This research is commissioned by Aan de Stegge Bouw en Werktuigbouw, hereafter called AdS. AdS is a multidisciplinary contractor who operates from the office in Goor, but is active throughout the Netherlands.
In the introduction to this research, the motivation for this research has been indicated. The main reason for the research was instigated by the 2009 benchmark, combined with the desire to professionalize the company. The purpose of this study is to identify and optimize the business processes and logistics within the AsD departments equipment service and transportation, making them as efficient as possible and cost effective to operate. The main question of this research is:
“How can Aan de Stegge Bouw en Werktuigbouw setup its department equipment service, focussing on the large pieces of equipment and transportation, most efficient, making it the most profitable and what changes will this entail?”
This research has a practical qualitative character. The required information is gathered by literature study, practical observations, open interviews and benchmarking study. In using triangulation, i.e. a multiple data collection method, the validity and reliability of the research is ensured.
The theoretical framework explains that this research is based on the organisational principle of accounting and internal control, AO/IC and also on the management concept of Lean Management. Based on the AO/IC, the current and desired controls where formulated. The Lean Management concept is used to eliminate current wastage.
To answer the main question, the following question was formulated:
how does Aan de Stegge Bouw en Werktuigbouw operate in general and how do the equipments service and transportation departments in particular?
It has become clear that the main processes of these two departments are mostly executed by on the basis of personal insight and experience. There are little or no paper-based processes developed. The processes of the equipment service department are divided into three sub processes:
1. hiring cranes;
2. hiring other large pieces of equipment;
3. hiring large pieces of equipment after the Kick-Off.
The processes of the transportation department are divided into two sub processes:
1. transporting large pieces of equipment in the wake of the Kick-Off.
2. transporting equipment pieces in the wake of the receiving section WTB. These five sub processes have been analyzed and then mapped using BWISE. These maps give the involved actors their designated roles.
Next, these sub processes have been analysed in practice to clarify how they are implemented and where improvements can be identified using the AO/IC and Lean Management. In this case the following question is answered:
how are the processes of the department equipment service and the department transportation composed and which individuals are involved?
It appears that in practice, a number of sub processes are executed differently than agreed upon. For example, on the intranet one should be able to find all the necessary information about the equipment service and transportation department. Both departments have little or no information documented on the intranet. For both the department equipment service as the department transportation a number of discrepancies have been identified. On the basis of these findings, for both departments the appropriate checks and controls are presented to get the departments more “in
control”. Also, the current wastage within these sub processes has been filtered out. It appeared that hired pieces of equipment are moved about unnecessary because hiring data and periods are not tracked and registered. For example, pieces of equipment are transported back to the Goor location and just one week later the same pieces of equipment are transported again, this time to a different building site.
To determine the profitability of the equipment service department, a business analysis has been made. Here the following question is answered:
does the actual use of large pieces of equipment justify the total number of pieces of equipment owned by Aan de Stegge Bouw en Werktuigbouw and what should be altered?
To answer this question, the utilization rates of the large pieces of equipment over the last ten years have been examined. This required gathering data from both the BMS program as Metacom. The rental price of the large pieces of equipment was said to be based on cost. For these large pieces of equipment a new cost-based price has been calculated. Next, using the external hiring rates, an equation is drawn up consisting of both the internal rental price and the newly calculated cost-based price. Based on this equation, a break-even point has been calculated. This break-even point indicates the number of weeks that a piece of equipment should be hired on a yearly basis to make internally hiring profitable. In order to deliver all elements needed for a sound decision making process, the Service Level Agreement has been examined too. Based on the qualitative and quantitative data and the conclusions and recommendations, a deliberate decision on the future of the large pieces of equipment can be made.
To examine if the transportation department is profitable, a business analysis has been made. Here the following question is answered:
does the actual use of trucks and drivers justify the total number of trucks and drivers deployed by Aan de Stegge Bouw en Werktuigbouw and what should be altered?
To be able to answer the question above, the current cost per hour from a truck is calculated. Additionally, the occupancy of the drivers over the year 2010 is calculated. On this basis, there are four scenarios formulated, namely: (1) total outsourcing of transportation, (2) outsourcing one truck, (3) outsourcing trucks without trailers and (4) maintaining three truck drivers on three trucks. These scenarios are examined both financially and on the basis of the Service Level Agreement. A final decision can only be made by the AdS management. This decision depends on the priorities defined by the management. However, in the eyes of the researcher, scenario four is the most plausible with the possibility of moving to scenario two in the long run.
From this study the researcher can draw several conclusions. One of the main conclusions is that both the department equipment service as the department transportation should document their processes and daily activities more frequently and better. This allows for early detection of inefficiencies and wastage. The departments will therefore be able to accurately estimate the demand for pieces of equipment and transportation. They will be able to act well-timed on hire or purchase demands.
Based on the conclusions a number of recommendations are formulated. There are recommendations concerning the stock of the large pieces of equipment. The pieces of equipment that are inefficient or in a poor state of maintenance may have to be replaced or should be pushed off entirely. Purchasing a software application that is more supportive to and compatible with the activities of AdS, will save time and lead to more transparency.