One of the best pieces of anecdotal evidence for an accelerating commercial world comes from order sizes. In an uncertain world that is changing fast, companies don’t want to gamble on big orders, instead preferring smaller, more frequent deliveries from their suppliers.
This morning at the Insider ‘Made in Manchester’ event where I was speaking, two very successful but completely different manufacturing firms reported that their customers were asking for just this: faster turnaround times on smaller volumes.
Holding large amounts of stock has always been problematic for businesses. While it gives you — and perhaps your downstream customers — reassurance, it ties up capital and requires you to operate a larger warehouse yourself.
Practices like Just in Time (JIT) were designed to eliminate a lot of excess stock, freeing capital and reducing operating costs. But while they had the cash and the certainty, lots of companies continued to hold large amounts of product in their warehouses.
The alternative was more challenging: capital investment in the skills and systems to manage a leaner process. This in itself is risky: just look at how many large IT projects fail. Screw this up and you could have catastrophic customer service issues. So companies put off the investment, preferring the certainty of higher stock levels.
Until recently. Because while cash (debt) remains relatively cheap for those who can get it, certainty has been eliminated. Now companies are doing anything that they can to minimise the consequences of a misstep.
This manifests itself as smaller and more frequent orders — perhaps made possible by improved technology. But it also manifests as changes to employment practices — the increasing use of freelancers and the rise of the zero-hours contract.
If you’re sceptical about the idea of a faster-moving, more uncertain business environment, just speak to a manufacturer.