They would rather have sold out of a small inventory than have sold a large inventory with some inventory left over. The incentives is “0% overages”, not “total sales”.
I don’t work in retail, so maybe just don’t understand certain things. But financially, if you have greater total sales with some inventory left over, you will have more net profit than you would, with limited sales but zero left over inventory.
Can anyone explain how running your business this way makes sense, in terms of dollars and cents????
It doesn’t work the way he says it does. Most of the world now revolves around JIT, just in time, nobody has warehouses, nobody has massive stock stored, they’ve got just enough in the supply chain to meet projected demand. If demand exceeds projection things get a little hairy for a few days. But more supply will arrive.
“Can anyone explain how running your business this way makes sense, in terms of dollars and cents????”
It doesn’t. Not at all. It merely explains the stupidity that is today’s people.
People are herd animals; at least they act like it.
If one animal in the herd thinks saving money means cutting overages to a minimum, then all the animals think no overage at all, ever, is best, even if it means not having any sales at all. At least the metric they are judged by, the 0% overage, has been met.
Unfortunately, this is exactly the business owner’s viewpoint, too. “I like Marcy, she always has no overages, and that means the most profits since it means the least losses.”
Scott Adams was not a genius when he created the Dilbert comic, he was merely observing people patterns of behavior.
Tried to find an electric space heater in Feb a few years ago. Not one store had one, it was an emergency. Bought kerosene instead.