You cannot manage what is not measured. Measurements are the key. If you can't measure it, you can't control it. If you can't control it, you can't manage it.
If you can't manage it, you can't improve it. The systematic lack or structural absence of statistics in organizations prevents their scientific administration.
Managing only based on past financial data, making predictions based more on intuition or simple extrapolations, and making decisions without knowing the probabilities of success or occurrence, are just some of the most common problems or inconveniences found in companies.
Lacking statistical data regarding what happens both internally and externally, prevents deciding on rational grounds, and adopting preventive and corrective measures with enough time to avoid damage, in many cases irreparable, to the organization.
Peter Drucker makes two basic statements. First, it states that few factors are as important to the organization's performance as measurement. Second, he regrets the fact that measurement is the weakest area of management in many companies.
Virtually all management book authors have lamented that measurement is critical to success and that most managers do not have adequate quantitative skills.
At other times, having the data and then analyzing it was a costly and exhausting task, since it was based on the manual labor of the employees.
But today there are increasingly faster and cheaper computers, while more powerful and flexible programs are available, so companies that use this potential will obtain a strong competitive difference in relation to their adversaries, but even more will be able to improve continuously the performance in the various ratios and measurements that make the processes and activities of the company.
Companies that do not make use of these new potentials and adequately face these new demands, will not only lose competitive capacity, but will be decoupled in the face of the continuous changes in the environment, seriously jeopardizing their own continuity.
In other times with slow processes of change, which were almost imperceptible over time, a company could be managed with little statistical data. Today, in a world of profound and rapid changes in all orders, it is no longer possible to act with displeasure.
Today an entrepreneur needs to predict the demand levels of his products in time, he needs to recognize the trend changes in time, he must not only know what he spent, but how he spent it over time and in what concepts.
To negotiate, to make decisions, to correct quality problems, to increase productivity, to set prices, to improve the maintenance and availability of machines and facilities, to improve the granting and collection of credits, it is necessary to have statistical data.
Every decision, every analysis, every budget is practically in the air without sufficient and reliable statistical data.
Not only at the company level, but also at the country level, those who have made the most progress have been those who made statistics a fundamental tool. W. Edwards Deming, a pioneer in statistical methods for quality control, noted that in Japan much emphasis is placed on statistics for company managers.
In part it was the application of statistical techniques taught by Deming that made Japan go from being a manufacturer of cheap knockoffs to an international leader in premium products.
Without statistics, a company lacks the capacity to recognize which activities or products generate profits, and which only losses. Not having data and interpreting it correctly is for administrators like walking in the dark.
Having the data enlightens them, allows them to see what is happening and consequently take the most appropriate measures.
One minute…………….
Could you answer me:
- Which customers generate the greatest benefits? What areas or regions are the ones that generate the highest sales in monetary units and volumes? (in total and by product) What are the repairs that have occurred the most in the last quarter? On which working day of each month does it reach the equilibrium point? What type of repairs have generated the greatest outflows? Can it tell me what are the capacity of the different processes in terms of costs,productivity and quality? what is the level in sigma of each of the activities? what is the level of turnover or permanence of customers? do you know what stage of the life cycle each of your products or services is at? What is the level of satisfaction of your clients? If you run a sanatorium, what are the diseases that most clients report? What are the problems that cause the most inquiries? If you have a restaurant
What are the most requested dishes during the year and by season? What are the most requested wines and which are the most sold?
- if you run a bookstore
What are the best-selling songs? What is the profitability of each topic? How does each theme contribute to achieving balance point?
- if you run a hotel
What is the average length of stay? The number of clients by zone or region? The amount of time per region and its relation to the amount of time of stay?
The invoicing by profession, area, reason for your visit (tourism, business, health, professionals, training, others)?
These are just a few questions that I am sure you will not be able to answer, or to do so you will have to spend a great deal of time on staff, apart from generating unreliable, expensive and out of time information.
