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Inventory risk and control management to maximize profit...
“Some time ago my wife had a piece of cake at a well-known store during her tea break. The assistant cut her a large slice. The supervisor noticed and rapped him over the knuckles for cutting such a large slice.
“Now, this may sound petty, but we do understand what the issue is all about. By only having four pieces to sell instead of eight, the store's profit is reduced by 50% (in other words, a 50% loss of potential profits).
“Yes, we know that one small piece of cake is not going to make a difference between failure and survival for this specific store, but add some hundreds or thousands of other profit erosion cases to this scenario, and the picture starts looking different!
“Imagine if the owners of this store start enforcing profit protection planning and the managers invite the staff to participate in risk management sessions. As soon as they know what profit erosion is and how it can affect the company (and their job security in the end!), I bet this issue will be mentioned to and discussed with the managers.
“And as soon as the owners and managers learn of the case, they will provide a policy, not only for the cutting of cakes but also for all other cases of profit erosion, stipulating how certain situations should be handled. For example, how many pieces a cake should deliver in order for the business to profit.” - Michiel Jonker
Message: This cartoon illustrates the need to implement policies to prevent the loss or erosion of inventory and profits.
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Real File Size: 189 KB (802 x 496)
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