Throughput: The right structure for orders

Sales depend on marketing, the sales team, innovation, product management, the products, but also the throughput.

If your sales department is working well, the rest of the organization has to ensure the incoming orders are handled on time.

If your company builds up a backlog of orders that are not fulfilled on time, it will soon become difficult to get more orders. Longer delivery times make it harder to get orders. But customers’ experience of not being supplied on time also makes them look for alternative sources. The result is the well-known vicious circle of a changing imbalance between order backlog and value added or sales, which can lead organizations into enormous stress situations.

One might think that with a lower order backlog, the backlog can be caught up more easily. But the opposite is true. In fact, experience shows that companies need a certain minimum order level to achieve a “well-rounded run.” If the order level falls below a critical minimum, things can go wrong in many places. In addition, it is then difficult to implement meaningful production networks on production lines, with the result that the ratio of production and set-up times becomes less favorable.

Don’t underestimate the ramp-up of capacity utilization either. Because even in this phase, there are challenges that can be troublesome and expensive for the company to overcome.

Therefore, make sure that you always have a sufficient and, if possible, constant level of orders in your inventory. If necessary, “buy in” additional orders at lower prices. This is often still better than being underutilized.

Listen to your employees at the grassroots level. This is where the practical experience from day-to-day operations is. Use this experience by involving your employees in the optimization of processes and by making use of a sufficiently broad basis of information sources for decision-making.


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