Efficiency Index (EYPEI) – Update

2024 September Update: The standard to monitor operational efficiency and to identify and benchmark best performers by sector in the world.

The EY-Parthenon (EY-P) Reshaping Results Team has been developing since 2020 a digital index that is capable of scouting public data and monitor performance trends in the main industrial sectors by leveraging AI advanced technologies.

After launching the Italian EY-P Efficiency Index, a new version has been released, for a testing period, with data from European companies. This latest version features an expanded set of parameters and enhancements that have improved the model accuracy.

The EYPEI leverages available data for listed and unlisted companies with a turnover above €500m for EU and above €50m for Italy. Those companies have been selected to reflect the reference players in the market.

The index has been developed over a 8-year horizon (from 2015 to 2023) and It combines financial and operational KPIs to summarize the performance with a single rating number. The companies are benchmarked by sector and best performers are identified.

Through the index EY-P wants to facilitate the prediction of corporate evolutionary trends across various markets. The goal is to provide a simple, solid and synthetic tool that can highlight areas of outstanding performance or inefficiency, thereby helping in the recognition of effective improvement strategies or in taking proactive measures to address inefficiencies before they lead to crisis.

The index is continuously updated and periodically published. Sectors and subsectors, along with their dynamics, are discussed with EY-P sector groups and the EY network is systematically leveraged for the EYPEI development.

Considering the current global market conditions and the imperative for companies to be adaptable and prepared (ad open) for change, the Index acts as a key tool for rapidly identifying and capitalizing on reshaping opportunities.

Below we provide an overview of the Index on some sectors.

By analyzing the output of the EYPEI on the performance of the AM&M sector on data gathered from Italian companies, we can see a widespread decline occurring during the years of the pandemic, which led to a slowdown in business and international activities.

The automotive and transportation subsectors were able to go back to pre-pandemic levels, with the latter experiencing a significant growth driven by the rise of travels and the increase of prices (this before the current 2024 strong slowdown).

Lastly, the Tech subsector shows a steadier performance, due to intense competition and high borrowing costs (inflation) that have slowed down investments.

2023 has been a year of growth for the overall industry, with the Automotive segment registering the highest growth.

The Index for the European Consumer Products & Retail market demonstrates consistent performance across most subsectors, with a slight decline during the pandemic years and a rising trend towards 2023.

An exception is the Fashion & Luxury segment, which experienced an exceptional growth in 2021, due to the recovery in global consumption, reopening of physical stores and a constant development of online channels. However, the sector’s performance soon reverted to the pre-pandemic situation, due to uncertainty amid geopolitical instability and heightened competition, with consumers being more selective in their purchases.

The Energy sector shows a noticeable downturn during 2020-2021 across both subsectors, Oil & Gas and Power & Utilities. This downward trend is primarily attributed to the pandemic-induced lockdowns and travel restrictions, leading to a substantial decrease in the worldwide demand for energy.

In 2022 the trend was positive, driven by rising energy prices and global shortages, as a consequence of a rapid post-pandemic economic rebound that exceeded energy supply. This scenario escalated into an energy crisis after Russia's invasion of Ukraine and started to show a recovery in 2023.

Calogero Immordino and Neri Fucile contributed to this article.