WEmile Wolff B.V.

Performace Improvement

Primary goal of any organizations is its survival. For a commercial company this requires a healthy business result: there must be a good result in the market in addition to sufficient ROI and ROS. Otherwise, the survival of the organization is jeopardized, be it in the short or medium term. Usually an inadequate business result arises out of changed external circumstances, combined with internal problems. Usually resulting in a loss making situation when market circumstances are adverse, threatening continuity.

A common response is to start with wait and see if the problem goes away by itself. Followed by one (or more) cost reduction program(s) applying the so-called cheese slicer method (slice off some costs each time). Usually applied over all business units, so that still good performing units run into trouble as well. The cheese slicer is also bad for morale in the organisation, causing a downward spiral. To come out of this downward spiral calls for drastic interventions, since cost reduction has only addressed the effects and not the root causes.

Lasting result improvement requires addressing the root causes of the deteriorating results. Starting with the strategy and objectives, an investigation of the deficiencies in the organization regarding its market- and financial performance is required. Such investigation shows more often than not, that there is a complex of factors, which individually and collectively lead to the insufficient results and therefore should be tackled jointly. And rapid improvement is often needed to reverse the downward spiral before the financial position gets eroded. ‘Performance Improvement ', a method combining speed with an integrated approach, is then the right medicine.

The Performance Improvement methodology focuses on improving the business result as quickly as possible through a structural improvement of the business performance. It is an integral program that optimizes the functioning of all business functions involved; in isolation and together.

A Performance Improvement project starts with defining the goal to be reached, based on the strategy of the company (translated in mission and vision). And to build a picture of the desired "Soll'-situation. By mapping the ' Ist'-situation, the gap and the necessary result improvement become visible, and required actions to achieve this can be investigated and developed. Subsequently, the desired to the desired result can be obtained by using a program/project management approach. Bottom line improvements of more than 20% have regularly been achieved with this methodology. In addition, the integrated approach also brings hitherto unknown cross-functional improvement opportunities to the surface.

Performance improvement projects have for example resulted in significant increases of factory capacity by attacking multiple bottlenecks simultaneously, and to the reorganization of product development processes. Optimization of the total logistics chain is a standard element of this type of projects, as well as optimizing the stocks, the product slate, maintenance and project implementation. Of course, also the organization and business processes will be optimized, while ensuring the right man to be at the right place. Which normally leads to both internal and external transfers of staff.

Because the time from project start to implementation is normally three to four months, a significant result improvement can already be achieved in 4 to 6 months after the start of the project. However, the short project time is also the biggest limitation to what can be achieved with this methodology. With about two months for the analysis and definition phases available, it is for example impossible to carry out a market study or a fundamental redesign of a manufacturing process.

In summary, a Performance Improvement Program can give a business again a healthy future, with the potential of the own organization fully utilized. A step up of the results will be achieved, also creating the basis for a continuously improving organization. With the business processes and organization sufficiently updated to for the next several years.