Two mistakes that entrepreneurs must not make to get out of the crisis

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       Written by Claudio Vivante

In these difficult months in which it is hard for every company to plan its strategies and think clearly about the future that awaits us, let's reflect about some thoughts of the famous statesman and lecturer EDWARDS DEMING on how best to manage companies in times of crisis.

E. D. sustained that often the enterprises, or to be more precise the managers, trying to obtain greater efficiency and productivity, commit the following two errors, that can compromise the effort of the company to get out of the crisis.

1 - Think that measuring productivity leads to productivity improvements

E.D. rightly observed that measuring the process productivity is only one aspect of the work process and does not allow to grasp all its nuances. This is especially true in complex industrial processes especially from the point of view of the physics and chemistry of its transformations, as well as from the human component that is an active part of it, i.e. the role of the operators who work in it. You may have noticed that every day there are conferences where new productivity indicators (KPIs) are proposed, and each of them is useful only to see a small aspect of the company's work: measuring costs, margins, downtime, etc., are certainly interesting exercises and allow you to grasp nuances never analyzed in the process. And then? How these measures are interpreted into correct strategies?

Expecting that the measure of the productivity brings to efficiency is an illusion since, according to E.D., the most important thing is to stimulate all the actors of the enterprise, from the last worker to the production manager up to the managers of higher level, towards a common objective, the search of the improvement of the process. This objective must be part of everyday life and not short-term. Surely it is impossible to implement the right strategies without a measurement system. So measurement is a NECESSARY condition for the improvement of the industrial process, but it is not SUFFICIENT 'cause if it is alone it is not enough to make it possible to achieve this objective.

2 - New machinery and automation systems aren't enough to improve productivity

With Industry 4.0, many companies have the illusion that replacing the oldest machines with the latest generation is the answer to the crisis, in terms of productivity. In some cases, this hypothesis is certainly true, but, in general, it is a seductive idea that is not supported by reality. Technology and industrial automation suggest that it is possible to remove the human factor, i.e. errors and inefficiencies of personnel. But man remains an essential part of the process because of his creative component and his ability to intuit the innovations and problems inherent in every productive activity. Efficiency is not a mere mathematical calculation, but the combination of many elements in which men and machines work to obtain quality products at the right cost (not at the lowest cost). Some machines can improve productivity sufficiently to be repaid in a short time, but they are still little in relation to the productivity gain that can be obtained from the optimal management of companies that survive the decline. DEMING reflected smartly that "... a banker should not lend money for the purchase of a new machine to a company, if the last one is not able to demonstrate, with statistical evidence, that it knows how to use its current machines at their maximum capacity". In other words, companies today know how to measure what their actual capacity to use their equipment is. And if by measuring equipment utilization, they find that they are not using it to its highest potential, what are the causes? I let you as readers find reasons for the inefficiencies in your companies that prevent you from obtaining the best quality and efficiency from your resources: logistical problems, lack of staff skills, internal disorganization, etc.


E.D. observed many years ago that companies can invest in machinery or staff training and, in the short term, achieve the same improvement in their efficiency. He also noted that in the long run, staff training pays the company more than just buying new machinery. What do Italian companies do about it? Do they invest in training? For some entrepreneurs, to invest in staff training is a risk, since they reason so: "if my men pass to the competition, they carry away also my investment, while the machinery remains always to the enterprise". In a rapidly changing world like ours, we need to focus more on the men and women who make up the strength of companies, especially for SMEs where it is only the talents of individuals that make the difference and their skills will lead us to overcome this crisis as well.

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