The benefit of BP(m) in today's market

The BBC has an interesting article about some of the challenges facing Hertz Car rental in the current environment.

One of the more interesting facets of this discussion is how Hertz themselves reduced costs and improved service by simply looking at one facet of their operations and improving the business process surrounding it.

Simply stated, they removed the large buses which circulate Heathrow Airport and pick up people from the terminals to take them to the off-site rental location. These were replaced with smaller 'mini-bus' type vehicles which visited one or two of the terminals at a time and then returned with their passengers. This simple move reduced journey times between the terminals and the rental facility by 50%.

For Michel Taride, president of Hertz Europe, the restructuring of the bus service at the Heathrow branch is an example of the "speed and depth of the transformation" Hertz is going through.

"We are proud to have done a lot of what companies are now forced to do while we were in good shape," he says, explaining that staff members are being urged to get involved in planning and improving how work is being done.

In addition to this, staff have changed the way they work as the company has adopted the Japanese Kaizen management philosophy that aims to eliminate waste by standardising processes. In addition to this they reckon that Hertz (and presumably other rental car companies) could benefit from greater automation in the area of processes and paperwork. This, again, will reduce costs and improve service.

This philosophy by Hertz is a prime example of the benefits that a company can achieve by looking at how they manage and operate their business processes. One very famous (although slightly tangiential) example is American Airlines. They discovered several years ago that by removing one olive from every First Class meal they could save $40,000 per year. The service is not reduced at all and the benefit hits the bottom line instantly. Of course, $40,000 on a company with the turnover of American Airlines is minimal, but it is an example of how a litle bit of thought can bring great benefits to companies.

In these times of cost cutting and belt tightening, it is incumbent on companies to try and get the best out of their existing assets and to look at ways of reducing waste, increasing efficiences and 'doing more with less'.

Any examples you have come across of a 'simple' change that has reaped large benefits?

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