When I speak about production with my customers, I never speak only about numbers in terms of batches they produce, because that number alone can mean very little.

Indeed:

• HOW MUCH YOU PRODUCE

Is a datapoint that is not directly connected with

• HOW MUCH YOU EARN

It is not true that if you produce more then you earn more, otherwise the road, as you could guess, would be very simple to follow and it would be enough to simply take more orders.

These two elements of production data, unfortunately for many entrepreneurs, are not the same and producing more does not necessarily mean more profit.

Many entrepreneurs and industry producers often forget this concept.

Their solution to make more of their production is closely linked to “The more I produce = The more I earn”, and therefore the road they travel is that of taking more and more orders to increase production.

But obviously in the real world it does not work that way.

The only real way you have to know how much you are earning is to know how to read your company’s financial statements.  To use the data to determine how much profit you are making using your current production strategies.

But being able to read a budget includes different abilities:

• Knowing how to pull out the appropriate numbers;
• Generate the balance sheet indexes;
• Knowing how to interpret numbers and indexes within their context.

As you can see, it is not only a question of doing some calculations, but also of developing the ability to interpret those calculations.

And this is the most important skill that an entrepreneur must learn to develop, especially in the world of production.

Among the various budget ratios you can analyze the first is the ROI, Return On Investment, That is the data that makes you immediately understand what return on investment you are receiving from the money you are putting into your company.

In other words, how much your money is giving back.

Then of course this is only the most superficial data, fast and easy to calculate, while if you want to deepen your understanding you need to analyze also all the other balance indexes, such as the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and the ROE (Return on Equity).

I also wrote an article on those,  

>>> CLICK HERE <<<

But in this article I deliberately focus only on ROI, because I would like to look only at the fastest way to make the first profitable analysis of your production.

From the ROI to the correct
Automation-Productivity

So, as said, if you want to quickly verify what your production is giving back you can quickly take your company balance and calculate the ROI.

From this data you can get an overview of the Return On Investment that your money invested in that specific production is generating.

At that point you will probably realize that, as happens most of the time, an increase in your production may correspond to a decrease in earnings.

This is the classic case that I see in our industry.

But if you are thinking you are the only one to make this sort of mistake do not worry, because it is actually one of the most common mistakes that entrepreneurs make.

Usually the most sensible thing you need to do to make your production more profitable is:

• Try to take more orders;
• Increase efficiency;
• Increase output by buying machines.

That in itself is not entirely wrong, even if the fundamental concept has to be clarified.

In fact, if you increase your production without a well-defined and studied planning and without a proven production method, the thing that will seem most natural will be to buy more machines, often Machining centers, to be able to support the new batch request.

Or you will be able to turn to hyper-productive machine tool manufacturers in order to greatly increase capacity and production speed.

These 2 options are an old mentality that reflect old business models, but today are no longer viable.

First of all, you absolutely must have an internal, tested method that allows you to balance the relationship between Automation and Productivity, so that you can make the correct assessments in production management.

Once you have this data you must continue to keep it monitored, because every single choice can influence the earnings of your production.

And your job is entirely to optimize this data, and be the conductor who directs the orchestra of your production.

All through using the numbers.

“You must have a Tested Production Method”

The Flexible Production method is the proven production methodology for Machine Tool users, which allows you to become more competitive and to implement in your company the tools necessary to make your production a success.

if you want to go deeper into the topic of Flexible Production

CLICK HERE

====>   www.flexibleproductionbook.com <====

Choose the correct CNC machine tool

Your real purpose then is to understand how to always maintain the correct balance between Automation and Productivity in order to have the greatest yield of your production.

Yields that then of course you can also see through the balance sheet indexes, such as ROI.

And this process then leads to the choice of the Machine Tool that you decide to buy, to keep faith with the data mentioned above and to make more profitable your production.

In fact, the final choice is right here.

To make your production more profitable you have to choose the right machine tool.

And as you can see the best way to get the best ratio of Automation-Productivity is no longer that of the machining centers in battery.

This business model, the battery of machining centers, is now the road that is bringing a lot of companies to bankruptcy.  As there is an increase in productivity there is also an uncontrolled increase in fixed costs and that will take you down a difficult road, a dead end from which it will be difficult to get out.

What is the best solution? Which Machine Tool do you buy?

Today the production market has completely changed and therefore a change of mentality is needed to face the new challenges.

To take this step and finally be competitive, a new production method called “Flexible Production” was born, which allows you to think in terms of a new business model.

And together with this methodology, a technology was born able to best apply this method, which translates into a new category of machine tools, the flexible machines.

A category of machine tools that is positioned in a middle ground between:

• the classic machining centers (not very productive);
• and the Super-productive Transfer Machines.

The Flexible Machines allow you to deal in the best way with the production of small / medium lots and to win new market challenges.

Finding the right way to deal with the problem of small / medium batches today is essential, because it allows production companies to reach the correct Automation-Productivity ratio.

Precisely for this reason the Flexible Machines were born, which make it possible to apply the “Flexible Production” method to the best possible extent.

The Flexible Production Method and the Flexible Machines allow you to make more of your production.

Increasing production is a process that is closely linked to an increase in the machine tool needs and therefore, if you increase your production, you know that you will also need to meet certain purchase choices.

But they all must be linked to the numbers. The indexes, ROI and correct Automation-Productivity ratios can guide you to increased profitability.

Now the choice is up to you only.

If you really want to start making a difference in your industry and bring your production to a new level, read carefully what you find written below….

If you want to go deeper on the topic of “Flexible Production”,

CLICK HERE

>>> www.flexibleproductionbook.com <<<

My book, dedicated to users of machine tools that want to make the leap in quality & productivity, is waiting for you!!!

Maurizio Porta

MASTER TRAINER Method FLEXIBLE PRODUCTION