How will you plan your business Operations?

I spent last weekend at the UK WOMAD Festival, 30 years after my first one and still enjoying it. Like many such events, it’s the result of much hard work by the organisers, performers and many other contributors.

As anyone who’s attended a music festival will know, choosing what to eat can be tough. Some people bring their own meals, but most buy from the many food stalls around the stages.

One indication of good food is a lengthy queue of customers. But this also means a long wait. And it may show how inefficient they are. Sometimes everyone’s waiting to pay, but then soon walk away with their food. Or the ordering might be quick, but there’s a crowd hanging around to collect their meals.

In today’s dynamic markets, demand can vary wildly. So, it’s important to be responsive to your customers. A significant lead time might reflect the quality and exclusivity of your product. Or it can reveal if your Operations need improvement.

The time from ‘Order to Cash’ is an important performance measure for any manufacturer. The quickest is when you’re ‘Making to Stock’, which is easier when you only have a few products. Then you just need to pack and ship them when you sell one. A good example this year was a ‘Venison Biltong’ (deer salami) stall, who had all their sausages sliced and bagged ready to hand over.

‘Assemble to Order’ is the next fastest, where the product modules are ready made but each product is built as it is bought. A curry stall who ladles different sauces onto rice is demonstrating this approach.

When every product is customised then you’re ‘Making to Order’. My youngest son always seems to eat the same crepe flavour, but there are dozens to choose from. They cook each French pancake on the griddle while adding the customers’ choice of fillings.

Whatever you’re selling, it’s good to know how you will deliver more of them as your business scales. Your lead time from Order to Delivery and Cash needs to be balanced against how much ‘Working Capital’ is in your inventory of raw materials and assemblies. You don’t want customers walking away if you can’t deliver on time, but If orders suddenly dry up, you don’t want to be left with excess stock.

If you’d like to discuss how to plan and scale your Operations, please get in touch!

(written August 2024)