Too Much vs. Not Enough
Thoughts on When & If You Should You Ramp Up for Higher Sales Volume
by Jack Guarnieri, Jersey Jack Pinball & PinballSales.com
A recent article in the Wall Street Journal headlined “Parts shortages crimp U.S. factories” was of interest to me. It talked about various factories in several industries that are being hurt because of a lack of parts and supplies to fulfill orders. It seems that while suppliers appreciated the orders, many didn’t react by ramping up production and staff enough to actually fill them.
Other articles and news reports note that many suppliers were caught flat footed by the strong increase in the economy, insufficiently preparing for the increase in orders at the rate they’ve been received. A good number of them simply didn’t believe there would be an upturn. Now that they have these unexpected orders, many have been slow to respond, not adding enough people or buying enough equipment to fill them. The result is longer lead times and, in some cases, cancelled orders. At this point, they question how long the good economy will last, reasoning that by the time they hire and train new employees and buy the needed equipment to scale up, the boom will be over and the economy will be in recession.
Now if you follow all of that, you’re probably shaking your head and may have some stories of your own about how you’ve seen this scenario play out in your business or consumer life. Part of it is a self-fulfilling prophecy. As a business owner, it’s hard to sell eggs from an empty egg carton. You need to be prepared to do business. For many companies, it means having the employees, stock and materials you need ready to make a sale and deliver product to the customer.
So who’s playing games at an empty arcade or trying to win prizes at an empty or unappealing redemption counter? As a parallel, I know that if I go to a deli or supermarket, I love to see stocked shelves with lots of choices and everything piled high and deep. It’s part of the attraction.
Some years ago, there was a drug store in town that would only have one of any particular item on the shelf. When you bought it, the cashier would write it down on a list at checkout so it could be re-ordered. If you wanted two at one time, you were out of luck. (Do I need to tell you that the store eventually closed?)
Look at bakeries. How do they know how many of this cake or that cookie to bake that day or how many loaves of bread they’ll need? If they bake too few, they lose sales. If they bake too many, they have waste.
Years ago, I’d see redemption center managers ordering tractor trailers full of plush toys in anticipation of an upcoming summer blockbuster movie. Then sometimes, the movie would be a bomb and the plush would end up being a closeout item instead of a hot property. Is it better to have a lot and hope for a hit, or better to buy what you know you can use within a set timeframe, run out and move on to the next hot item?
With IAAPA and the “Fall Buying Season” approaching, you need to get out there and see what trends, products, games and next big thing(s) will work for you. This should be an everyday process. Being prepared to do business is important. However, is it better to have the product or service ready to sell and deliver, but have no customers, or better to have customers, but be unable to fill all of the orders?
Recent experience has shown me that some businesses are content to fulfill only what orders they can at the current level of employees and equipment, letting the rest either wait or go elsewhere. Frankly, it wouldn’t surprise me if these suppliers even raise prices to discourage some buyers and increase profits at the same time.
What about you? Do you decide to do as much as you can without any further investment or do you ramp up for bigger and more (if it comes)? After all, the choice is yours!
Jack Guarnieri started servicing electro-mechanical pinball machines in 1975 and has been involved in every phase of the amusement game business since then. He was an operator in NYC, then began a distributorship in 1999, PinballSales.com, selling coin-op to the consumer market. In January of 2011 he founded Jersey Jack Pinball (named after his RePlay Magazine pen name), which builds award-winning, full-featured, coin-op pinball machines. Email Jack at jack@ jerseyjackpinball.com.