All operations have the same problem…
They all have times when they are busy and times when they are slack. Feast or Famine.
It is the way of the world:
- If you sell Christmas crackers it will always be busy in October
- If you run a gym you will always have a rush in January
- Inner city casualty wards are mayhem on Saturday nights
- Canteens are busy at lunchtime
Whatever you do for a living you will suffer from waves of demand. Those waves are either expensive (you hold too much capacity) or painful (you don’t serve the customer). Neither outcome is a great.
Minimising the pain
The solutions are simple:
- Smooth out demand – If I catch the train into London at 9am not 7am it is half the price
- Flex your capacity – The 9am train is also half the length
The flatter you can make demand the easier it becomes to match supply to it
Smoothing things out — as much as you can — is a good thing to do.
- It is good for the customer – they aren’t left waiting
- It is good for your employees – they aren’t rushed of their feet
- It is good for your assets – you have time to maintain them
- And it is good for your bottom line.
Of course you can’t smooth demand out completely. Customers want what they want, when they want it. But you can work at it.
The wave maker
If it makes sense to smooth out demand why do we do so many things that amplify it?
- Why do we offer bulk buy discounts to stimulate demand? (will I use more shaving foam if I get 3 for 2?)
- Why do we have that last sales push at month end (is it surprising the following week is quiet?)
- Why do we buy all our materials at the same time (is the economy of scale really an economy?)
- Why do we do our year-end finances at year-end (could we not stretch them out a little more?)
Don’t we have plenty of waves without making more?
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Read another opinion
Image by Miguel Tejada-Flores
Hello James,
You assume that smoothing demand is the prime directive. It may be in an operational environment like a call centre. It is not in marketing or sales.
We offer bulk buy discounts because we know they work – they generate that spike in demand that we need to make the numbers we would not ordinarily make. We love a ‘bargain’!
We have the sales push as the end of the month – the final month of the quarter – to make the numbers. We have to make the quarterly numbers to secure our employment, to win our bonus, to keep our status.
We buy our materials at the same time because that occurs as the best course of action. That way we can negotiate bulk (volume) discounts. And we only have to go through the purchase process once. Look the other day the doctor prescribed medicines for six months, one batch per month. At the Chemist I asked for all the medicines to be dispensed in one go. Given that I live five minutes walk from the Chemist, why did I do that? Because I only wanted to make that five minute walk, and 10-20 wait once – not once every month.
Why do we do our year end finances at the year end? Because we don’t look forward to doing it. It is painful. This year I put off doing my tax return till two weeks before the deadline. I did the same the previous year. And the year before that. Why not leave it to the very end? I did one year and I couldn’t submit the tax returns because the website did not accept my login details….
Think for a minute about politics. If not making waves was the prime directive then we would just vote in one party – the Conservatives or Labour. The Republicans or the Democrats. That way we would have consistency born of being wedded to one ideology. But that doesn’t happen. We vote one party in and eventually we vote in the polar opposite. We make waves….
Have you ever wondered what life would be like without waves? Living without waves would be like looking at or swimming in a sea that was always tranquil. After a while it gets dull – too dull. We might not acknowledge this yet it occurs to me that we need waves and when there are no waves me make them.
All the best
maz
But do these things work Maz?
Generating a spike in demand – does it create profit, or a lasting customer relationship?
The sales push at month end to hit our numbers – for the sake of what?
Buying materials in bulk – how much gets thrown away? If your medicine cabinet is anything like mine the medication can sit there for years.
How much of this is received wisdom rather than thought through logic.
I used to collect council tax for a living. Every April we dropped hundreds of thousands of bills into the post, then resurfaced for air in July. Is that really sensible way to run an organisation?
Thanks for your thoughts
James
Hello James,
You keep looking for the rational in human worlds. You show up for me as an optimist. It is possible that you will prove me wrong.
Maz
Hello James,
One further thought: clearly they do work!
Workability is decided on the basis of desired outcomes.
If your desires outcome is make your sales quota then offering discounts to close the sale at the end of the month/quarter does work. If your desired outcome is grow profits over 1 – 2 years to secure your bonus and then move on to another role, then cutting down on growth investments, cutting costs, does work.
There you have me Maz
James,
I don’t think we can get away from making waves or responding to them.
However, wouldn’t it be great if there was a bit more coordination about what waves might get created and what their impact might be, especially inside an organisation?
Adrian
I have to agree – I don’t think we can avoid the waves.
But having awareness, can we avoid creating more? Maybe. But I’m not convinced.
Annette
I agree Adrian, you can’t avoid them, but do we really need to shoot ourselves in the foot? Both feet even.