The Business Book

(Joyce) #1

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.
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