Breaking operational barriers to peak productivity
October 4, 2024
The world needs more productivity growth. As a recent McKinsey Global Institute report argues, it’s the best possible antidote to wealth inequality, inflation, and exploding debt and could provide crucial funding for the net-zero transition and improved living standards.
Over the past few years, three primary vectors of operational improvement have promised to raise productivity, but companies have often struggled to take full advantage of the potential:
The technologies collectively referred to as 4IR (or Industry 4.0) can improve performance across an entire value chain. But McKinsey research indicates that only 30 percent of organizations successfully scale and sustain digital improvement.
In 2023, research from McKinsey Digital estimated that gen AI could add $2.6 trillion to $4.4 trillion to the global economy. But by 2024, only about 5 percent of organizations said they could attribute at least 5 percent of their EBIT to gen AI.
Core operational excellence practices have a proven track record of creating significant improvement across variables ranging from cost reduction to employee retention—with the effects increasing over time. But data from the Operational Excellence Survey (OES) indicate that few organizations perform well across all five elements (Exhibit 3). Those that do are far more likely to sustain impact from 4IR and gen AI: operational excellence increases the value that technologies can generate.
Industrial Engineering leaders and managers have to plan productivity improvement or projects and studies for each financial year. Industrial engineers have to plan and achieve significant productivity gains year after year. These gains make possible increases in revenues and profits of the companies. As McKinsey authors write, if companies do not show growth, they will disappear. If IE departments cannot show productivity improvement they will diminish in importance and compensation. IE leaders have behave like entrepreneurs to identify productivity improvement opportunities at elemental level in operations. But, they have to be made Enterprise level contributions by horizontal deployment. It is important to remember that elements are common in many operations.
McKinsey authors write: Growing a business is a matter of do or die.
Top growth leaders are methodical in asking and answering three crucial questions:
Where is my growth going to come from?
How do I grow now and tomorrow?
How do I set up my growth engine?
Productivity or industrial engineering leaders have to ask similar questions
Where is productivity going to come from?
How do I increase productivity this year and next year?
How do I set up my productivity engine?
Read McKinsey article:
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/growing-faster-than-the-market
Important to read in detail.
Ud. 29.7.2025
Pub. 16.12.2019
No comments:
Post a Comment