Data Science in a Bakery: Enterprise Restructuring
Restructuring is a work aimed at improving the organisation, body, processes or other forms of activity.
Restructuring is therefore a form of reconstruction, associated with the elimination of inefficient elements of the process or inactive areas of the body.
New elements are introduced to replace inefficient parts, which are intended to help improve the process.
A good example of restructuring is building muscles in an athlete.
When an athlete starts training after a long break, after the first hard workout gets so-called acidosis. Acids manifest themselves with a specific muscle pain.
Acids, commonly also called delayed muscle pain (DOMS) is a pain resulting from micro-injuries of muscle fibers.
Damaged fibers are intensively repaired and reinforced, damaged tissue is also eliminated. There is an adaptation process.
Muscles are getting bigger and more resistant to intense effort.
Another example that describes the restructuring well is the process of weight loss of the body; it seems that everyone has already learned this difficult subject.
In nature, there is a continuous process of adaptation, strengthening, eliminating faulty elements and building immunity, run by animal and plant organisms.
A counterweight to healthy competition is the example of growing plants under a bush.
Plants or animals reared in an artificial environment become weak, fragile and unable to exist alone.
The constant adaptation to difficult conditions is therefore a form of race of living organisms for resources, a struggle for survival. In the longer term, these aspirations can be defined as evolution.
To some extent, the artificial form of evolution is just restructuring.
W-MOSZCZYNSKI-2024-4-35Pareto principle
The most important principle of effective restructuring is the Pareto principle. It describes a phenomenon where about 20% of the causes generate 80% of the results.
The founder of this principle was Vilfredo Pareto, an Italian economist and sociologist who noticed an uneven distribution of wealth in society."
As regards this principle to the restructuring process, the aim is to find such factors of the process, usually forming a small part of it,
which greatly affect the efficiency of the whole process.
For example, in the bakery we can see that the form of packaging of commemorative cakes significantly affects consumers' purchasing decisions.
+ Principle of Pareta, Wikipedia. https://en.wikipedia. org/wiki/Rule_Pareta.
may represent 1-2% of all costs associated with the production and delivery of the finished product to the customer.
Changing the box used to date for a slightly more expensive but fulfilling a number of excessive standards and customer needs can result in an increase in sales by up to 60%.
A simple rule can therefore be adopted to restructure so that it is common: .para does not go in the whistle.
We focus only on elements that can significantly affect the extreme effectiveness of the action.
So we need to find the most important factors that affect the efficiency of the process and then optimise these factors. Unfortunately, this is not easy.
So let me use the example that I met during my work here, and let's say there's a large chemical factory where gas is 90% of the cost.
Gas is also a raw material and a source of energy. Due to the great importance of gas, all other costs represent less than 10% of the total cost value,
with staff costs representing only 2% of the value in this structure.
The restructuring team applying the Pareto principle will focus first on the sources of extraction and the form of gas use.
Every small change in gas price causes a huge increase in margin. Pareto theory causes,
that restructuring will not be carried out in areas of low economic importance such as employment efficiency,
management of real estate or optimization in the area of transport and logistics inside the plant.
This theory will point to the need to improve production efficiency by using new technologies to make more efficient use of gas.
Unfortunately, technological developments in this industry require time and large capital expenditure.
Moreover, chemical technologies resulting from the laws of physics have limitations on adding value.
Thus, following Pareto's theory will in this case block the restructuring process.
Restructuring is about rebuilding the whole body. In a complex organism, there are usually very complex internal connections.
The key is a skillful analysis of the factors responsible for efficiency. Let's go back to the example of the cake packaging quoted earlier.
To find out that packaging is of great importance to customers' purchasing decisions, you have to talk to them, know how to ask questions, draw the right conclusions.
In order to detect inefficiency in the human resource management process, you need to talk to employees of every level. Short interviews can indicate,
that employees are under pressure, afraid to come up with their own ideas or there is some form of arrangement within the organization,
which results in preferential treatment of some of them.
Part of the information can be obtained by analyzing numbers, you can find cost structure, revenue,
individual products can be compared in terms of their labour intensity of efficiency and the margin obtained.
In order to carry out this analysis, efficient accounting should be introduced by the manager, i.e. the accounting that allows the creation of a performance account for each product,
for each service, and even for every activity.
Rules for conducting restructuring
Restructuring is most often linked to the elimination of comfort zones for workers, with the need for redundancies,
changes in the arrangements and regulations aimed at improving the efficiency of the work. Such actions cause great stress among employees.
The members of the restructuring team are subject to frequent pressures and various forms of manipulation by employees during the restructuring process.
It is therefore essential to establish restructuring rules.
It may relate to a specific stage of restructuring and may be general in nature, which will be adopted for each stage of restructuring once.
1. Act on behalf of the management of the unit. Under no circumstances should restructuring be undertaken without agreement with the management board.
2. Restructuring should be carried out in accordance with established rules of cooperation between the restructuring team and the management board.
The restructuring process should be based on a well-established form of procedure, for example, a methodology for conducting technological projects.
It is very simple that the team first makes
the preliminary analysis and provides the information collected to the Management Board (called in this methodology:
At the next stage (often known as milestone) the team shall carry out a detailed analysis, setting out the costs and expected effects of the proposed actions.
