The average industrial day production in the Netherlands is at its lowest point since 3 years. In November 2023, it was even 10% lower than in November 2022.

Manufacturers are getting more negative, mainly about their order books and future output in the next months.

So, economic expectations are challenging, and we are truly at a crossroads.

Some experts warn that we could face a second lost decade if it does not address the structural problems of our economy. However, if we do address these challenges, we are ready for a sustainable and resilient growth in the future.

Next to lowering debts and reducing the socio-economic inequality, improving business productivity is essential.

Although most organisations have had programs to increase productivity, the majority of them fail. Here are some reasons that I have seen at Argon & Co, why this is the case.

Lack of agreement on productivity improvement goals, method, and metrics among managers, workers, suppliers, and customers. Having transactional metrics in place, and thus no aggregated management KPI’s, together with a structured methodology increases your success-rate immensely. Having a standard improvement methodology also enables you to translate the approach to other areas of your organisation.

Inadequate resources or support for productivity improvement, such as insufficient capacity and capabilities and a lacking infrastructure to monitor and manage productivity (no data, no formal review, no Operating System). This will inevitably lead to terribly slow or no progress of the program, loss of momentum and eventually a quiet and unsuccessful closure of the program. Creating speed and showing results in these programs is of the utmost importance.

Misconceptions about the benefits and costs of productivity improvement, such as assuming that it will lead to job losses, lower quality, or higher prices. The opposite is true, however. One of the key levers to work on when optimising productivity is to reduce the number of production errors and thus save production time. By doing so, the costprice will actually go down. And there are many options to use the time gained by productivity improvement, including: produce more (assuming there is demand), training, maintenance, etc.

These are some of the familiar challenges that productivity improvement programs in the industry face. To overcome them, it is important to involve and align all the relevant stakeholders, clarify, and communicate the objectives and expectations, provide adequate resources and support, and monitor and evaluate the progress and outcomes of productivity improvement

Frank Stieger

Partner

frank.stieger@argonandco.com

More Articles