If you do not have this information, how do you do it? for:
- adopt corrective measures on time; make a viable and effective budget; effectively manage your cash flow; avoid excess inventory and inventory obsolescence; manage the improvement of various processes; know when productivity is improving; negotiate an increase pricing; detect the cause of a problem and fix it.
Bottom line: do you really know what's going on in your organization?
In order to know what is happening in your organization, it is necessary to have data in a timely manner, knowing how to interpret it correctly.
It is here where statistics and information systems converge to enable managers to manage their organization much more efficiently and effectively.
Why the statistic?
Although this was clearly stated, an enumeration is never over. Thus, statistics are essential for the purposes of managing and improving topics or activities such as:
1. Quality control.
2. The level of breakdowns and their frequencies.
3. The times for changes or preparation of tools.
4. The productivity levels of different processes, activities and products.
5. The costs corresponding to different types of concepts and activities.
6. The management of credits and collections.
7. Monitoring the flow of funds.
8. Customer and user satisfaction levels.
9. The types of accidents and their frequencies.
10. Pareto analysis of defects, costs, profitability, sales.
11. Sales by clients, sellers, zones and products.
12. Sales predictions by zones, products, services or branches.
13. Process capacity in terms of generation of cost levels, quality and productivity.
14. Total times of production cycles.
15. Response times.
16. Inventory management.
17. Compliance of supply by suppliers.
18. Prediction of sales by marketing channels.
19. Investment projects.
20. Probabilities for the construction of the “Tree for Decision Making”.
21. Evolution of the different economic - financial and equity ratios over time.
22. Market research and studies.
23. Times of machines and people by activity.
24. Quantity and percentage representation of different problems and their economic effects on the organization.
25. Staff versatility rate.
26. Most demanded products, globally, by area and by marketing channel.
27. Percentages of added value generating activities for end customers, value added for the company and lacking added value.
28. Average, maximum and minimum repair times by type of breakdown.
29. Cost calculations and especially for Activity Based Costing.
30. For calculations of productivities.
31. Correlation coefficients.
32. Statistics of personnel (managers and employees).
Why are they so little applied?
Partly due to a cultural issue on the part of employers, but to a greater extent due to the lack of preparation of professionals, in statistical matters, especially those who advise on the management of companies.
The aforementioned is less frequent in Anglo-Saxon countries, which have a strong culture and inclination for statistics and probabilities.
The same occurs in Japan or Korea, countries that give statistics and mathematics education a strong preponderance in their curricula and then in practical application.
Undoubtedly, the issue is not to have statistical data, if they are not properly interpreted, or are not even taken into account.
Therefore, it is necessary to raise awareness and train managers and employees about the fundamental and transcendental importance of statistical information when planning, directing and controlling the progress of the company.
What to do?
The first step as previously expressed is to raise awareness, and then move on to training. The third step is implementation.
Diagnosing to know what data the organization needs is a fundamental step, since from there the most appropriate software will be designed for the specific activities, processes and requirements of each company.
While intuition will never cease to matter, being backed up by reliable data will allow you to make decisions on a more appropriate basis. This is what is called Modern Statistics-Based Management (GMBE)
Conclusions
If we are in the dark, it is better to have a candle, even if it is small, than to run over everything in the dark.
Modern statistics accompanied by powerful computing tools allow managers, consultants and staff to have enough information to improve the company's processes, make better business decisions, improve security and make much more productive use of it. and profitable of resources.
Statistics are essential for both financial management and operations management, sales, marketing, collections, logistics and personnel management, among other areas and activities of any corporation.
Every day it is required to be more productive, systematically eliminating waste. Making this possible requires information.
Pretending to run a company like fifty years ago is no longer valid or possible. The entrepreneur has in his hands the decision to improve the company through a GMBE, or to continue leading his company in the dark.
Bibliography
Statistics for businesses - Hanke - Editorial Irwin - 1995
Forecasting Methods - Makridakis - Editorial Limusa - 1998
Computing for Managers and Economists - Casas Luengo / García - Editorial Anaya - 2000
