Operations and logistics are frequently viewed as secondary functions that can be handled by someone else. But here’s the thing: With data so richly available, using it to help reinvent operations and logistics can help you stand out just as much as the next electric car or purple cow.
Just take a look at some of the world leaders in business.
Amazon, Uber, Airbnb, and other sharing sites are turning their industries around with structural and operational changes that challenge old paradigms. It’s not the products or services that stand out but the operations, logistics, and method of delivery.
For example, Amazon does not just succeed on lower prices or by offering different products than their competitors. They have revolutionized, simplified, and automated ordering, customer service, distribution, and warehousing.
The results have been staggering. It’s estimated that in 2016, they represent about 30-40% of internet retail sales and 8-10% of total retail sales.
Operations Innovation Isn’t Just For The Big Businesses
You might be thinking, “But that’s for the big businesses. How can that help my small business?”
Changing operational paradigms is for small businesses, too! Take a look at GrubHub. They are a publicly traded company, but think of whom they help: restaurants, big and small. They’ve helped thousands of restaurants expand their sales by providing seamless delivery.
Outsourcing key activities like web design, social media, cloud services, CRM, and even distribution have become both less complicated and more affordable.
No matter the size of your business, you can streamline or maximize your operations to take your sales and profits to a whole new level. The key is maximizing forecasting, inventory control, and distribution to maximize service, investment return, sales, and profitability.
Here are a few things to keep in mind:
- Many operations experts say that 80% of sales are with 20% of your products. It’s often true, yet suppliers continue to proliferate styles, colors, sizes, models, and features to presumably serve more customers and provide more features. By keeping it simple, you help yourself and your customers.
- Pursue profit and not volume. Businesses frequently fail by adding too many stores, products, and marketing. In contrast, focusing on competitiveness, bestsellers, reducing costs, and reducing structure can have huge payoffs.
- Conduct a simple “SWOT” analysis (Strengths, Weaknesses, Opportunities, and Threats) to get a perspective on your business. The surprising aspect of this exercise is that we frequently take our strengths and opportunities for granted rather than maximizing them. For example, approaching key and repeat customers usually presents the greatest opportunity, lowest cost, and most profitable source of additional sales.
- Encourage testing new ideas and scrapping ones that don’t work. You will make mistakes. Focus on solving them rather than blaming someone. Consider using the process of develop, test, measure, and adapt. The measure step is, by the way, the most frequently forgotten.
It’s easy to get seduced by design, marketing, or the next flashy idea. Plenty of businesses innovate in these areas. Don’t forget, though, that just as frequently, success comes from innovation in operation and logistics.
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