PROCESS EFFICIENCY ANALYSIS OF SELECTED AUTOMOTIVE COMPANIES IN EUROPE

The automotive industry has lately been undergoing major changes having a considerable impact on the whole vehicle sector. This does not only refer to what is technologically new on vehicles themselves, but also to the new modern management methods, frequently associated with the Industry 4.0 concept. As well as other companies, car factories are pushing their costs downwards to increase their production efficiency. This paper analyses the economic situation of 5 car manufacturers, two of which having their factories in the Czech Republic and three in Germany. The task was to ascertain efficiency of individual companies in order to propose possible improvements. To do this, the Data Envelopment Analysis (DEA) for two models (CCR model based on Charnes, Cooper & Rhodes and BCC model based on Banker, Charnes & Cooper) was used. The BCC model was found to be more applicable to the established efficiencies, than the CCR one.


Introduction
The automotive industry brings a number of innovation processes and methods -from the manufacturing process and selection of supplier companies to management systems and the customer orientation. From the quality assurance aspect, these processes are at the top of efficiency of individual processes as the safety of motorised vehicles is strongly emphasized.
Most of these activities are related to the Industry 4.0 strategy within the innovation processes. Industry 4.0, also known as the fourth industrial revolution, is the digitalization-based concept. Individual activities, demonstrating a certain degree of repetition and simplicity, are computerized based on the control processes. This way, the human factor is being replaced by the robotic work. This concept considerably changes the powers on the market, giving a huge market advantage to those undertakings, which are able to put the Industry 4.0 concept in place. These companies save their time and money, while increasing their efficiency.
In line with the EU´s long-term sustainable development plan, large companies are obliged to incorporate this concept in their long-term strategies. This concept has become a trend which has to be included by all the major enterprises in their plans. The annual reports from where the research data are taken clearly show that the automotive industry already deems the sustainability to be one of the pillars of their activities.
The sustainable development was established and for the first time defined in Our Common Future report [1]  The performance measurement is focused on future development, in particular. The BSC benefit is that it creates a room for self-reflection. The BSC monitors performance in four perspectives: financial, customer, internal business processes and learning and growth, which allows to make overall and balanced evaluation of a company, as stated in [16] or also [17]. Very interesting publications dealing with this strategy can be found in the scientific literature. Works by other authors [18][19][20][21][22] are also of interest.

The Blue ocean strategy
The Blue ocean strategy (BOS) is an alternative approach to the strategy management in the company. It puts into question fundamental prerequisites for the strategic success and changes the traditional approach to the strategy, as a whole. Nowadays, companies, as a rule, venture into direct confrontation with their competitors, striving to find something, which would differentiate them from the latter. Unlike other strategies, the Blue Ocean Strategy is different in its goals and the employed resources, which require unconventional thinking. Whilst the most common company strategy is competition-oriented, the Blue Ocean one strives to wipe out the competitors. The BOS´ goal is to create a sovereign market space without competitors and to ensure the future profit growth of the company by means of the value innovation. The Blue Ocean Strategy entails a systematic approach how to create system frameworks and to apply analytical tools and principles [23].
«The only way how to beat competition is to stop trying to beat it" [24]. This issue is also discussed in [23] or [25][26]. Based on monitoring the long-term development of individual industries, the results achieved by means of creating the blue ocean were found to be sustainable [27].
The Blue Ocean strategy is not, however, only applicable to companies, but also to public services. As an example of the BOS implementation in the political practice, one can mention Malaysia where the local government adopted the Blue Ocean strategy in providing programmes and services to the public [28]. In 2010, the operation of the Blue Ocean strategy research centre was commenced in India, too [29].

Correlation analysis
The correlation analysis examines the mutual (mostly linear) dependencies where the intensity (strength) of the interrelation is emphasized more than investigation of variables from the cause and effect viewpoint.
One of the publications [12] defines the process approach as the basis of the labour organization in the undertaking-as the basis of all business activities. Strategic, tactical or operational management -all of that may be carried out either in accordance with the division (specialization) of labour principle, which, however, currently fails to meet the companies´ needs reflecting the change in the environment, or in line with the process principle.
The prerequisite for effective and efficient functioning of the company is to define and manage many interrelated activities. Any activity, which uses the resources and is also managed to convert inputs into outputs, is considered a process. Application of the system of processes within a company, along with identifying these processes, their interactions and management can be called the process approach. The benefit of such a process is continuous management of relations among individual processes within the process system, as well as their combination and interactions [13].

