Isn’t It Obvious?
Part 1. Summary of the book
Paul White was running the Boca Raton branch of Hannah’s Shop, but the store’s profit kept dropped down. When his store’s warehouse suffered from a water leak, Paul asked his friend, Roger, who is also the warehouse manager in the area to help. They came to the plan that Paul will sent one combined list at the end of the day. Paul decided the amount to hold from each SKU is equal to twenty times the daily average sales. By the time, Paul’s wife, Caroline, failed to persuade her father to buy the Leon’s. Four weeks after the accident in the warehouse, the finance people ...view middle of the document...
The fact that it has such an impact on sales only supports this. But for the system to be truly efficient, it should be implemented for the whole region, not just in Boca. Paul then got the approval from the regional manager, Martin, to given all his own inventory to the general pile. Paul and Roger also came to the conclusion that when Paul ask for an SKU, and all Roger had were residuals, that means it’s a high runner and Roger should cross ship as much of it as he can. Meanwhile, Caroline cornered her supplier and asked him to deal with the mistakes they made. She also went to the trade fair to find new product and vendor. Three weeks later ,Paul got information from Bob that his store’s profitability was about three times that of an average store, and the inventories are about a quarter of what they were. It brings the store’s ROI to more than ten times what it was before. Which is more clearly when using the equivalent measurement— inventory turns. Paul separate SKU in green, yellow, red to reduce the SKU. To make all the work fit for the whole company, Roger learned from the GSP’s warehouse about mini-warehouse. Though they had hard time to persuade their colleagues, they started testing the process in an area. Caroline had a new deal with their supplier and it is a win-win situation. Finally, they planned to build a central warehouse so the potential problem that will caused by the cross-shipment will be avoid.
Part 2. Five quotations from the book
1. “When people do not accept a suggested change, they are not doing it because they are programmed to resist change.” “So, why do they resist? Why are you turning down my suggestion to buy Leon’s?” “People judge the proposed change. They judge the benefits and they are evaluating the risks involved. If they come to the conclusion that the change is good they accept it, if they come to the conclusion that the change is bad they resist it. And never forget that the perception of risk is the dominant factor in judging whether the change is good or bad. People resist your suggested changes not because they resist change but because on that particular suggestion their judgment is that it’s not beneficial enough or the risk is too high.” “Maybe.” Henry was firm, “No, not maybe, this is important. If you understand that fundamental truth, you’ll listen to their arguments and you have a chance to change their mind. If you stick to your belief that they are programmed to resist, you’ll be a very bad manager because your alternatives narrow down to giving up or to using force.”
2. Paul used the system to check how many of his store’s SKUs had appeared on the inventory shortage list during January. He then checked how these items sold during February. The income from these items came roughly to the increase in sales. Obviously, the fact that more of these items were available in the store accounted for the large increase in sales. He then checked the shortage list for February, and saw that his...