes. The more complex the processes, the more diverse the possible influencing factors. On average, up to 50 % of direct and indirect costs are hidden. In order to efficiently identify these potentials, new methods and an external view are needed.

Procedure in five steps

The focus is on a multi-stage, systematic assessment that examines all direct and indirect areas of the company. Similar to a dragnet search, data analyses are used to gradually narrow down the potential factors influencing costs. The potentials are then prioritized according to cost and savings. Depending on the size of the company, the team consists of several "cost profilers" or experienced management consultants.

1. Deployment preparation: Optimal preparation of the deployment teams on site is crucial for fast and effective identification of cost drivers. For this purpose, we have developed a standard procedure that ensures that no unnecessary time is lost. As part of the preparation, initial analyses and sensitivity calculations are already carried out on the basis of data and documents received in advance. The preparation is supplemented by the compilation of best practice KPIs from comparable industries.
2. Identification: In two parallel streams, the on-site teams conduct structured analyses in direct and indirect areas. In the first on-site step, existing processes are reviewed and the areas with the greatest potential are identified. In doing so, we draw on assessment tools, methods and experience. Hidden costs and efficiency gaps are also identified, among other things, through value stream analyses, waste walks, etc. As a rule, a week is required for the first design. Already after the first day, the first potential measures are examined together with the employees. The main focus is on cost transparency and understanding the specific cost drivers. The focus is on both operational (production, logistics) and non-operational areas (management, administration, development, etc.) as well as suppliers.
3. Quantification of potential: Where the initial investigation reveals anomalies or deviations, targeted, more in-depth analyses are subsequently carried out. The depth of the analysis depends, on the one hand, on the potential expected in each case and, on the other hand, on the large number of starting points found and the ease with which they can be implemented. In comparison with best practices, the cost potentials can be concretely quantified. Indirect potentials such as reduced throughput times or reduced failure or rework rates are also taken into account. Examples of starting points are: -- Unclear interfaces (garden-variety thinking) -- Elimination of substitute processes (safety thinking) -- Transfer from fixed to variable costs (flexibility).
4. Prioritization of the measures: In the next step, evaluated measures can be derived from the information obtained in this way. This is followed by a selection of what is feasible within the given timeframe. The preceding analyses provide concrete improvements that can be implemented. The measures are summarized in a roadmap.
5. Parallel implementation: Subsequently, as early as reasonable and possible, the measures are implemented under strict project management. Depending on your needs, we provide technical and methodological support or, by agreement, take over selected measures for implementation. Further optimisation potential can be added as part of the implementation.

With the procedure plan described here, an initial roadmap for raising cost potentials can be developed on site within three to five working days and then implemented together. This SPEED approach not only shows short-term cost savings, but also concrete approaches for sustainable, long-term cost optimization such as standardization, digitization, variabilization of costs, etc.

With appropriate practical support, you gain experience and know-how. External consulting experience coupled with your specific company knowledge is the way. A tried and tested process model helps.