In the 90s it imposed the theory of cutting production costs as the most effective way to become competitive. Started in the U.S. by a Spanish Top Manager, this theory of cutting the costs of helping suppliers at the same time to work together and be more efficient was quickly adopted for all those companies that were using the same cost structure, in which the factor Cost of production was important.
It is clear that the idea of working up the industry was novedosa as novedosa was to involve companies or managers who until then were considered as a cost factor in the pejorative sense of the word that includes them that they were will benefit even if the company was in crisis or its products are not selling as expected.
Like all the ideas behind us are the men who apply and the resulting application of the results more or less harmful or more or less best. Working so, is the work knowing that each one must get a result, may not only look for one that will get a result, because in doing so somewhere you will destroy value.
It is clear that if the cost reduction is not for better efficiency of the process in house provider and the company also provided, and that large companies are working efficiently control the prices of supplies, there can be two consequences: the first in quality of supply, is already in use of materials or of lower quality for greater flexibility in control of this quality. The second, if the pressure and still have not found efficiencies in products or processes sufficient to offset the loss of profit from falling prices or not and followed an increase in sales and consequently production volumes because compensate for the loss unit, the only consequence and the economic strangulation of the supplier. So by passing a difficult situation to a situation worse.
The supplier, without resources threatens its survival, to survive must do with all of the risks to the quality of finished products in case deliveries are of lesser quality, or receive compensation that may affect related products, which in turn may become more expensive and reduce the volume of sales, generating a vicious circle to explode quickly, if demand for that company does not recover. This is a clear signal that leads to thinking that maybe the problem upstream, but in the company. Sure that improve processes or products delivered and always possible and we must continue in this strategy, but since this fact and putting into question the survival of other companies, it is only worsen its implementation. This should be an important signal of alarm.
To send a whores a company there anything easier than to show that there has been a reduction in costs of a supplier that has not existed. Is not difficult, it makes a nice meeting with all those who spend on a particular product, for example, take one of the voice of Marketing that can be printed. Managers agreed with those who must provide all costs to the direction the purchases because this analysis and the supplier will help to reduce x% of the purchase, so to be more efficient. Up to which everything and logical. The logic breaks down when the direction purchases asks what projects close to that percentage of cost savings! But not talked to improve the cost of purchases? But we should not be able to do the same things, but at a lower cost because there was an improvement of conditions of purchase? No, cut spending, so we will see that we cut costs, many times there is confusion between expenditure and cost outgoing calls. The problem with this nonsense and that instead of helping them be more competitive in our actions, it hampers efforts to unavailability of expenditure. Not the contrary, that is, be able to do more with the same or less cost in absolute terms, ie with the same amount or less willingness to spend. Such decisions are only a pararsi the ass from one direction or another must be completely erradicate in a company.
The top management of a company may not have some short-term goals. Although the company and the situation of life or death, the Top Management can not act only according to save his ass and calling the act provided. Because as much IMPOSSIBLE demands, plus the Management act covering the results are not generating a espiral for the worst. For the worse because the Top Management will have been banquet of the results, act with new shares Whereas these false results, will require more effort because the former have been reached, putting even more difficulty in the management, covering more results falsehoods adding to the numbers and causing the collapse of the system.
The Top Management Instruments must act strongly, but considering that the company must maintain, can not act without considering what Serano effects in the medium term. The excuse that decisions are taken because she alive or dead are always damaging the excuse for a single show in doubt if there are some results that you brought home, although this result and only paper, no real.
