Continuous Growth Is The Main Theme

At the manager's reading party On November 17, 2021, Mr. Wang expounded that the enterprise is facing multiple pressures such as devaluation of exchange rate, rise of raw material and energy prices, increase of labor cost and increase of investment in fixed assets of new plants, and continuous growth of performance is an effective way to solve the above pressures.

Pressure on Enterprises

In recent years, glasses manufacturing enterprises mainly engaged in foreign trade are facing multiple pressures, including depreciation of exchange rate, rise in raw material and energy prices, increase in labor costs, customer price reduction, etc. Moreover, our company is also facing the pressure of moving into the new industrial park to increase the investment in fixed assets and various costs.

1. Exchange rate depreciation. With the enhancement of China's economic strength and the improvement of domestic purchasing power, RMB appreciation is the general trend in the future. Through the analysis of exchange rate data, the exchange rate between RMB and US dollar has depreciated by 11.6% from 7.13 in 2020 to 6.3 in 2021. The depreciation of exchange rate means that the profits of enterprises mainly engaged in foreign trade have been reduced by 11.6%.

2. Rising prices of raw materials and energy. In 2021, due to the rising prices of energy and bulk commodities, the cost of raw materials such as metal parts, plates, plastic particles and paints and the cost of supporting labor increased. The cost pressure caused by these external environment is a problem that we can’t change must face.

3. Increased labor costs. With the weakening of China's demographic dividend advantage, it will be more and more difficult for us to recruit school-age workers, and the labor cost will be higher and higher. According to the analysis of monthly and quarterly operation data, the annual growth rate of per capita income of the company is about 10%, and the cost of single wage payment also shows an upward trend. It is neither realistic nor in line with the corporate vision of “let us make life better” to reduce labor costs by reducing employees' wages.

4. The investment in fixed assets and various costs of moving into the new industrial park increased. The factory building area of the new industrial park is four times that of the old factory. As the plant becomes larger, more funds need to be invested to buy new equipment and supporting facilities to expand the production scale, and the daily operating expenses of the enterprise will inevitably become larger and larger. With the increasingly fierce competition, we are also facing the pressure of customers to lower prices.

Continuous growth is the main theme

So how to resolve the multiple pressures faced by enterprises? At the 2017 strategy meeting, the company's senior management clearly pointed out that “continuous growth of performance”is the company's strategic project to promote the best strategy, resolve cost pressure and stimulate team ability through continuous growth of performance. The continuous growth of performance is divided into two main lines, one is to receive more orders and the other is to create more output.

On the receiving side, the receiving budget of previous years is that the business department conservatively estimates the receiving target of the next year according to the information fed back by customers. The evaluation index of receiving quantity is evaluated according to the conservative receiving target, not the goal. Business teams rarely take the initiative to create conditions to develop the market. The order receiving mode of most salesmen is passive waiting, or wait for windfalls. New customers and new product development mainly depend on the task assignment of the senior management, or after the senior management has negotiated the project, the salesperson will undertake the later service of the new project. In 2022, the company will adjust its annual budget strategy: first, the company will determine the overall performance growth target of 20%, and the deputy general manager of operation will assign the order receiving target to department I, Department II, Department III and department IV. Then, the four managers of the business department will lead the business team to analyze the growth potential of each customer and formulate the business order receiving budget. In the process of implementing the order receiving budget, we should fully stimulate the team's ability and let the salesperson take other members of T5 team to plan the scheme, integrate resources and implement the action plan. The production department and peripheral service department will formulate their own budget, match resources and formulate annual implementation plan according to the business order receiving budget.

In the output side, we can only dilute the cost by continuously improving the output, because a large part of the expenses in the daily operation of the enterprise are relatively fixed, such as plant rent, machine depreciation, management expenses, etc. There is also little change in the labor costs of logistics, quality, engineering, human resources, logistics, finance and other surrounding departments serving business and production. In other words, these fixed costs must be paid whether or not output is increased. Only by increasing output and giving full play to the scale effect of manufacturing, can the cost be diluted. Like the business team, the production department should maintain a target growth of 20% every year to prepare the budget and implement the action plan. Only when all production units have reached the performance growth target, can the river be filled with water and the company's performance growth target of 20% be achieved. Therefore, the company requires all production departments to overcome all difficulties, integrate all resources and go all out to complete the annual budget objectives.

Continuous performance growth is an effective way to promote the top two strategy, resolve cost pressure and stimulate team ability. As a business team, we should play the vanguard role of sustained performance growth, change the past work style of wait for windfalls, constantly tap the potential of salespeople, take the initiative, create conditions and constantly explore the market in order to achieve the performance growth goal. As a production team, we should overcome all difficulties, integrate all resources and go all out to complete the annual budget target. As a peripheral service department, we should correct our attitude, be positive and promising, and play a role of escort for business and production.