well-conditioned, well packaged? What about its logistics?– does its cost price bring acceptable margins or can it not be sold because it is too expensive when it comes out of the factory?
1.4.1.2. Analysis of the industrial facility
The industry and manufacturing are at the service of the business; that is their raison d’être. In the chapters that follow, we will lay the groundwork for evaluating the processes and the plants that implement them. At this point, we will limit ourselves to substantive questions:
1 – is the plant a good one? In other words, how does it compare to the competition in terms of efficiency, profitability, and management (safety, stability, branding, and compliance with regulations)? Do we have any idea of its durability? All of these issues fall within what is called benchmarking;
2 – is it in the country where we want it to be? Does it have the right capacity?
Obviously, the cost price of a product is the primary element of interest to the salesperson in charge of its sale. To this essential notion must be added the consistency of quality and reliability of production.
A strategic plan consisting of a number of potential actions will result from the confrontation between business and industrial analysis (see the bottom of Figure 1.3). These actions are:
1 – executive management: investments (internal growth), divestments, JV (joint ventures), divestment of activities, search for new activities, doing or making others do (subcontracting), partnerships, corporate purchases (external growth), etc.;
2 – marketing: search for new products, modification of old ones in terms of formulation (see, in Chapter 3, the case of aspirin, a century-old product that has been rejuvenated by adding additional functions, such as effervescence), innovation (innovation is sometimes making the old new again!);
3 – research: new synthesis processes, new products, new applications;
4 – manufacturing: improved operations, construction of new plants, closure of unprofitable plants.
The definition of core competencies is a difficult exercise that we will deal with through KM (knowledge management).
Development abroad, which has gained considerable importance through globalization, has its own unique characteristics, which we will see later.
1.4.1.3. Definition and implementation of a strategic plan
All of the above thoughts and ideas need to be structured and defined in terms of human and financial resources over time. The mobilization of the company’s executives and hiring consultants and engineering companies to do feasibility studies costs money. Is it necessary to remember that the resources of any organization are limited?
The following keywords can help prioritize actions, that is, set their launch date. The term “prioritization” is increasingly used, although it grates on the ears of many.
1.4.1.4. Pareto analysis revisited
In order to compare various scenarios, the following keywords can be used: expected return, chances of success, ease of implementation, risks, necessary means, time factor, prioritization. Each keyword is assigned an “importance”, a “weight” ranging from 1 (low) to 5 (high). Common sense, professionalism and the use of the collective intelligence of the company generally make it possible to eliminate irrelevant projects. Priority will be given to a project that has a good chance of succeeding quickly with limited resources, as opposed to projects that appear fabulous but require a lot of resources and time.
Actions on which the survival of the company may depend are called strategic; these are, for example, very large investments and major acquisitions.
1.4.2. Business plan
This name generally refers to the dossier for requesting financing from a bank in the context of setting up a business. It contains commercial and financial aspects; it defines the structure and organization of the new company.
1.4.3. Reengineering the corporation
Reengineering the Corporation (Hammer and Champy 1993) and Liberation Management (Peters 1992) are the provocative titles of two American books published in the 1990s. The idea was to shake up corporate America that had rested on its post-war laurels.
The following quotes, taken from these two books, give an idea of this “crusade”:
1 – “forget what you know about how business should work. Most of it is wrong!”;
2 – “American companies function according to principles that are two centuries old and mainly according to the principle of the division of labor put forward by Adam Smith in 1776”;
3 – “we live in a world governed by the three Cs: customers, competition, change”;
4 – “reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvement such as cost, quality, service and speed”;
5 – “reengineering ≠ restructuring ≠ downsizing ≠ reorganizing ≠ flattering an organization ≠ automating'’”;
6 – “Why do we do what we do? Why do we do it the way we do?”;
7 – “People, jobs, managers & values are linked together. Processes, not organizations, are the object of reengineering.”
When we look at what has happened to the American automotive industry in the face of Japanese competition, it is not certain that the message was heard!
The term reengineering can be considered as the awareness of a company that is asking fundamental questions about its existence. It therefore calls on high-level consultants to help it review its strategy and its way of working from top to bottom. One can imagine the state of mind of the employees who are experiencing reengineering and who wonder if the remedy will not kill the patient.
1.5. Systemic vision of the enterprise: the enterprise and flows
Figure 1.4 gives a systemic vision of an enterprise that has invested in an industrial facility. The term “CAPEX” (Capital Expenditure) is now used for capital investment. The expenses relating to the operation costs of this tool are abbreviated “OPEX” for Operating Expenditure.
Figure 1.4. Systemic vision of the enterprise