Essential insight into process environment and definition of terms
The process is a series of logically related activities and tasks through which, if performed gradually, the pre-defined set of outcomes is to be created. This definition describes the process as to its purpose, i.e. making a product or providing/ensuring a service [14].
The process is defined as a set of activities through which the set of inputs is transformed into the set of outputs (goods or services) for other people or processes, which uses the labour and tools to do so [13].
Based on another definition, the process may be described as a set of consecutive activities, which transform the defined inputs into a desired output, bind resources to themselves and deliver measurable characteristics. The key element in the definition above is the activity. In principle, it can be assumed that every activity might be described as a process. The process approach to the activity description and definition, therefore, depends on the clarity of the model, tools used, as well as the invention and the style of who describes the model [15].
Very interesting and recently often discussed strategies are represented by Balanced Scorecard and Blue Ocean strategies.

The balanced scorecard
The Balanced Scorecard (BSC) transforms the mission and strategy of the company into a clear set of individual benchmarks of the company's performance. This method combines financial and non-financial benchmarks. In the BSC, the company is considered as a participant in coalition relations with a wide range of stakeholders.
represented, in particular, by the so-called desired (positive) effects. It means that if the value of these effects increases under otherwise unchanged conditions, the productivity of the given unit will rise. The production unit consumes inputs to create effects. Those inputs are of a minimising nature, which means that reduction of values of these inputs will lead to higher efficiency of the unit being monitored. The input and the output may be represented by, for example, company´s staff headcount and sales, respectively [34][35].
The input/output ratio is called the production unit efficiency. This ratio can be described using the relationship [36]: It must be borne in mind that a situation may happen in the case of the overall efficiency of production units when the whole set of inputs and outputs is determined. The relationship for a relative measure of efficiency is used in this situation. It is expressed as follows [36]: . relative measure of efficiency weighted sum of puts weighted sum of outputs in = Assume that the sample under examination includes p units. Each of them consumes m inputs to produce n outputs. Assume that x ik is the amount of input consumed by the unit k and y jk is the amount of the output j produced by the k th unit [36].
Mathematically, the relationship can be expressed as follows: where: k… unit of the sample under investigation, p… number of units of the sample examined, m … input, n … output, x ik … the amount of input i consumed by the unit k, y jk … the amount of input j produce k-th unit, u i and v j are uniform weights of individual inputs and outputs for all the units being evaluated [36].

CCR model
The

Spearman's rank correlation coefficient
If there are a few identical values, one will allocate the average rank to them. It is clear that if Y i tends to increase when X i increases, the same relationship will apply to their rank, too. If Y i tends to decrease when X i decreases, the identical relationship will apply to their rank, too. Assume that R 1 , R 2 , ... R n denote the rank X 1 , X 2 , ... X n and Q 1 , Q 2 , ... Q n denote the rank Y 1 , Y 2 , ... Y n . If variables X and Y are independent, he values of their ranks will be randomly scrambled, as well [30].
According to [30], the Spearman´s rank correlation coefficient r s will be defined by the relationship: where: n … number of values, R 1 , R 2 , ... R n indicate the order X 1 , X 2 , ... X n , Q 1 , Q 2 , ... Q n indicate the order Y 1 , Y 2 , ... Y n . If X and Y are independent, then their order values will be randomly shuffled [30].
The Spearman´s rank correlation coefficient obtains the values within the interval ; 1 1 -, as well. In the case of the identical rank, the value of the Spearman´s rank correlation coefficient is 1. In the case of the opposite rank, its value is -1. In the case of independence of both variables (X and Y), its value is 0.

The DEA method
The DEA (Data Envelopment Analysis) method is an optimization method which belongs to the field of multicriteria evaluation. It is used to evaluate performance and efficiency, as well as to optimize the units in private and public sectors [32][33][34][35].
The set of units, engaging in production of identical or equivalent effects is called a homogeneous production unit. Those effects are referred to as outputs which are

Results of the correlation analysis
The correlation analysis application was carried out using the statistic software R [43]. The Spearman´s function of the correlation analysis was applied to a minor sample of accounting units.
The results in Table 2 make it clear that the earnings after taxes (EAT) represent the lowest statistical dependence between selected variables. The relationship between EAT and fixed assets is the absolute statistical independence. This means that EAT do not initiate any change in fixed assets and vice versa.
In the accounting and financial perspective, however, this economic principle is meaningless. The aim of fixed assets, reported in the balance sheet or the off-balance sheet, is to provide the accounting entity with economic benefits. Production factors seen as inputs make up the capital for the stocks and fixed assets and are aimed to generate the returns and the profit, while spending minimum costs.
The goal of the accounting unit is to provide such a product, which would meet requirements and maximize benefits of consumers, while respecting the optimal operating costs.
in the amount of inputs will be directly proportional to the change in the output amount. This model will set individual weights of inputs and outputs for each unit to maximize the technical efficiency coefficient. Certain conditions pursuant to [37], however, must be met, namely: • Weights cannot be negative, • When using this set of weights for all entities, no coefficient of the technical efficiency must be greater than one.

The BCC model
The input-oriented BCC model (based on Banker, Charnes & Cooper, 1984) is a modification of the previous model CCR. This model already takes into consideration the variable returns to scale, i.e. increasing, decreasing or constant returns. It foresees the variable, in certain parts, linear returns to scale and can evaluate efficiency of entities for the generally non-constant returns to scale [37].

