“The secret of success is to do the common thing uncommonly well.”
– John D. Rockefeller
One of the most important components of any company’s delivery system is capacity. You can only deliver as much product as your operation can produce, and that capacity threshold will impact not only your profitability, but your sales. It’s crucial that every business owner, manager and sales person understand production capacity. Here are some key things to consider:
Capacity Must Meet Sales Intentions – Sounds simple, but it’s often the Achilles heel of many companies. Management sets sales goal and intentions that far exceed what the production team can physically produce. If you are setting unprecedented sales intentions for your business, you must be prepared to acquire the necessary resources to produce the product at that level. Can your current production system accommodate a sharp increase in demand?
Capacity and Percentage Sold – It’s very important that production and sales meet regularly to monitor available capacity. If your production capacity is 100,000 units per month, and your sales team has already sold 85,000 units, you only have 15% remaining capacity. Another order for 30,000 units will create a backlog that will frustrate customers. Sales and production must always be planning for upcoming orders and how they will fit into the available capacity. Either that, or management must be prepared to do what it takes to increase capacity so that there is no backlog.
Manage to Customer’s Expectation – Your production system must be able to produce product to meet the customer’s expectations in terms of features, timing and service. The sales team should not make a practice of over-promising beyond what production can reasonably deliver. If the customer is expecting 10,000 red and blue units in 7 days, they will not be delighted to hear that they can only receive 7,000 blue units in 10 days. Production has to operate to the customer’s expectation, but sales needs to appropriately communicate that expectation.
Getting the Product Out the Door – It’s one thing to produce 10,000 red and blue units in 7 days, it’s another to get them safely to the customer.Production capacity doesn’t stop with manufacturing the product.Timely physical delivery to the customer is just as important.Do you deliver the product yourself?Do you rely on outsourced shipping?Who is responsible for making sure the product reaches the customer in good shape – sales or production?Your company’s system and capacity for getting the product to the customer as promised is essential for customer satisfaction.
Don’t leave any of these steps to chance. Clearly define delivery responsibilities at every stage of the production process. Consistently monitor your production capacity so that you are prepared for all orders and can anticipate breakdowns in advance. Always advocate for collaborative communication between the sales and production departments. Companies that go the extra mile to meet the customer’s expectations will reap the rewards of repeat business and good word of mouth. And that’s a winning formula for meeting sales and profit goals, even in the most unpredictable of markets.
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