Managing Complexity from the 1000 Mile View

Damien was an interesting fellow I first met during an evening presentation I was giving at Leeds University. The presentation was on supply chain management and ended at 8 pm sharp.

After the presentation was over Damien was telling me how he had started out with a part-time ‘cottage industry’ type business shipping pet care products out of his own garage and how one thing had led to another..

Before he knew it he was turning over 3 million pounds for each of the previous couple of years.

“Business is going well then” I remarked..

“Well, it was..” he replied..

So I inquired..

“What do mean by ‘was’ going well, are there issues?”

Damien went on to tell me how incredible it had all been starting off with a small part-time income stream selling a few items on eBay that soon multiplied into something much bigger.

He described how he began selling his pet care products on eBay and then other sales channels including Amazon, his own website shopping cart and through Amazon Vendor Central. He also supplied a couple of other garden centers and pet store chains.

.. although I could see there were issues the way Damien winced as if it was painful to talk about..

“I only started this as a side line just to earn a bit of extra income to help pay down the mortgage payments whilst I was still working a full time job. It was all going really well until I had to lay-off some of my staff recently. The overheads on the warehouse are just eating into any profits we’re making. I considered my staff as my friends and I had to let them go..”

I could tell the way he said it that having to let his staff go was definitely a sore spot. Damien went on to tell me..

“If we didn’t have to pay so much rent for the warehouse I’d be able keep my staff in a job and I wouldn’t need to have to deal with all these sales orders coming in from all these different companies and I’d be able to organize shipments to and from all these different customers warehouse locations without having to work 7 til 11 every day and night, on my own just to keep up.”

I asked Damien if he thought his business would continue to grow anymore and how he planned on managing his increasingly growing inventory, orders and distribution..

He told me..

“John, I rent the warehouse unit and I’m only just hanging in there managing this at the moment. We’ll soon need a bigger space if it does keep growing at the rate it has been doing. Although moving into an even bigger space would surly kill us on rental payments”

He continued to tell me..

..”and unless I can find a way to manage time sucking activities like processing sales orders from all these different sites and companies and figure out a way to manage shipping between customers warehouse locations and our own in house fulfillment, I can’t see how we’ll continue to manage any new growth with the small team I have and the overheads I already have to cope with..”

I could see the problem Damien was facing although apart from needing to let staff go, the rest of it was actually a GOOD problem to have.. could be fixed.

The problem Damien faced stemmed from warehousing space and overhead costs that had a knock on effect leading to redundancies. This meant less hands on deck to manage the increasing volume of orders coming in from different places and more shipments to manage and track between all the customer warehousing locations.

Damian’s order book was bursting at the seams. He simply couldn’t manage the workload on his own due to the fact overheads were eating into his cash flow and had forced him to cut labor costs.

Nevertheless, it was a good problem to have. At least his order book was bustling..

The simple solution would be to outsource the expense of warehousing, fulfillment and labor costs and automate as much backed administration activity as possible. Things like order processing, invoicing and shipment tracking, etc.

I explained this to Damien and although it took a leap of faith for Damien to make changes to what was previously a good business plan that had been working. Although to take his business to the next level, he had to do things differently..

The resources Damien’s business needed to get him from literally zero to 3 million per year turnover were not the same as the resources he would need to get his business from 3 million to 10 million. Changes had to be made.

Its often the case that we try to keep doing what always worked before and to a certain extent this is true. Although if you need to step back and take a broader look at the big picture now and again and take the 1000 mile high viewpoint, you can often notice simple chances that need to be made to take your business to the next level, more quickly.

For Damien this was a simple matter of moving his inventory out to a fulfillment house, installing an order management system and re-allocating his staff to leverage the automated systems and outsourced fulfillment and shipping he would put in place.

Sometimes we need to take the 1000 mile high view. Even if its to make simple changes that turn complexity into simplicity. To be able to make things easier and simpler to manage is to allow space for new growth.

Maybe you have over complexity in your business? The next time you’re in the shower or taking a walk, or just talking time out from the daily fire fights..

I wonder if there’s complexity in your business that could be made simpler and easier to manage? By taking a 20 minute look from the 1000 mile high viewpoint.. you see any?


Seize the day!

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