Competition, Innovation and Productivity

espanolIn this article, I analyse why and how the organizations should focus their efforts on increasing productivity and competitiveness trough the productive transformation

Global production

After the global crisis in the 90s there followed a large increase in the supply of labor with over 700 million workers added to the global production of goods and services.

mundoMany manufacturers moved their plants to countries with cheap labor, to achieve cost reduction and maintain competitiveness without altering their production of goods and services.

At the same time the impact of technological developments impulsed competitiveness globally. These constant changes demand to the companies to do an additional effort in order to introduce upgrade to the manufacturing process.

In this context, organizations that innovated in their production processes and were flexible to reality maintained their competitive level and protected their business.

Latin America, considering its human and natural resources, is in a favourable position in the current globalized economic, political and social climate. However, compared with countries with cheap labor and that are fast adapting to new technologies, its competitive edge will be blunted if it does not transform the way it produces goods and services.

Productive transformation

When we are thinking about the competitiveness of the productive activity at long-term, inevitably, our thinking must be linked to how we can increase the productivity.

Productividad-y-desarrolloOnly based on this principle the transformation of the production can reach cost reduction as a solution sustainable over time.
In this sense and from my point of view, to think in introduce hand cheap labor as variable to reduce cost of production is not a resource sustainable in time

What does increased productivity mean?
Increased productivity refers to a constant search for improved efficiency in the use of resources to produce goods and services.

How to achieve continual improvement in productivity?
Implement plans for continuous improvement in productivity will result from primary actions marked by the need to be competitive in a market that demands constant innovation.

So it can be said that on transformation of production the innovation is the key element to boost productivity.

This is based on three concepts:

  • Incorporation of technology
  • Improvements in the processes
  • Staff training at all levels.

If we pause briefly, we can see how the above items are all interconnected. For example, with incorporation of technology the processes are improved, but to take this decision and to do the implementation it requires trained personnel. In other words, by focusing on any one of the above items we automatically stimulate the other two.

How to implement an innovation plan?
The challenge is the simultaneity of action that is needed to incorporate technology, improving processes and training employees in order to make a successful transformation.

The implementation of this transformation should not necessarily be centred around a single big change, but rather to hundreds of small changes relating to specific objectives and with clearly defined scope.

Obviously, it is impossible to conduct each and every one of the tasks in a production process with optimum efficiency. As such, I believe efforts to improve productivity should focus on those elements that provide added value to the customers.

Where to focus our efforts?
Just as the industrial revolution paved the way for large-scale production, at present the innovative efforts of companies should focus on customer needs as a differentiating mechanism to achieving competitiveness.

How important are organizations’ human resources?
Continual improvement in productivity is a process fuelled by new ideas. The human resources of the organization, unlike any other resource, have the ability to innovate and develop new ideas.

A machine can only reach its theoretical limit of performance; the human is limitless in its imagination.

Conclusion

Incorporating innovation as a means to improve productivity will be the major challenge for the organizations, if they want to remain competitive .

graficoNot only to ensure their livelihood, but also as necessity to expand their commercial actions to new markets.

In the current model of global marketing, competition forces dynamic adjustments to ever changing market conditions. The history shows us that technological changes create new paradigms, new models of working.

The challenge is to be ready to accept the changes in order to increases productivity and improves competitiveness.