In the dark side of big business, cost accounting rules, and demons with pocket protectors lurk, ready to pounce, shrieking, cut, cut, cut!
Despite ample evidence to the contrary, many privately held businesses think they have to follow the "common wisdom" too often repeated; "watch your pennies the profits will take care of themselves."
So they squeeze those who supply them because they too are being squeezed. Everyone is fighting over a nickel or a dime in a race to the bottom, like minnows deluded into thinking they are swimming with the sharks. Ugly!
Lets divorce what in corporate speak is called the supply chain, to model it another way, as a pipeline, in one end the money comes in from the customer, and in the other supplies come in, and in between is a flow in both directions.
The only place stuff comes in is at the beginning, the only place money comes in is at the end, think about it!
Who buys and uses the product is the often spoken about but generally maligned consumer. The money they spend of their hard earned dollars trickles its way down through the pipeline and everyone fights to get their share.
But rather than crush or squeeze those behind you in the pipeline, to try and keep more, then whine to those ahead of you who are doing the same to you, or trying to shorten the pipeline by cutting you out and going more direct, there is a better way, called THE FOURTH DIMENSION... TIME!
ASK APPLE AND WALMART
The current president of Apple had as much to do with the success of the iPod as Steve Jobs when he realized that they could ship small quantities by air rather than tons by boat, and go from sale to manufacture to delivery at the store within a week or so.
He got the idea from Walmart. When you buy a tire, the computer tells a computer in China that a tire was sold and when there are enough goods to fill a container it is made, and shipped. This leverages incredible savings in time, and thereby more dollars to them from the pipeline. Systems thinking in action!
The less time stuff is in the pipeline, the faster it is converted into products or services, the more money there is leftover for everyone in the pipeline to share. Transform your pipeline thinking: download a FREE pdf of a presentation with the slide notes, and think about it! If you have questions, drop me a line!