Follow the interesting article by consultant Luiz Carlos Freire Cimatti, published by Portal HSM. In the text, the expert analyzes the competitive barriers for Brazilian companies and offers management policy tips to increase productivity. It's worth reading!
“Just like most Brazilian entrepreneurs, I share the concern regarding the lack of competitiveness of our product prices compared to foreign competitors. I understand that one (and perhaps the main) cause of this may be the low productivity of processes, which occurs for various reasons – from outdated industrial facilities to the lack of adequate management tools, but also due to the lack of interest from top management in companies on the subject.
In 1987, Professor João Carlos Hopp, from the Getúlio Vargas Foundation (FGV), wisely said: ”The financial administrator of the 80s is entirely absorbed in the task of making money through the management of money itself and is increasingly divorced from the operational profit generation process.”.
Unfortunately, this statement is still a reality due to both the lack of options in management tools and because working in this field is a lot of work, and out of sheer convenience, they neglect this important profit generator. And so, “the Asians thank you.”.
And when it comes to the problems our country faces in matching prices with competitors like China and Japan, we can highlight:
High cost of doing business in Brazil (taxes, fees, etc.);
Dollar parity;
Lack of funding (or difficulty obtaining this type of aid);
Expensive labor.
The pursuit of higher productivity still lacks action, and national industry is crawling compared to Asian competitors on this matter, which exponentially increases the pursuit of excellence in competitiveness.
This excellence, which needs to be objectified, is only achieved when actions in processes envision four sciences: administration, economics, engineering, and marketing, which in synergy operate in any company, each with its importance, but one completing the other.
A company's operating cycle necessarily begins with sales forecasting, which technically should be prepared by marketing and approved by senior management. In practice, this is not the sole reference for demand projection for other departments.
When acquiring ultra-modern machinery, for example, a large company ensures production in less time. However, this gain is practically limited to the technical area (in this case, engineering) and is not correctly utilized by the other three areas.
This happens not due to communication failures, but because a good part of companies operate with inadequate cost and pricing management policies and tools (if they have any at all), and they can't even measure these technical benefits, let alone pass them on to costs and, consequently, to the prices of each product. This is the scope that productivity gains must have for excellence.
In small and medium-sized businesses, you can count on one hand the ones that have any kind of process documentation. In other words, they don't even have records for their own cake recipes, and the efforts they make daily to improve productivity become minuscule because they are done without any planning and without proper measurement. Therefore, the largest and most important actions are not executed, which greatly compromises excellence.
How to start?
To achieve the excellence in productivity and competitiveness necessary, a company needs to have:
Process Sheets - The production processes for each item must be meticulously and faithfully described, operation by operation, machine by machine, department by department, as nothing can be done without the recipe for each cake.;
● Downtime – It is essential to record, analyze, monitor, and control the company's unproductive hours, as losses can range from 12% to 40% of available hours;
● Productive hours – Industries are focusing on streamlining productive times, more specifically standard times, believing they are acting on total times, but they are not. In a production process, the following times are involved:
a) Preparation Time: Setup time;
B) Standard Time time a trained worker normally takes to produce an item;
c) Permissions: is the time spent on personal needs, receiving instructions, pace, work position, etc.;
d) Total Time = preparation time + standard time + allowances
By focusing only on standard time, companies overlook other important times, during which extremely significant losses occur that can even be more relevant than standard times themselves on certain occasions.
Finally, it is important to highlight four points that need to be extremely valued:
1. Performance Management
2. Value Analysis/Engineering
3. Costing Methodology, Downtime, and Pricing
4. Senior management participation
Therefore, I believe that this excellence in productivity and competitiveness should be constantly pursued, and that any company correctly guided by a specialist and with efficient management methods can certainly achieve these goals.”
Luiz Carlos Freire Cimatti is a managing partner at LC Consultorias, which provides management solutions for small and medium-sized enterprises. For 35 years, he has worked in the areas of strategic pricing, costing, brand valuation, processes, and other aspects of business management.
Texto do Portal HSM
