World Class Manufacturing: The Next Decade by RICHARD J. SCHONBERGER

Author:RICHARD J. SCHONBERGER
Language: eng
Format: epub
Publisher: THE FREE PRESS
Published: 1996-07-15T00:00:00+00:00

When business is slow, the company gladly does business with difficult customers. It will sometimes even sell at a loss—to help cover fixed costs. When average demand exceeds capacity, however, the team looks for best ways to refuse or divert business; see the right side of Exhibit 7-3. This may include stretching out deliveries or response times to the point where the customer begins to look elsewhere. The usual marketing imperative—sell, sell, sell—makes no sense in this situation. Every sale is not equal. Some are very good sales, and others are not. Finance needs to be involved to help show total financial impact, and operations needs to be there to articulate capacity alternatives, such as overtime and subcontracting. A marketing contribution is to note when it is advantageous to be a full-line producer despite losses on some items. In other words, keep selling a certain product at a loss to a major customer in order to also sell highly profitable items to the same customer.

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