Resilient Results

Inventory

September 27, 2020 by rwhitcomb@acm.org Leave a Comment

One of the key concepts of the book The Goal is that anything in a business falls into three categories.  These are inventory (stuff you can sell), operational expense (stuff that makes inventory), and throughput (how quickly you can turn inventory into sales).  The theme of the book is that you want higher throughput while reducing operational expense and inventory.  If you follow your process through, you can identify the bottlenecks and optimize your flow so that the bottlenecks are always producing inventory.  

 

We were out shopping for furniture today and one thing I noticed in the store was that all fixtures had price tags.  Literally all fixture.  Even in the men’s room all the decorations and the items in the room, minus the sink itself, the toilet, soap dispenser, and the paper towel dispenser had price tags.  I found this clever because it right in with the store’s purpose of selling home furnishing and decorations while also using them in useful way.  They’re not sitting there in the back room, they’re in the bathroom and it’s easy to see someone admiring it and the ultimately purchasing it.  Think how many other stores that just have decorations in the bathroom but consider a price tag on them?

For businesses, the message is clear. Regardless of your primary product, if you look at everything a business owns, there’s something that’s not generating revenue that could be.  The same goes for our lives, we surround ourselves in our homes and trappings of success.  How much more could our lives be if we looked at everything we owned and asked “How can this help me achieve my goals?”.

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