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Rationalisation Measures and Their Consequences

19 June 2019 L. Dupont, M. Golombeck, N. Peppinghaus, S. Tübben Technical Report 10.13140/RG.2.2.19244.00646 University of Applied Sciences and Arts Dortmund German
#Cost Management#Business Process Improvement#Operations
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Rationalisation is rarely a single decision. The term goes back to Friedrich von Gottl-Ottlilienfeld, who argued in 1929 that economic considerations should lead in operational performance, and the literature since has treated it as a repeated process rather than a one-off exercise. That repetition is what makes a comparison of efficiency over time possible at all.

This paper examines what rationalisation measures actually consist of, and what follows from them.

Presentation

The work was presented alongside the report, covering the same ground in slide form.

Title slide reading Rationalisierungsmassnahmen und ihre Folgen, by Lars Dupont, Marius Golombeck, Nico Peppinghaus and Stefan Tuebben, for Fachhochschule Dortmund, Fachbereich Wirtschaft, Kostenmanagement, dated 3 July 2019. White text on an orange field with angled translucent panels down the right-hand side.
Presentation slides, in German. Open the full deck (PDF, 400 KB).

Cost reduction after Kilger

The paper works from Wolfgang Kilger’s six fundamental opportunities for reducing cost by eliminating operational inefficiency: uneconomic use of energy, personnel, materials, transport, tools, and uneconomic procedures and workflows. These are categorised as static cost-reduction potentials across production and distribution on one side, and organisation and personnel on the other.

Technical rationalisation as a management process

Technical measures target cost through plant and equipment: machines, tools, conveying systems, information technology. Two starting positions are distinguished, replacing manual activity with suitable machinery, and replacing or extending existing plant with more capable machines. Where human labour is displaced, the categories overlap.

The paper frames the sequence as a management process with five phases:

  1. Analysis. A deviation from the cost budget is identified, with value analysis and cost decomposition supplying detail on the current position.
  2. Planning. A target is formulated and investment alternatives are assessed, weighing business process reengineering against business process improvement.
  3. Decision. The investment calculation is embedded into a utility analysis, and the effect of the measure on value contribution is questioned rather than assumed.
  4. Realisation. Project management methods take over.
  5. Operation. The measure runs and its effect becomes observable.

Cite this work

@techreport{dupont2019rationalisierung,
  author      = {Dupont, Lars and Golombeck, Marius and Peppinghaus, Nico and
                 Tübben, Stefan},
  title       = {{Rationalisierungsmaßnahmen und ihre Folgen}},
  institution = {University of Applied Sciences and Arts Dortmund},
  address     = {Dortmund, Germany},
  year        = {2019},
  month       = jun,
  language    = {german},
  doi         = {10.13140/RG.2.2.19244.00646},
  url         = {https://www.researchgate.net/publication/333903183}
}