Pursue ultimate cost performance

At the morning meeting of all management cadres on Saturday, on April 9, 2022, Mr. Wang explained that the essence of enterprise competition is human competition. Planning depends on people and success depends on people. Pursuing the ultimate cost performance is the eternal theme of enterprise competition.

Since the factory start work, affected by the Russian Ukrainian war and the COVID-19, the global economy has been depressed and inflation has been serious. According to entrepreneurs in clothing, shoes, glasses and other industries, the purchasing power of consumers has weakened this year. The sales of some domestic glasses enterprises decreased by 30% in the first quarter, and the orders of manufacturing enterprises also decreased sharply. The global economic downturn also affected our company's order taking in the first quarter. First, economic uncertainty reduces consumers' desire to buy. Second, the COVID-19 has led to difficulties in transportation, increased transportation costs, and explosive growth in eyewear consumption in 2021. Many customers are afraid of running out of stock for 7-8 months. Glasses are not only fashionable consumer goods, but also medical supplies. They have a certain rigid consumer demand. If the economy is depressed, consumers will spend their money on necessities, and most consumers already have glasses. The consumption of glasses may change from one pair of glasses in one or two years to one pair of glasses in three or four years, or buy 2-3 pairs of glasses at a time when the economy is good, but only one pair of glasses at a time when the economy is bad. In this environment, we should pay more attention to cost. On the one hand, glasses manufacturing is a low profit industry. On the other hand, customers pursue the cost performance of products, that is, constantly seeking a better balance between product quality and price. So, how to maintain the competitiveness of enterprises? I think the competition of manufacturing industry is still the competition of cost. Pursuing the ultimate cost performance is our eternal theme.

Pursuing the ultimate cost performance is the eternal theme.

Throughout the transfer process of glasses manufacturing industry chain, from west to East, that is, from European and American countries to Japan and South Korea, to Taiwan and Hong Kong, to the mainland, and then to Vietnam, Bangladesh and other countries, all of which are driven by lower costs. Recently, some customers asked how much our company plans to increase the price in the context of inflation this year. For this problem, I personally think that the problem of product price is not only determined by inflation, but mainly depends on the cost performance of products. No matter how high the internal cost of the enterprise is, if the competitor's products are more cost-effective, the customer of course chooses to cooperate with your competitor. If your product is more cost-effective than your competitors, you will gain a competitive advantage. The glasses manufacturing enterprises in Wenzhou have no independent brands and have no pricing power. From a certain point of view, it is a cost oriented enterprise. While pursuing product differentiation, we also need to save costs and provide customers with products with higher cost performance.

The key factor in pursuing the ultimate cost performance is people.

Among the five elements of human, machine, material, method and environment, human is the first. There is little difference in the price of products and materials between competitors (even the supply materials of some customer orders are designated suppliers), the performance and efficiency of machinery and equipment are almost the same, and the rent and water and electricity costs are relatively fixed. The traditional glasses manufacturing industry is not a high-tech enterprise, and its technology will not have much generation difference. However, people's knowledge, skills and professional level are the most critical factors affecting the cost performance of products. In the business activities of an enterprise, doing things right at one time is very different from the operating costs brought to the enterprise by employees who have repeatedly made similar mistakes. The ancients said: water can carry a boat and overturn it. For Ouhai, if we want to recruit adults, we need employees who can do things right at one time, not because their own quality does not meet the requirements, and we need personnel from other departments to repeatedly train, remind and supervise. If the enterprise has some employees with semi-finished products and defective products, it will increase labor costs and management expenses, and it is difficult to provide customers with cost-effective products. Since people are the most critical factor in pursuing the ultimate cost performance, what should we do well in management?

Let employees know who I am. To understand who I am is to let every employee find out their own role and know what they do, how much they do and how far they achieve. For example, MPS specialist is the personnel to ensure the delivery time of customers. They should do a good job in delivery planning in the development stage, delivery evaluation in the delivery signing stage, process cycle control in the production stage, and finally meet the delivery needs of customers. If you can't do this, you don't find your role. So, how to evaluate whether a person can find his own role? That is the KPI indicators commonly used in performance appraisal. For each post, we should have clear and quantifiable evaluation indicators, each evaluation index should have clear evaluation objectives, and there should be a step-by-step promotion plan. We should ensure that everything is managed by someone, everyone has indicators, everyone has tasks and everything has results.

Establish a regular verification mechanism. Zengzi said that he reflects on himself many times every day: do you work hard for others? Is there honesty in communicating with friends? Have you practiced the knowledge imparted to others? We should also reflect and check our work from time to time. Just as I insist on keeping a diary every day, keeping a diary is not to show others, but to record what I see, hear and think in my life and work, review and summarize my work, etc. As early as 2006, the company put forward the management concept of "reminder, feedback and summary". In order to implement this concept into the daily work, the company requires the production and Engineering Department to write a daily report every day. Its purpose is to let the management cadres summarize the task achievement of the day, reflect on the shortcomings of the department or themselves, and feed back the problems that need assistance; In addition, the company requires non production front-line employees and production line management cadres to carry out work reporting every day. The purpose is to let everyone review and summarize their work completion, and work reporting is also one of the effective ways to seek resources from superiors; At the same time, the company requires each reporter to report on the achievement of key indicators at the regular manager meeting on Monday, the third class meeting on Thursday, the regular business meeting on Saturday and other meetings, and mark the achievement results with different colors (green, blue, yellow and red).

Form the improvement logic of the system. In the daily operation of the enterprise, why do some problems occur repeatedly, with the spring breeze blowing again? On the one hand, the people who solve the problem do not have a deep understanding of the problem and do not step in; On the other hand, the problem-solving people only look at the problem locally. There is a phenomenon that headache cures the head and foot pain cures the foot. There is no systematic sorting logic and no corresponding prevention and improvement mechanism is established. When a problem occurs, the company requires the person in charge of the work to know what happened, why it happened and how to solve it, and establish corresponding prevention or improvement mechanisms.

The pursuit of ultimate cost performance is the eternal theme of enterprise competition, and the core factor of the pursuit of ultimate cost performance is people. Water can carry a boat or capsize a boat. We need people who can do things right at one time. For each post, we should have clear and quantifiable evaluation indicators and assessment objectives, so that everything is managed, everyone has indicators, everyone has tasks, and everything has results. According to the management concept of "reminder, feedback and summary", a regular verification mechanism and systematic improvement logic are established.