The Common Mistake
Startups and SMEs are always in a rush to make the next sale, hire the next employee, buy a new piece of equipment or see another investor.
Although there is nothing wrong with the above, companies tend to lean more on growth than optimizing what they already have. A business is essentially an aggregate of processes that work interdependently and independently to deliver the same output – profit or social impact. These two outputs are the driving factor for the majority of all business processes and decisions.
Generally business owners or managers share the notion that profit will increase if they can grow their top line. However, this is a common mistake and usually occurs when a company has a lot of prospects.
The reality is that by only focusing on sales, you start to neglect the processes that enable the deliverables. These processes are cluttered and distorted as the business grows and soon the company finds itself asking why it isn’t making money.
Generally there are 8 type of waste that builds up:
Stockouts mainly focus on:
- Inventory
- Transportation
- Extra Processing in warehouses
We’ve noticed that companies are so focused on service delivery and they never take the time to step back and evaluate their situation. In most of our engagements we find that stock is brought in to test the market, clients over commit to volumes and trends in the market change. All three of these problems result in a stock build up. It’s important to understand these factors and position yourself to avoid being caught in the same loop.
Contact Stockouts to analyze your company and find out what you can do to achieve higher profits and reduce waste.