The dynamically developing economy requires efficient use of the production force in order to satisfy clients’ demands. Losses in production translate into decreasing profits from sales and margins. High investment costs and the preparation period increase the advantages that result from improvements in production force use and the potential value of discontinued and postponed investments. At the same time, the significance of production costs increases together with growing pressure on the costs of labour and materials. Productivity improvement helps reduce such pressure.
How can PwC help your company?
PwC, in co-operation with clients, examines production activity improvement opportunities and supports the implementation of changes in an organisation.
Production activity diagnosis
Areas of our focus:
Assessment of overall equipment efficiency (OEE) and production force management
Work organisation, shift work schemes, etc.
Resource management, production planning, managing production in progress
Products quality, defective products, quality control
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Production improvements implementation
Areas of our focus:
Implementing the examined improvement opportunities
Transfer of know-how
Key performance indicators and current performance management
Change management and focus on constant improvement
VALUE CHAIN/SUPPLY CHAIN OPTIMISATION
Value chains have a similar purpose in most enterprises – they deliver products and services that satisfy clients’ needs with a maximum end margin. In many companies, however, it is not clear how to achieve this goal or whether a company is able to achieve it. Moreover, sometimes particular links of the value chain (departments/units/partners) may work to achieve their own goals that are not necessarily consistent or sometimes even contradict the main goal of the company.
How can PwC help your company?
In co-operation with our clients we recognise shared goals and establish the role of each link in the goals implementation chain. We also help define the appropriate value chain configuration (e.g. company’s own development or external commissions, configuration of supply and distribution network, sales channels) and the framework of value chain management (key processes, organisational structure and appropriate performance indicators).
The end result is a “slimmer” enterprise that is able to realise the value demanded by its clients and co-operate in achieving shared goals.
IMPROVEMENT OF PURCHASE AREA EFFICIENCY
The rising prices of resources and increasing strength of suppliers result in a cost increase and a decrease of the enterprise’s productivity. The pressure for specialisation and, at the same time, for outsourcing increase enterprises’ purchase expenses in relation to their income to the highest level ever.
Our experience indicates that efficient purchase area management is a remedy for cost increases and a solution for improving the quality of products and services. An appropriately organised purchase function together with adjusted supporting tools, consciously developed employees’ skills, efficient planning process and purchase realisation may have a significant influence on the company’s performance.
How can PwC help your company?
PwC has at its disposal proven solutions that enable a company to use the purchase area for gaining a competitive advantage on the market. Our services include:
Optimisation of purchase processes and organisation:
Establishing maps of the optimal flow of purchase process,
Defining products created as a result of process realisation,
Establishing the principles of co-operation with other processes within the company,
Choosing efficiency indicators for the entire process and its particular stages,
Designing the structure of the purchase organisation, establishing the optimal level of centralisation,
Establishing the roles of organisation units in the process and assigning them tasks.
Costs and purchase categorisation system analysis:
Establishing the rules of dividing a company’s purchase into the main purchase groups and further into purchase categories,
Isolating particular purchase categories and characterising them,
Analysing purchase costs for particular purchase categories and groups,
Indicating savings potential and opportunities for management improvements in particular purchase categories.
Development of purchase strategies:
Establishing purchase area role and goals that result from the company’s overall business strategy,
Establishing methods of goals achievement in such dimensions as human resources, IT, purchase policies and management methodology; formulating a purchase strategy,
Planning strategic activities in particular purchase categories (researching suppliers’ market, researching the company’s purchasing power, identifying purchasing levers, preparing a strategic activity plan).
Saving schemes:
Analysing the purchase area in respect to unused purchasing power levers,
Building Total Cost of Ownership models for chosen purchase categories in order to identify all cost sources,
Building “should cost” models for chosen purchase categories in order to establish expected prices for the particular Total Cost of Ownership elements,
Analysing specifications of chosen purchase categories in order to establish costs of redundant quality,
Analysing the principles of co-operation with chosen suppliers in order to indicate opportunities for common optimisation of processes and IT,
Preparing an activity plan and monitoring the implementation of saving schemes.
Strategic sourcing:
Identifying the company’s needs in respect to purchasing particular goods and services – co-operating in preparing optimal specification,
Building cost models in order to define and optimise all costs of ownership,
Researching suppliers’ markets, analysing current trends on those markets and current situation of major players,
Strategic planning – preparing the strategy for activities and negotiation,
Pursuing enquiries and negotiations,
Auditing contracts realisation and suppliers efficiency.
