Service Snapshot: Efficiency or Optimisation

Optimisation is the new growth.

At Penumbra we challenge the standard view. Our experience shows that overly zealous approaches to efficiency can have negative impacts on other parts of a business. How is this so? Experience is a great teacher.

Challenge

To find efficiencies without being short-termist is the new challenge. Conventional approaches include cost cutting and efficiency drives, but do they always deliver in the long-term?

IBM research shows that 75 per cent of managers thought that efficiency was more important than understanding the customer. Motorola’s share price has dropped consistently since its invention and use of six-sigma.

All irrefutable facts, but do they mean anything? Extreme optimisation, such as reduction of inventories to release cash, can create a risk in the supply chain. It by definition can reduce service levels to customers. This is real.

We have seen an organisation outsource all logistics functions, and sell the assets to return cash. The third party logistics function then underwent consolidation and addressed their efficiencies and moved to a centralised location, 400 miles from the client production facility. Prediction of delivery times for just-in time practices became impossible, customer orders were impacted, reputation was affected. The result: after 4 years of issues they reversed at great cost and in-housed logistics again, and now the business is stable.

Reduction of errors to zero reduces the ability to discover through mistakes. A company stifles its creativity. We have worked with lean six sigma initiatives and seen the benchmark of success be the number of projects completed rather than a holistic measure of success across the programmes being assessed.

While the importance of reducing waste and error cannot be underestimated, nor can the conditions for innovations and creativity in new product developmet be underestimated either.

Solution

Using the experience of our associates at Penumbra, you can harness the experience of seeing the wheels of efficiencies turn full-circle.

We call these programmes Optimisation Projects because it implies the maintenance the existing business while bringing about improvements through forward looking development.

Penumbra is in a position to help by:

• Identifying efficiencies in a holistic way
• Understanding the factors driving a need to change
• Bringing a wealth of experience to bear
• Looking at your business end-to-end to determine the best wins

At Penumbra we do not simply identify areas for improvement; we can actually design and implement efficiency tools and processes. Areas that we can help with:

• Manufacturing Supply chain and ERP systems
• Service industries
• Specific Process related issues across industries

We have learnt over time that efficiencies are best gained by leveraging existing resources and expertise and using strategic partners when necessary.

Penumbra works with clients by helping with:

• Defining suitable Structural Design with adequate resource levels
• Designing and developing or enhancing tools
• Working with people to help them understand their place in the optimisation programmes
• Designing incentive approaches
• Creating consistent data sets for comparison and benchmarking
• Creating Accountability structures with transparent reporting

Look at some of our case studies to see some of our projects.

Benefits

We review your activities objectively to identify areas for improvement.

We define the processes, structures and measures required to build efficiency by improving the way in which organisations work.

We deliver measurable results.