In 2020, Focus on Productivity
By Randy Metcalf
Recent US headlines are a mixed bag of economic indicators. There is a great deal of good news: unemployment is down, consumer and business confidence are up, wages are growing, and housing starts have been enjoying a recent uptick in activity.
At the same time, this news is tempered with less favorable conditions, resulting in an overall unstable state of mind for manufacturers. Many international markets have weakened, geo-political drama threatens supply chains, fast-moving new technologies and trends are hard to keep up with, all of which weigh negatively on the good news.
Of course, manufacturers want to grow and excel, but it’s understandably hard to commit to changes in such an unstable world. But one change can be profitable, regardless of what happens around you – improve your daily productivity. This doesn’t have to mean increase volume or sales. It just means producing more with less input.
It’s not as abstract, nor absurd, as it sounds.
The most basic formula for productivity is:
Productivity = output/input
So, if you produce more product with fewer resources, you’re going to improve your profit margins. To improve your productivity, you either need to increase your production volume without increasing your input (production costs) or maintain the same volume while decreasing your inputs. It seems like Manufacturing 101, but amidst the hectic activity of managing a manufacturing business, it’s easy to overlook this basic fact.
The bottom line is this: efficiency and productivity gains can make every day more profitable.
Even if sales are stagnant, improved productivity cuts the cost of each unit you produce – every day. So that gap between transaction price and production cost grows with every unit you produce. That’s what we call profits!
The keys to improving your productivity is reducing labor through automation, simplifying tasks so each worker can create more per hour, and improving workflow with fewer non-value-add touches. Global Systems Group has developed new equipment and work aides focused on achieving these specific goals. Productivity focused investments like these have some of the best ROI because it improves profits every day.
Now, it’s time for you to focus on productivity in 2020.