Increasing profitability of SME groups
SME clusters often suffer from inefficiencies due to a lack of sharing, the absence of joint purchasing programmes and general work duplication. Once resolved, the resulting cost savings can be significant. Often, however, they’re not immediately obvious, and therefore not automatically tackled.
Acquisitions are another cause of inefficiencies. The integration process that follows an acquisition often affects management, finance and HRM only. On the product side, considerable autonomy often continues to exist. This is because the new owner has insufficient knowledge of the product or its development potential, and, as a result, a blurred view of the inherent risks.
Exchange of knowledge
The exchange of know-how, designs, market contacts and technical skills can unlock considerable synergies. This also applies to the joint procurement of raw materials and components, which improves efficiency considerably. Joint purchasing does not, by definition, result in a loss of autonomy (a common obstacle).
Increase profit / return
Each efficiency improvement will cause group profits to increase. While these improvements may not be measurable on account of other influences, they are nevertheless very desirable.
Kolk Water Consultancy has carried out several advisory projects in this area.