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"We might as well make it, someone will surely buy it"

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Boosting Productivity: The Case for Making Only What You've Sold




In the world of manufacturing and production, optimising productivity is the key to success. In the current difficult economic times where there is a greater focus on the reduction of waste. An approach that has gained momentum is the practice of making only what you've sold, as opposed to producing based on sales forecasts. This strategy offers a range of benefits that contribute to efficient resource utilisation, reduced waste, and enhanced customer satisfaction.


Running a production line for 40 hours a week simply because resources and time are available can often lead to wasteful practices within a business. While it might seem logical to maximise production output, this approach can result in overproduction, where products exceed current demand.


When a company manufactures products solely based on actual sales orders, it minimises the risk of overproduction. Overproducing ties up valuable resources, including raw materials, labour, and operational capacity, which could be better allocated to meet actual customer needs or invested elsewhere.


Sales forecasts, while informed, can often lead to inaccurate estimations, resulting in excess inventory that ties up resources and incurs storage costs. By producing exclusively what has been sold, businesses ensure that every item leaving their production lines has a ready buyer.


Excess inventory can lead to storage costs, increased risk of obsolescence, and cash flow issues. Adopting a more demand-driven production approach that aligns with real-time orders and market demand can not only reduce waste but also enhance operational efficiency and overall profitability.


This approach also enables better resource allocation. Instead of dedicating resources to speculative production, they can be deployed more effectively to fulfill confirmed orders. This not only reduces idle inventory but also enhances overall operational efficiency.


Focusing on producing what has been sold enhances customer satisfaction. With a streamlined approach, products are delivered promptly, meeting customer expectations and fostering positive relationships. This contributes to an improved brand reputation and encourages repeat business.


An increased production capacity enables businesses to explore new markets, launch new products, or extend their reach to a wider customer base.


As supply becomes more flexible and responsive, businesses can seize time-sensitive opportunities, adapt to market trends, engage in bulk orders or partnerships that were previously unattainable. Consequently, this cycle of enhanced production capacity leading to heightened sales not only drives revenue growth but also establishes a strong competitive advantage in the market.


The "make what you've sold" strategy aligns production closely with actual demand, leading to reduced waste, efficient resource utilisation, and heightened customer satisfaction. By prioritising real-time sales over forecasts, businesses can streamline their operations, strengthen their bottom line, and cultivate lasting customer relationships.

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