Everyone benefits from profitability improvement
Profitability has developed modestly in the infrastructure business and particularly in the paving business, while other industrial sectors have progressed in leaps and bounds.
The explanation that is often given is that, instead of working in industrial halls, we work outside at the mercy of the weather and traffic conditions and other factors.
While there is some truth to these claims, they do not comprehensively explain the difference. Profitability can improve significantly even in the paving business if operating models, processes and supply chains are boldly renewed.
A good example is the industrial companies that have eliminated waste in all of their production-related operations in line with the Lean philosophy. In the paving business and other sectors, we must realise that everything that does not create value for the customer is waste. This applies to all products.
The customer will not pay for unnecessary aspects – such as unnecessary paperwork or storage time. Furthermore, they will not pay for defective products or product qualities that they do not need.
The Lean philosophy includes the concept of Muda, which classifies waste into seven categories: transport, inventory, motion, waiting, overproduction, over-processing and defects. We have room for improvement with regard to all of these.
When projects are completed in a shorter period of time, we will be able to create value for the customer more efficiently. The customer will benefit from our working more rapidly, ensuring high quality and getting things right the first time.
When a company succeeds in improving profitability, other operators in the field usually close the gap by improving their profitability. This results in tighter competition, which benefits customers the most.
Profitability improvement is closely linked to corporate responsibility – that is, environmentally, socially and economically sustainable business operations.
A good example of this is our campaign to minimise idling.
It used to be necessary to keep pavers, milling machines and rollers running because of their low-performance batteries. Thanks to technological development, this is no longer necessary, but old habits die hard.
Leaving machines idling is pure waste. The machines will wear out prematurely. In addition, according to our calculations, we can reduce our annual fuel consumption by nearly a million litres if we change our ways of working. This reduction is equal to the amount of emissions that a car produces over 18 million kilometres.
It is true that profitability improvement can conjure up images of being expected to work faster and faster.
I see this differently. Above all, profitability improvement is about smarter ways of working. Reducing idling is a prime example of this.
It pays to seek more efficient operating models and ways of working, as everyone will benefit from them – not only companies, employees and customers, but also the environment and society.
Executive Vice President, Paving