“Ordinary people think only about passing time, while those with ingenuity think about making it useful.” Schopenhauer
We hope the great philosopher will forgive us for borrowing his thought to introduce a seemingly more trivial topic, such as the concept of cost-effectiveness, which is often a subject of numerous discussions in many organizations.
The terms “effectiveness” and “efficiency” are fundamental in business, especially in planning and controlling supply chain activities. While often used interchangeably, these terms actually reflect two distinct but complementary concepts:
- Effectiveness: The ability to achieve the set goal.
- Efficiency: The ability to achieve the goal at the lowest possible cost, using the minimum necessary resources.
A company is efficient when it uses its available resources economically, and it is effective when it reaches the set objectives. In manufacturing, both effectiveness and efficiency must converge to ensure long-term cost-effectiveness: the ability to efficiently use resources while effectively achieving goals.
Practical Application in the Supply Chain
In daily operations, cost-effectiveness translates into using the right tools to manage and analyze real-world scenarios in a simple and fast way, saving time that can be dedicated to production and resolving unforeseen issues. For example, saving just one hour per day on a production line thanks to optimal sequencing means being able to produce more within the same time frame and at the same overhead costs.
Tools for Cost-Effectiveness
A better approach to planning daily activities and managing “disruptions” can be achieved by using advanced tools such as COMPASS360, the supply chain software solution that enables the creation of an efficient and effective model. It helps businesses respond better to market demands and create profitability.
Making time useful, as Schopenhauer suggested, means adopting strategies and tools that improve the effectiveness and efficiency of the supply chain. Optimal management of resources and daily activities not only improves productivity but also enhances a company’s competitiveness in the market.