The Business Book

294

IF THE PIE’S NOT BIG

ENOUGH, MAKE A

BIGGER PIE

FULFILLING DEMAND

T

he success of a company

can depend in large part on

the effective management of

its stock. Customer demand in most

markets varies throughout the year.

During busy periods, companies

may not be able to produce enough

to satisfy consumers. If companies

fail to match supply to demand,

potential buyers have to find

alternative suppliers and sales will

be lost. Additionally, once consumers

have tried out the opposition, they

may switch loyality and never return.

Sales may never regain previous

levels, even after supply has been

addressed, leading to lower profits.

Types of stock

Companies keep stock as an

insurance policy—it enables them to

deal with sudden surges in sales or

a sudden drop in output. In addition

to inventories of finished goods,

manufacturers may hold stocks of

raw materials, to create parts of the

If the pie’s not

big enough, make

a bigger pie.

IN CONTEXT

FOCUS

Stock management

KEY DATES

10,000 BCE Better farming

techniques allow the creation

of surplus food. Grain is stored

for times of scarcity or trade.

4100–3800 BCE Early

Sumerian culture develops one

of the earliest writing systems

in order to keep track of goods.

1889 US statistician Herman

Hollerith invents the first

machine-read punch card.

Merchants who had previously

relied on handwritten notes

and stock counting can now

record complex data.

1974 The scannable, modern

bar code is introduced,

revolutionizing the ability

to manage inventory.

2000s Inventory management

software programs can

instantly update databases

using bar-code readers.

During peak periods,

demand exceeds

current production.

Stock is released to

supplement current

production.