I recently had a client phone me as happy as a kid at Christmas. He had an in-house product that was selling well, and he was about ready to be picked up by one of the Very Big Box discount stores (the Big Dogs). He asked me if I could do a capacity analysis to see if he could compound enough material and would he have the molding capacity to keep up with the demands of this giant.
I'm all for successful projects, but when someone offers you the opportunity to increase your annual sales by 30% with the addition of one client, it is always a mixed blessing.
The Big Dogs work on a simple principal we know in our industry - JIT. In the retail business it's all about cash flow. The manufacturer ships to a distribution center that quickly moves the goods to a retail outlet. The retail store is heavily invested in how fast it can move the goods out of the store into the hands of the customers and then replenish the stock. Profit is made by low margins and high turnover. If the turnover rates aren't achieved, the product is dropped. This particular customer has about 150 distribution centers servicing 4000 stores. They are masters of logistics, to the point that the Armed Forces have studied their model for the optimal method of supplying the troops....