OPTIMIZATION

The definition of the word optimization says the following: a procedure by which, during design or planning (in economics, technical and natural sciences), the best possible choice of economic and/or technical quantities is realized (determined) based on previously determined criteria.

A very, very common word that people like to use often, they use it when selling services, when doing budgets, when proposing new projects. But what does it mean to us?

It is easy to state that I will help you with optimizing costs, optimizing processes and procedures. What is the outcome at the end of the day?

Let's start from the very beginning. The theoretical understanding of the word optimization by Enigma Consulting is that it is necessary to achieve the best possible performance by using resources in the best possible way at a given moment or period of time.

Let's translate that into what actually happens when we get to that famous optimization. We will work on the example of one process within the company. So far it has proven ideal that we simply talk first. We talk about how that process works, where it gets stuck, we define process risks, we define control points. In particular, the process of acquiring a fixed asset - who is the initiator, who is the person responsible for making the decision on the purchase, what is the added value of that fixed asset, who will check that the asset is exactly what the company needs, what are the potential additional maintenance costs and how the entire investment will affect the company's operations not only today, but in the upcoming period in which the asset is amortized.

So we do one scenario. A scenario that has its own introduction, plot, denouement and conclusion in order for the company to get the previously stated theoretical understanding of optimization in the purchasing department.

We use an almost identical method when optimizing costs. Let's take a look at what costs the company generates and to what extent they are actually justified. To simplify, how much of the cost we do is actually added value that helps us make the company more profitable, how much it affects the growth of the company. If we conclude that the cost is necessary, the next step is the analysis of the supplier - is there someone who is more favorable, without reducing the quality. Let's agree that there is constant work on testing the market, that the company adopts good practices in a way to "challenge" the market through new tenders, testing the possibilities of new suppliers. So far, it has proven ideal to ask for a minimum of 3 offers in order to reach the best solution through the ratio of price and quality for the company.

Often, entrepreneurs forget about this way of doing business, and it happens that they lose money, that costs only increase, and the added value is not reflected in income, and they themselves are not aware that they have not done OPTIMIZATION.

What is the added value of optimization of processes, procedures, costs:

• Cost reduction

• Improved business efficiency

• Increased productivity

• Better quality of products or services

• Increased satisfaction of end users

Marin Horvatić • 8/25/2024