INCREASING PROFITABILITY OF PRODUCTS/CLIENTS AND EFFICIENCY MANAGEMENT
1) Profitability
Organisations often face dilemmas such as: why is our profitability decreasing? Which products are the most profitable? How should we estimate a price for a particular product? Which client segments should we focus on in order to improve our financial performance?
How can PwC help your company?
The abovementioned questions indicate that the unit needs managers’ information that enables the company to take quick decisions regarding the products and clients portfolio. PwC, based on best world practices, offers such services as:
Creating complex models of cost allocation,
Creating profitability models,
Developing a segment cost calculation that enables a company to analyse profitability according to various cost objects, e.g. products, clients, distribution channels, projects, tariffs, etc.
Our solutions will enable you to take the right decisions regarding assortment structure of sales – the decisions that will increase your enterprise’s performance.
Our operating model
We approach every project in an individual manner and build a profitability model adjusted to the client’s environment. We can, however, distinguish several frame stages of our approach:
Analysing information requirements regarding profitability,
Establishing the exactness and amount of target cost objects,
Isolating areas that require detailed cost allocation and application of advanced techniques, such as Activity-Based Costing,
Building profitability system,
Developing report patterns,
Developing functional requirements for the IT system (optional).
2) Efficiency management
In many sectors we can observe the process of a constant decrease in margins. The margin obtained one year ago seems to be impossible to obtain at present. On the other hand, many enterprises have minimal influence on their products prices – the price is established by the market.
How can PwC help your company?
As a result of the abovementioned market changes, companies must constantly increase the efficiency of their activities and decrease their costs in order to survive. It should be highlighted that optimisation must apply to all actions in a particular unit, not only those that are related to the main activity of the company. PwC has practical experience in the following efficiency improvement services:
Developing a model of cost management for processes and activities implemented in a unit,
Building a KPI model that monitors the efficiency and effectiveness of implementing particular activities,
Comparing the KPI of a given company to best practices in a given area.
Our solutions will help you increase your productivity, decrease your costs and optimise fixed assets utilisation in an enterprise.
Our operating model
We approach every project in an individual manner and build a profitability model adjusted to the client’s environment. We can, however, distinguish several frame stages of our approach:
Defining areas included in the efficiency analysis,
Analysing information requirements regarding cost and quality information,
Building a cost calculation model for activities and processes,
Creating a map of quality indicators in the following dimensions: productivity, quality, time of realisation, client’s satisfaction, effectiveness,
Developing the process of defining and verifying indicators,
Developing report patterns,
Developing functional requirements for IT system (optionally).
PLANNING AND BUDGETING
Do the following problems affect your company?
Excessive time consumption and major outlay of other resources in creating budgets,
Operational budgeting is not related to strategy and is in conflict with long-term goals/lack of strategy operationalising,
Conflicts over the division of resources in budgeting,
Stiff fixation on periods that limits the opportunity to quickly react to market environment changes,
Lack of cohesion between the budget and middle-term planning, planning and reporting,
Problems with linking the budget to the motivation system,
Scattered IT infrastructure, incoherent data structure that does not support the process,
Operational planning focused on financial factors,
Lack of one cohesive planning and budgeting methodology for an entire enterprise,
Limited link between budgeting and reporting: frequency, time horizon and exactness level are incoherent,
Middle-term planning, budgeting and planning do not function within a common IT platform, which results in redundancy/contradictory data and requires major outlay of manual work,
The result of mechanical extrapolation of data from the previous period is declared as a plan for the next period.
How can PwC help your company?
Chosen process optimisation opportunities:
Strategic planning
Operational planning/Budgeting
Planning
Chosen possibilities for optimisation processes
Remodelling strategic planning processes and defining organisation objectives
Optimising the process of strategy implementation measurement
Identifying balanced organisation goals that would ensure long-term competitiveness
Changing the main focus of the budget and its market orientation
Flexibility and frequency: rolling budgets implementation
The content, context and the range of planning; optimising the range of planning; the amount of units subject to detailed planning
The level and quality of goals: defining balanced, ambitious and at the same time feasible goals; exposing them to market testing by benchmarking
Developing the planning methodology in the aspect of:
planning scope and exactness
planning frequency and indications
Integrating with early warning and management system
Vertical integration: Merging the processes of strategic and operational planning; co-ordinating goals establishment at all planning levels
Horizontal integration: Integrated profit and loss account, balance and cash flow
Key success factors
Project management
Integrated IT system
Consistent data structure within the Budget and Current Data and Plan Reports
Budgeting and planning process standardisation
We analyze the above processes in following areas:
