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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Silver_Bullet who wrote (24896)	4/28/2000 12:31:00 AM
From: Rande Is	Read Replies (1) \| Respond to of 57584

Why is it that ADAP cannot fill orders faster? I believe that most every fibre optic related company is into backorders. When the orders come faster than production can keep up. . . you must increase production capabilities. You can add shifts, speed up production, farm out the work or expand. Adding shifts means hiring more people, an expensive proposition. Expanding means re-tooling and hiring. . . more expensive. You can only speed up production so much. So often fibre optic companies farm out work to the Pacific Rim. . .but when you do that, you must often wait anywhere from 6 weeks to 6 months to see your products. And you must order a minimum of 100,000 pieces at a time. Now a system could have dozens of parts. . . each of which needs manufactured separately. . . are you beginning to see the problem? Now a company that is not rolling in dough has major challenges at various times in their growth. What happens when you sell 35,000 pieces? Its too much to make in house. . .yet too little to send overseas. Sure, you could order 100k. . . but in paying for three times more than you need, you hand over all your cashflow. Now what? OR you get 100k manufactured, but in the 6 months it takes, the big customer cancels. . .now the big deal you were counting on to take you to profits. . .is sitting in inventory as discontinued expensive JUNK. Make that mistake about once or twice and you could find yourself quickly out of business. Now if one part of the many needed to complete a system. . is backordered. . . or you cannot find a manufacturer to make it. . . or you must make that part yourself. . .it could slow down the entire run. And. . . if all that isn't enough of a headache in a rapidly growing business. . .try this. . . While you are struggling to get caught up. . .the technology is expanding. . .and by the time you fill an order, you are already shipping discontinued products. So then you say, well I'll just hold up the orders until we get enough of them. . . but while you are waiting to fill the production schedule, your R&D department brings in prototypes that blow away the speed of the current product. So you rush the upgrades before the run begins. But there is a bug. Now you must tell your sales department to put off new orders for 6 weeks . . .then 3 months. . .then 6 months. . . And for that matter. . .why fill the orders at all. . . I mean it is obsolete before it even ships. And there is not a thing you can do about it. So you try to set a standard. . . like ABAccess. . . but the demand exceeds your greatest expectations and you are right back where you started. Lucent has been going through this very thing for years. Finally, they just closed up shop on many products. . .so they could focus completely on the products that were in greatest demand. . .and the ones that would be used in the next generation internet. . .broadband. . . optical. . .wireless. . etc. They literally dumped products and departments that were generating revenues. . .in order to re-tool and concentrate on the future. . . primarily for the purpose of being able to stay up with orders. Order fulfillment is the toughest part about fibre optic systems. And even though filling demand is a nice problem for a company to have, it is still a problem that needs solved. Hope that helps, Rande Is