Input data for analysis
The analysed data are clearly listed in Table 1    are in line with the expected (optimal) condition where the minimum inputs are used and, at the same time, the condition of output maximization is met.

Constant returns to scale (CCR)
For purposes of minimization of inputs and maximization of outputs with constant returns to scale, the data in the second column of Table 3 were used.
Application of the CCR method, with minimisation of inputs, analysed the status quo of the manufacturing process involving the selected inputs. The result shows that Hyundai fails to meet the production process efficiency assumption by 3.5 %, as compared to other efficient companies. Table 4 lists the recommended changes in variables that are based on the Peers units (sample efficient companies). In this case, PSA, VW and SKODA are efficient units. They propose reduction in total costs and staff headcount by 3.45 % and a significant decrease in fixed assets by 59.68 % and in equity by 15.30 %. Changes proposed by the CCR method would encourage Hyundai´s efficiency.

Results of the DEA method application
The DEA method (i.e. a method of applied mathematics) was applied to verify efficiency of selected accounting units focusing on the production activity, or more precisely, the undertakings in automotive industry. Efficiency was measured using the Frontier Analyst software [44].
The input variables for the DEA method included the staff headcount, total costs, equity and fixed assets. Total sales, earnings after taxes and the number of vehicles made are the output variables.
Minimization of inputs and maximization of outputs are analysed for both models (BCC and CCR). Table 3 shows the DEA method results in Frontier Analyst.

Variable returns to scale (BCC)
The data needed for purposes of minimization of inputs and maximization of outputs with variable returns to scale can be found in the first column.
The result makes it clear that all the companies report full efficiency. This means that the selected variables sustainable development. The transition from the today´s use of fossil fuels to renewables is a frequently discussed topic. This need does not depend on the environmental improvement issues only, but also on the situation of the country. The Czech Republic is currently one of many countries, which depend on oil supplies. In respect of the worldwide efforts to increase the use of renewables and to free a country from dependency on the global power of oilexporting countries, it is possible to establish relations with other countries having a similar environmental policy in the future [45]. It is also safe to predict that countries, which are striving to transform the use of fossil fuels to a large extent already today, will gain a great advantage in the form of decentralised power since in most countries the level of availability of renewables is different. The renewable energy, thus, may be easily generated and consumed in a decentralized way. The next factor is an undoubtedly adverse effect of carbon dioxide emissions. This is a frequently discussed issue all over the world. A number of countries, including the European Union, strive to enact legislation to regulate the amount of pollutants emitted to atmosphere. The fact that this issue is increasingly addressed by countries with a rapid population growth and the developed industry, such as India or China, means substantial improvement.
Automotive manufacturing is essential for the economy of a majority of European countries. The automotive sector plays a very substantial role in the industrial production and exports. Even this field, however, shows minor, yet noticeable, symptoms of the potential forthcoming recession. How influential it will be and whether it will meet or surpass expectations is a question for the world´s leading analysts to answer. The 2008 recession might help to better grasp the situation and the follow-up utilisation of reserves in the period after the end of the crisis, when the interest rates tend to decrease and the economic situation tends to improve.
Application of the CCR method while maximizing outputs analysed the status quo of the manufacturing process involving the selected inputs. The result shows that Hyundai meets the assumption of the production process efficiency again up to 96.5 % as compared to other efficient companies.
For Hyundai´s efficiency, the following measures were proposed in Table 5, by efficient units, again represented by PSA, SKODA and VW. Total costs are spent effectively. When maximizing the outputs, the CCR method recommends the following changes to be made in variables, which do not report 100 % efficiency. It is necessary to increase total sales by 6.7 %. It is recommended to increase the number of vehicles made by 3.58 %, which will lead to generating a profit increased by the same value. Another recommendation is to reduce the equity by 12.27 %.

Conclusions
As to the CCR method application, it is important to note that constant returns to scale practically do not occur. It is just a theoretical framework designed to check potential deviations which may occur. The proposed changes would not be feasible as this is the case of strong reduction of fixed assets which brings the economic benefit.
This implies that the BCC method assumes variable returns to scale and it can be aptly applied for a number of reasons. The production structure of companies is a relevant reason. It means that it takes into consideration the large-lot production -economies of scale, constant, rising and decreasing prices of inputs, a type of the market structure (perfect/imperfect competition), differentiated but similar products, know-how affecting efficiency, product innovation, exchange rates, bargaining power and many more.
Another factor of the production structure change stems from the non-systematic risk component that is represented by a potential change of the production process in the political and economic area. Wrong decision-making processes may result in other additional costs, such as increasing costs of vehicle storage before their sale or as a result of modifications of the zero kilometre or an increase in overhead (administrative) expenses.
New technical aspects of manufactured vehicles are one of decisive factors for both the customer and the