Productivity Business Model (PBM)

By exegens

Cost reduction through Productivity Business Model (PBM): desire vs. ability

To achieve their vision and mission, the strategic goals of the companies are often perennial. Such goals refer to: (1) profit, (2) turnover and market share, (3) unit cost, (4) delivery time, (5) productivity, (6) quality, (7) new profitable products, (8) respect for the people.

Many managers often claim that cost reduction and productivity are among their main concerns and that setting their annual targets and identifying ways to achieve them are their major challenges. However, managers often focus almost entirely on operational activities to ensure planned deliveries. Profitability by cost reduction through consistent productivity is seen as a result and not as a goal continuously linked to market and strategies.

So, cost reduction through productivity is actually being met within companies? And if so, is this consistent, measurable and repeatable? Do companies have and use a Productivity Business Model (PBM) like the one in the figure below?

Image Source: Posteucă, A. & Sakamoto, S., 2017. Manufacturing Cost Policy Deployment (MCPD) and Methods Design Concept (MDC): The Path to Competitiveness, p.21, Productivity Press, Taylor & Francis, New York, USA.