Then, at the next stage, it carries out the restructuring in close agreement and on the basis of the permits obtained from the Management Board.
After the completion of the basic restructuring activities, the effects of the activities shall be measured and the restructuring or termination of the restructuring shall continue in agreement with the sponsor.
3. The restructuring team must be governed only by the management of the unit. The members of the team must comply with the agreed restructuring rules.
job losses are a very sad, often indispensable element of restructuring.
Scientific and technical progress in the area of computerization and new communication technologies results in a significant increase in labour efficiency.
Activities that have once been performed by dozens of employees are now easily performed by one person with the appropriate IT tools.
An example of such a drastic increase in labour efficiency is the emergence of GPT chat in IT industry. So far, programmers have been irreplaceable in code writing.
At present, it is enough to define the problem so that the GPT chat itself writes the code in any programming language.
Over a short period of time, the efficiency of one developer has been multiplied.
One experienced programmer can write as many code as several or even several times once once a day.
As a result of this sudden technological change, hundreds of thousands of programmers lost their jobs.
These people found themselves out of work not because they worked badly but because they were replaced by machines.
A similar effect once caused the introduction of an automatic loom.
Traditional weavers were replaced by a machine that worked for 20 people and could work 24 hours 7 days a week.
Thanks to the introduction of this technology, Łódź became the largest and richest city in Poland for a long time.
Unfortunately, despite the huge economic benefits of technological progress, there is a need to reduce employment,
and restructuring usually involves reducing jobs to improve efficiency.
Administration is the most common place to reduce employment.
In this area, jobs are often created, which have no economic justification and are linked to the existence of informal links between workers.
If we eliminate the possibility of creating such posts,
this and so the dynamic development of information processing technology will force companies to review the effectiveness of office workers.
In general, restructuring administration is a very difficult activity,
because it involves learning about the specifics of complex data processing teams.
In order to carry out the restructuring of the accounting department, you do not need to know about accounting. Just transfer the accounting processes of the company to the external accounting office.
On the other hand, it is easy to obtain information on how many accounting documents are available, both external and internal, which should be processed monthly.
Information on the efficiency of processing accounting documents by external accounting offices is readily available.
The information obtained from commercial accounting offices can be compared to the effectiveness of our office by dividing the number of accounting documents by the number of employees of the accounting office.
In addition, modern integrated accounting systems allow to display statistics of the work of individual accountants, working time, moment of accounting and document numbers,
These programmes can easily be informed of any activity that has been carried out by individual employees in the framework of accounting duties.
A typical form of defence against dismissals is the creation of extensive, fictional duties or activities related to the implementation of procedures.
These actions are most often implemented by analytical or reporting departments,
because such activities are difficult to compare with other similar entities in other economic operators. Unlike the processing and accounting of invoices,
reporting/control or taxonomic activities do not have a standardised form, which can be very confusing and opaque.
The reduction of labour costs, which is simply reducing jobs, is a difficult experience.
It is also sad to observe a phenomenon when workers have to invent their own work to justify their continued work.
The dismissal of workers, especially middle and old, is a very unpleasant responsibility. On the other hand, workers generate fixed costs.
which, given the recently raised minimum wage and the heavy burden on the employer's charges and taxes, are a heavy burden on the employer.
Restructuring is a process that is negatively perceived by society, and therefore few people are willing to do so.
Fireing workers is sad and difficult for restructuring teams.
On the other hand, bypassing this unpleasant process may block the achievement of the objectives of the entire restructuring project.
Unfortunately, an efficient economy is based on a constant effort to minimise costs and introduce modern technologies that are largely replacing people.
This phenomenon we are unable to avoid.
Restructuring and the economy
There are two countries where, for cultural reasons, drastic redundancies are not carried out in the context of restructuring, Greece and Japan.
In Japan, workers usually work their entire lives in one company because of cultural and social conditions.
They work very hard, they rarely take vacations, they rarely get sick. In Japanese culture, a company worker is something like a family member.
The cultivation of this tradition, combined with the intensive ageing of this society, has led to a significant decrease in labour efficiency.
As a result of this phenomenon, Japan is struggling with economic stagnation, largely expected,
because the level of labour efficiency is an essential factor of competitive advantage.
In Greece, in turn, there are many small companies, which are often subsidised and subsidised by the state and banks.
The phenomenon of subsidising failing companies in the world nomenclature is defined as zombification.
The efficiency of employees in these small subsidised companies is extremely low. This country has been struggling with stagnation for decades.
Business restructuring is an essential part of change and is a major factor affecting the country's economic development.
In a country that retains high growth dynamics, workers have many opportunities, they are able to find easy work because unemployment is low.
On the other hand, frequent job cuts encourage workers to constantly improve and seek new directions of development.
No change is the best way to stagnate.
A successful restructuring can be a source of competitive advantage that will lead to high profits and dynamic growth.
This in turn will lead to the need to employ more workers.
Wojciech Moszczyński — graduate of the Department of Econometrics and Statistics of Nicolaus Copernicus University in Toruń; specialist in econometrics, finance, data science, and management accounting. He specializes in the optimization of production and logistics processes. He conducts research in the area of the development and application of artificial intelligence. For years he has been engaged in the popularization of machine learning and data science in business environments.
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