My Own Japanese Strike?

Escrito el 7 abril 2010 por Jesus Guerro en General

I do not know which will be your perception but according to my experience, many companies tend to provoke Japanese Strikes inside the Organization by their management practises and the order of their priorities.
Obsessions for productivity ratios based on volume of output per time (on run or daily basis) can be extremely dangerous when there is not enough demand at short or even medium term to absorb that fantastic production.
Some analysts, and what it is worse, some CEOs, believe that fixed costs and so, investment, is better amortised with bigger production runs following the basic principle of product costing by wich the higher the volume of output produced, the lower the portion of fixed cost assigned to each unit.
Unfortunately, this is not always true in real terms. The investment applied to acquire raw materials and maintaining capacity remains in inventory if we produce at a higher rate than we are able to sell. The cost of capital associated to these inventories as well as the cash flow retained, push the company to increment debt to tackle payment responsibilities and therefore, incrementing total costs. Amazingly, I have seen companies taking their pallets out of their warehouses or subcontracting warehousing services, adding expenses to the original investment, when demand is not really claiming that volume by far-
Sometimes companies react to mountains of invetories, downpricing so that, reducing average margins nad punishing brand image.
From my viewpoint, Investment is never returned with kilograms, littres or pieces. Investment is only returned with money. The rest, it is just an Ilussion.
However, Productivity ratio provides competitive advantage in costs when products are sold under just-in time basis. Thus, when capacity and demand are prefectly matched. Keeping a Lean Flow of materials, and so cash, brings us real opportunity for differentiation since we will have higher free resources to foster strategy.
On the other hand, I think more recommendable to figure up Productivity indexes comparing value of goods sold with input value considering as input all the resources we put in practise to achieve that concrete production.
So, Be Carefull with some knd of Reporting!
Obsessions with Productivity could be fatal for your sustainability!


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