A Productivity Miracle by Makoto Kawada

George Trachilis (professional engineer in Canada)interviews Alborz (CEO) of Abadgaran Group. Alborz shares how this company won the GOLD for productivity.  He shares 7 secrets about developing a high velocity organization.

George later reached out to Dr. Kawada in Japan. He recorded a webinar sharing how organizations can go from being fractured to behaving in a lean and agile way. The key is velocity in information and cash- not just materials.

Adopting Kawada’s methods and creating key indicators in your organization can be the difference between average and stellar performance. This is the right time to change your thinking about how your organization should function.

Due to the CORONAVIRUS SHOCK, GDP in the first quarter of 2020 was terrible; -28.1.8% for Japan, -32.9% for the U.S, and -59.8% for the UK. The drastic increase in unemployment rates is another indication of the world’s worsening economy. This condition will be hampering the world economy for a long period of time.There are many knowledgeable people seeking to find the way out. Dr. Makoto Kawada, Ph.D. in Economics has invented a scientific approach by integrating one language for all to understand in the “POST CORONA ERA” world we live in. Businesses will help turn the economy around and the impact can be profound if we learn and apply the Productivity Miracle that Kawada-san shares.

Dr. Makoto Kawada Ph.D, Economics Professor Emeritus, Meijo University Japan-ESD21 Economic Sustainable Development 21 century. SCCC (Supply Chain Cash Conversion Cycle) – BSQ (Balance Sheet Quality), IoT, and Fintech- MEIT have already converted Japan Economic and Trade ministry to new knowledge patterns origin of our ideas for the Post-corona Era. From the “NAA conference” in Bermuda in 1988 entitled “Global Solutions to the Global Problem”, where Prof. Kapan & Johnson, co-writers of then best seller Relevance Lost – The Rise and Fall of Management Accounting.

Dr. Goldratt who advocated “Theory of Constraints”, and Dr. Kawada, then Corporate Planning Department Manager of Japan’s machine tool manufacturer, disclosed IBIS (Integrated Business Information System) that proposed how to integrate then disintegrated production and accounting relationship. From the aspect of velocity-oriented productivity of Lean-TPS, the Income Statement is not “flow” information, but just “the difference between two fixed points with unknown variable in-between”.

The Balance Sheet is “not stock, but flow” information that can constantly measure the sustainability of the enterprise. Now, in the 2020s, the time of the DX (Digital Transformation) era has come in which the Balance Sheet can be updated in real-time. July in 2020, almost forty years later, Mr. Klaus Schwab, Chairman of World Economic Forum, advocated to convert from “shareholder capitalism” to “stakeholder capitalism” to build the post-Corona smart society, thus practically opening the way for “Global solutions to the global problems. Perhaps, whether the management can accept the notion of SCCC that “the earlier payment to suppliers” improves the global B2B productivity” becomes the divide of success of the stakeholder’s capitalism.

For a Productivity Miracle to happen a “Eureka!” feeling must overwhelm the organization. A new way to measure must come out of this. The reasonable setting of KPIs suitable for the company. That was the case with SCCC. SCCC theoretically coincides with the inventory-negative, “velocity-oriented” productivity (Toyotaism). The old – Profit in the Income Statement – fits for inventory-affirmative “resource & operation-oriented” productivity (Fordism). In the manufacturing industry, history has proved that Toyotaism won over Fordism as the right knowledge pattern for success in the Post-corona era. In the Shareholder’s Capitalism, as Joseph Stiglitz, a US Nobel Laureate economist said, “Management was forced to pay attention to the current share price so that indexes like PER or ROE that relies on the short-term reporting profit, thus robbing American managers of the energy to pursue a company’s mid- or long-term reputation.”

In the Stakeholders’ Capitalism for the coming “After Corona era”, these good-old, short-term profit-oriented indicators must be reinforced by sustainability-focused indicators like SCCC (Supply Chain Cash Conversion Cycle) and BSQ(Balance Sheet Quality). We can do it now thanks to Dr. Kawada.

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