In the production worlds of mining and manufacturing, a surge in market demand often beckons an increase in production levels. It's a tempting strategy: more products, more sales, more growth. But is this always the wisest move? The logic seems straightforward: by enhancing production capabilities, businesses expect to capitalise on market opportunities, leveraging economies of scale to boost efficiency and profit margins. Yet, this seemingly foolproof strategy has a hidden downside.
Would you bump up production levels if it impaired productivity?
The truth is, that is what we do, and that is exactly what happens.
Consider a local manufacturer of sensor equipment to the mining and rail sector. They started as a small group of experienced and expert operators. When demand soared, they doubled their production. Initially, profits climbed, but soon, quality issues emerged, staff became overworked, and production delays became frequent. Their attempt to meet market demand inadvertently led to a drop in overall productivity, profitability and customer satisfaction.
This scenario prompts a critical question: How can businesses balance the urge to increase production with the need to maintain productivity and quality? Is there a middle ground where growth and efficiency coexist harmoniously?
The Productivity Problem Part 1: Defining the Problem Series