Success for Industrial Companies

Industrial success is getting harder and harder these days. Companies seeking success in industrial production face tremendous competition from abroad countries, that have production costs advantage. The trick to invert this situation was given in “European Jewels – Steel Industry” where I described the industrial process for constant market success. When investing in devalued industrial corporations one should always be sure that the target company is not stuck in a price war:

“ If the company has markets for its products, then it should produce them at the lowest cost possible. This is where the process efficiency enters. The industrial plants of the company should be organized in a way that allows them to continuously search for areas that create waste, new ways of organizing production that increases efficiency, and new technologies of production that decreases the production time and increases quality of the production (…) Toyota was the most notable company in assimilating this view, with its famous Toyota Production System (TPS) or “Lean Production” practice. Most of all, we need to be sure that the company has a widespread culture of continuous search for improvements. All the workers must be part of the effort to reduce waste, trough the increase of standardized processes and reduction of overburden activities and processes

(…) In Industrial companies the production is at the center of the company attention, we must ensure that the management is competent in terms of production management, but also be sure that the company is not getting “production oriented,” thus forgetting about developing new products at the expense of the current ones. Companies that get production oriented, seeking economies of scale, usually get sucked in a spiral of price reductions, with its competitors, therefore destroying margins. The constant introduction of new, differentiated, products is the solution to this trap, by getting products that the competition does not have yet, the company is able to maintain premium prices, thus sustaining or even improving margins.

The right approach to market is the next critical factor. The Sales department, commonly known as marketing department is the external sensor of the company. In other words the marketing department is the main point of contact between the company and the external environment. Only through a constant diffusion of information throughout the company, can the various departments identify and be correctly positioned to face the market demands.

The marketing department should be able to communicate with the R&D department in order to identify new trends and on the other hand should be able to identify possible innovative products in the R&D pipeline that could be brought to market successfully.

Usually we can identify successful marketing departments in companies with constant introductions of products in the marketplace and constant increase in sales figures. Other important factor is to understand how the marketing department is positioned inside the organization, if it has proportional importance to other departments or if the company is production centered.”


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