Trends in Manufacturing

Plant Profits: The Whole that is Greater than the Sum of Its Parts

In a healthy product-driven business environment, value is created in the manufacturing process. In fact, the entire value chain lives within the manufacturing (and supply chain) process. Case in point, if you take the of raw materials, conversion (labor utilities, maintenance, etc.), and overhead and total that all up for one unit; then compare that value to the market price for one unit, the difference is the amount of value created. Now some of that value is real and some of it is perceived which is created by dynamics in the market such as scarcity and other factors.

Measuring Plant Performance by the Common Denominator in Business

For the sake of its own survival, a business must make money. And it must make more money than it spends. A business that spends more money than it makes is cannibalizing itself – and if not corrected will eventually fail. This is not controversial; it is a fact of reality for all commercial entities. Because of this fact, the default “language” of any business is cash. Sure there are many aspects that all make up the DNA of a business such as company culture, employee safety, product quality, and so forth.