Brazilian products are also expensive because of traditional management

A study just released by Abimaq (Brazilian Machinery and Equipment Industry Association) has confirmed once again a reality that many people working in the corporate world have known for a long time: Brazilian products, manufactured by companies in Brazil, are “expensive” and therefore face greater difficulties in standing out amid the strong competition of the international market.

According to the survey that has just been published in the media, a product manufactured in Brazil is 30% more expensive than the same product made, for example, in the US or Germany.

Some strong reasons for this low competitiveness are also already known: the so-called “Brazil cost”. These are the factors that daily – and inevitably – affect the operations of any company in the country, generating cost after cost that burdens production without adding any value for customers.

For example, poor public management, which does little to encourage and much to hinder business through the well-known Brazilian bureaucracy. The extremely heavy taxes that affect costs and, in general, give nothing back to society. Our precarious logistics, with roads, ports and airports that are often true nightmares for those who produce...

These are painful factors that are “external” to organizations. In other words, they are barriers that companies cannot get rid of. But it must be remembered that there is an “internal” factor in many companies that also contributes to this backwardness: the “traditional management” that still persists and adds negatively to the “Brazil cost”.

Lean management has already proven that every production process, whatever it may be, is full of activities that add no value to the final product offered to customers. These are the so-called “wastes” which, although they add no value whatsoever to what is being produced, represent costs that needlessly burden production, making the company less competitive.

The problem is that most of the time these wastes remain “invisible” to the inattentive eyes of organizations that insist on the traditional view of management. These are companies whose leaders, for example, think only about “what” or “in what quantity” to produce and forget that as important as “producing”, or even more so, is “how to produce”.

This is a mindset very different from lean management, in which everyone is encouraged, every day, to look at processes, at their daily work, with a critical eye. To identify opportunities to eliminate waste or to do activities better than they have been done before. A company that cultivates this mindset eliminates costs all the time.

A very clear example of this occurs when an organization that is beginning to adopt the lean system puts into practice a lean “tool” we call “Value Stream Mapping”.

It is a “map” drawn up of a given process, which usually reveals a series of activities that take place but are useless: rework, process defects, waste of time, of space, etc.

By eliminating these activities, the company, in the vast majority of cases, increases productivity enormously and eliminates costs in huge proportions, in some cases reaching more than 50%, which will obviously tend to make its final product more competitive.

Or when, in another example, companies carry out what we call “kaizens”, immediate improvement actions in production processes, which quickly make the work more agile, more economical, more value-adding...

And there are several other management-change practices and concepts that, without requiring high investments, “just” by changing the way people work, effectively manage to eliminate waste and thus mobilize everyone in the pursuit of greater value creation and customer satisfaction, making the product more competitive.

Our so-called “Brazil cost” (public bureaucracy, high and often useless taxes, our precarious logistics...) is truly unsustainable. And we hope the new government leaders will include among their priorities actions that actually eliminate these obstacles that hinder the growth of organizations.

But we also need to be honest and recognize that we must do our “homework” more intensely in order to be more competitive. Companies can attack more emphatically the costs generated by internal waste, by poor production processes.

Only by combining both factors (reducing the Brazil cost, which depends on the efficiency of the State, and reducing internal inefficiencies in companies, through more effective management) will we move toward a more competitive country on the international stage.