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The "Whip Effect" That Affects Profits

2010/11/18 9:46:00 47

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Selling clothes or making money?

clothing

Making money? Many people buy cloth to make clothes, compare the cost with the price in the store, and find that they are totally different.

So it is taken for granted that making clothes must be very profitable, but this is not the case.

Clothing factories across the country are numerous, but there are few profits in the end.

People are puzzled, raw materials are so cheap, and the selling price is so high. How can they not make money? The reason is simple: the whip effect is causing trouble.

What is the whip effect?

Whip

There is a long rope, if suddenly shaking, the whip will show a wave, it is more and more magnified, this is called the whip effect, that is, step by step amplification effect.

Although the cost of a garment is very low, because of the whip effect, the inventory cost is gradually enlarged to a huge number in the garment factory, which will swallow up the profits of the factory.

In a direct shop, a customer needs 1 X style large size clothes, because there are few people who buy this style, and there is no stock in the shop, so they have to order from the dealer.

The boss is very smart, since there are 1 needs, if I order more than 1, sales should be no problem, so decided to book two large X style clothes for dealers.

This information is pmitted to the local authorities.

Distributor

After that, the dealer thought that a store would have two such clothes. I had 15 outlets in the city, which could be sold, that is, the demand for 30 pieces. So conservative, ordering 8 pieces should not be a problem.

So, local distributors decided to issue information to the provincial general distributors, requiring 8 X styles and large code clothes.

After receiving the information from the provincial dealers, we also follow this train of thought. There are 8 agents, and I have 25 agents in the whole province, that is, the demand for 200 pieces. There is no question that the market should be digested 64.

So I report to the manufacturer. I want 64 X large size clothes.

When this information is sent to manufacturers, manufacturers are excited. This provincial distributor wants 64 X styles and large size clothes. I have 30 provincial distributors in the whole country, that is, the quantity required for 1920 items, and 500 pieces produced by Sir.

So overtime production, but the actual situation? Only 1 pieces of customer demand, after the first level, to increase the number of manufacturers to become 500.

How do we get out of it? Most of them are in the warehouse of garment factories, which heightens the overall cost of enterprises.

Where does the problem come from? From the first level, every level thinks that a subordinate needs so many pieces. How many subordinates do I have? How many of them will be needed in general?

In this way, the pmission of information, like the "whip", has gradually expanded, and has completely divorced from reality at the end.

The information of the enterprise can not be grasped clearly, and the grasp of the market is often based on subjective speculation, and the information is inaccurate. The solution is to improve the management structure and establish a smooth upper and lower level information communication mechanism. In the precise management, the matrix management is put forward, through the omnidirectional acquisition and acquisition of the information, to ensure that the whole system operates on one line, and effectively solve the problems caused by information asymmetry between manufacturers and distributors, and achieve the goal of deep distribution.