In order to ensure a reasonable level of long-term competitiveness, it is necessary to define and meet the level of external profit (from sales) and internal profit (from cost improvement) through maximizing outputs and through minimizing inputs. It requires the development of contextual productivity scenarios and strategies for each product family cost (PFC) to consistently transform the current business method.
These productivity scenarios and strategies need to be convergent with Corporate/ Company Vision and Missions, which are often synonymous with Corporate/ Company Productivity Vision and Mission and are aimed at:
- external manufacturing profit through maximizing outputs (E) – the predominant need for productivity growth by improving effectiveness (reducing losses – not effectively used input);
- internal manufacturing profit through minimizing inputs (I) – the predominant need for productivity increase through improving efficiency (waste reduction – excess amount of input).
In order to establish a clear direction for productivity to achieve, in particular multiannual and annual manufacturing profit plans, top managers teams often develop their own business model aiming to achieve the required productivity, in particular to develop their own Productivity Business Model (PBM).
PBM starts from the development of the multiannual productivity vision and mission, and then sets related productivity core business goals (PCBG) and productivity strategies (PS). Based on PS, productivity policy deployment (PPD) is created, monitoring the implementation of the PS to achieve the Overall Management Indicators (OMIs) and Key Performance Indicators (KPIs) and Cost of Losses and Waste (CLW) associated with the IMO with kaizen and kaikaku indicators (KKIs) and daily management indicators (DMIs). In order to achieve the annual and multiannual KPIs targets, through the support provided by KKIs and DMIs, an annual productivity master plan is developed and updated continuously to ensure the convergence and consistency of all productivity support activities in order to achieve productivity vision.
In fact, productivity goal basic thinking, the essence of PBM often represents the company goal-based thinking. Understanding the current situation of the need for competitiveness (including competitiveness through profit) through productivity is reflected in:
- choosing and setting productivity improvement targets for each product family cost (PFC);
- understanding in detail the phenomena, principles and restrictive parameters of process productivity for each product family cost (PFC);
- establishing the goals of short- and medium- and long-term productivity of the processes and calculating the actual necessary effects (profit required for each PFC and per total company).