Sunday, July 31, 2011

When The Best Of Times and Worst Of Times Collide

"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way..."

   --From Charles Dickens, A Tale of Two Cities

One of the benefits of years of experience in a basic commodity business like tee shirts is that you grow very accustomed to "...the worst of times...." because it becomes obvious after a while that your best years are those years when the general economy suffers.  When the overall economy is "frothy" then you will struggle and when there is a general recession your opportunities for success grow.

You develop a totally different perspective toward business and you are constantly looking at your return on your investment (ROI) for any new endeavor; the concept of 'lean manufacturing' is ingrained in you out of necessity not because you took some class or seminar on the subject.

You come to realize that employees are truly stakeholders in your organization because they sacrifice along with the company; you realize that stability, security, and being a stakeholder are just as important of a motivation for employees as is pay, fringe benefits, and advancement.

I participated in an online discussion last week where the topic was ecommerce, inventory, and efficiencies and I have to admit that I was shocked at how what I considered to be basic common sense was treated as expert knowledge.  Yes, you want to layout your inventory so that order fulfillment is efficient, logical, and error free.  You want to lay it out with a starting point then have the organization match exactly how the goods will be listed on the packing list, from left to right and top to bottom; that way you have a constant forward movement of product.

Can't wait till we get to the session on turning one's inventory!  Not too many folks have any idea how the carrying cost of inventory is such a killer to a company.  Of course, I have to remember that the term is "just in time....."

I can't help but wonder how many screen printers, how many of these new lines of embellished tee shirts, actually know how to price the cost of screen printing into their product?  That would involve time studies...

The hardest thing to get across to ones accounting, sales, or IT, is that while they are critical aspects of the company under no condition will their tasks ever impede and or stop production;  if the computer system has to be brought down then it will be done after hours, if a month end audit has to be performed it will be done after hours.  The reality is with plants in Los Angeles and in Germany you end up with about a 4 hour window in the early morning hours when the computer system can be shutdown or everything waits till the weekend.

I really have no concept of what it feels like to work for a company at "...the best of times..." or to be a wash in cash to where decision making not just involved making a good decision but rather necessitated making the best decision.  Every decision should be made as if the future of the company is on the line.

I spend quite a bit of time monitoring business trends and the world of technology/internet start ups fascinates me because I have no idea what it would be like to have someone invest $20 million dollars into an idea; I always operated on the assumption that a start up should be 6 to 8 months and then you better have a self sustaining income stream.  At which point your goal is to grow your business and increase your margins.

In my industry, your goal is to turn your inventory six times a year at a minimum and never have your cost of goods total more than 60% of your net sales.  Obviously, with B2C sales the goals change and your cost of goods should be dramatically lower than 60%; but you should be able to establish the ideal based upon what percentage of sales are B2C vs. B2B and adjust your ideal cost of goods accordingly.

Customers become real important because keeping an old customer is a lot cheaper than finding a new customer and with the ever increasing pressure of rising wages, fringe benefits, and other commodities, you have to control any costs that you can.  Keeping great employees is also cheaper than attracting and training new employees.

Yes, outside the technology/internet start up industry there does not seem to be much sense of excitement, which probably explains why my views are such at odds with the majority of my counterparts; hey, if it was easy then where would be the sense of accomplishment?

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