Austria     Belgium     Brazil     Canada     Denmark     Finland     France     Germany     Hungary     Iceland     Ireland     Italy     Luxembourg     The Netherlands     Norway     Poland     Spain     Sweden     Switzerland     UK     USA     

The Principle of “Practical Production” in Business Decision-making

Coordinating design and implementation as a cost-cutting factor in business

Business decision-makers need to evolve as the economy moves in new directions. This is exactly what we will be experiencing every day in 2022. It is a time when decision-making principles will emerge that have previously been given little or no attention. In the field of manufacturing, the control of material costs has changed to a very significant extent, creating the principle of “even better raw materials”. Another particularly important issue for manufacturing and production companies is the duration and cost of producing the tools, components, and parts they design. Changes in the market require a LEAN approach to the production of even the smallest component, whereby anything in the production process that does not add value and no longer has any practical benefit is considered a waste. This approach has given rise to the “practical production” principle.

Dreams and reality

We have chosen the manufacturing of parts and tools to illustrate the new decision-making principles, as it is not a traditionally showy field, but it gives a more authentic picture of the major change in business decision-making that has taken place, or is taking place, in the wake of the pandemic. The production of parts and tools is one of the mandatory tasks for companies. The predictability of the production of engineered components is a clear factor in the stability of a company’s operations. It is also true that disruptions in this area can seriously jeopardise production and, consequently, trade itself. This, in turn, has a direct impact on revenues and profits. It is no coincidence that the serious competition between suppliers, which was clearly “price only” some twenty years ago, has changed significantly over the last decade or so. Price has been joined by reliability and timeliness as primary decision-making criteria. And even if they do not take precedence over price, which is still the most important issue, they are a major factor influencing final decisions. It is also interesting to note that in the often-myopic focus on price, a very important factor is lost: the issue of practical production. In the traditional process, companies that manufacture parts or devices receive ready-made designs that they have to produce and deliver. Yes, but the process is not that simple. Mostly because there are sometimes irreconcilable conflicts between the design dream and the reality. Since the client side has the money, it naturally has the upper hand, and a “dictatorial” approach is established, with the company that ultimately produces the product giving up its professional principles. The end result of the process is often the production of a final product that makes little sense from a professional point of view and, more importantly, from the point of view of practical use. Obviously, this is an indication of the shortcomings of design engineers, but they cannot be expected to have the same expertise as those who actually execute the designs they draw up. The back-and-forth often takes a lot of time and energy from both parties, and the client side thinks that they have won at the end of the process, because, in most cases, they succeed in getting their way, pushing it through.

Conflicting cooperation and cost savings

In this cooperation, the concrete specialists first “shout”, then express their displeasure, and later the component company slowly falls in line if it wants to continue to get work. They usually hire a customer manager who communicates well, who settles the conflicts so both sides are satisfied, because there is an easier cooperation between the parties. Yes, but in the meantime, the real professionals are excluded from commenting, even though these comments can save the client a lot of money. After all, if designs were examined from a practical point of view before ordering a device or component, two very important factors would be introduced into the final product. The first is the production time and safety itself, since if the specialist who will actually manufacture the devices finalises the design or provides the designer with practical advice, then the concrete manufacturing compliance is also included in the designs. The other is the possibility of making changes to the device or component itself. Indeed, in many cases, just a change of shape or a minimal change of size, or other design “minor” element, can significantly reduce the overall manufacturing cost. As design and implementation have become increasingly separated in multinational business, it is no longer physically possible to bring these two areas together, so there is a need to mediate between them, but this should be done with appropriate controls. And this opens up considerable scope for professional advice in the future. From then on, moreover, professional comments will not be refined, but will be translated into the right language and land on the desk of the real decision-maker. Fundamentally, the only problem is that internal engineers and technicians are unhappy on the client side that they are being checked by decision-makers, and by higher-level specialists at that. But in terms of the bottom line, this is an issue to be dealt with rather than ignored. In addition, consultants are obliged to show the savings that their activities have generated on the client side, so their work can be clearly measured.

It is important to stress that one of the most rapid consequences of any crisis in business is an increase in demand for consultants. This also creates new areas for consultancy in general, as the focus is on savings and efficiency. In those areas where, moreover, the work of external experts can be quantified, there is obviously no question of taking advantage of it. It can be seen that even in the production of components, even the smallest elements, it is worthwhile to carry out a “self-assessment” within the company, just in case.