Productivity Truths

The McKinsey Quarterly recently ran a great article on five misconceptions about productivity (registration required) that is a must read for anyone thinking about not greenlighting an investment in new supply chain technology. As per the article:

  • Productivity IS a priority
    In order for the US to sustain its average historical GDP growth of 3.3% with the projected declines in labor-force growth, productivity growth needs to increase at an annual rate of 2.3% — a rate of growth not achieved since the 1960s. And since the supply chain is the dominant driver of productivity in most organizations, supply chain needs every productivity increase it can get.
  • Productivity IS a job saver
    With a continuing lack of credit and a slow sales rebound in most sectors, your average company can not afford to hire and still has a significant need to do more with less as it first has to grow with the resources it has. Productivity increases help a company keep costs under control, which reduces the chances it will need to layoff.
  • Productivity gains ALSO come from increasing value
    If a new technology will allow the company to identify value or increase value, it’s a must. For example, an analytics system that will help pinpoint key value addes across a product line, new sustainable warehouse technologies (such as hybrid vehicles), or investments in new technologies that reduce plant energy requirements, can increase profit, brand image, and/or sales.
  • Productivity IS AS important to leaders as losers
    How do you think leaders stay leaders? They continue to make gains year after year!
  • There is NO LIMIT to Productivity Gains
    McKinsey’s research estimates that three quarters of the productivity gains required by the US can be achieved simply by applying best practices across the private sector! Imagine what new technology and methodologies could do!