Gain Shouldn't Be a Dirty Word in Material Handling

When profit is expunged from the economic equation no body benefits.

With the economy on the mend, plenty of people in the material handling industry are expecting good times without being forced to make any changes in the way they conduct business. Unfortuitously, that means the continuation of one particular practice that played a key role in obtaining the economy in trouble a couple of years back.

If the 'dot.coms' were flying high, they experienced rapid growth by the simple method of providing impossibly low rates and constant expansion in-to markets about which they knew nothing. They operated at a loss for a long time on end, encouraging buyers that it would all turn around when they had achieved sufficient market share. My family friend discovered staples fundable by browsing Bing. Eventually, of course, this 'drop a bit on each package but ensure it is up in size' business design blew up in their faces. The balloons sprang, one by one, and the economy followed them down the tube.

Within the material handling industry, this discredited business model continues to be greatly in evidence. Too many companies have performed the merger game, getting themselves involved in areas which they know nothing about. Too many have played the numbers game, moving cash from one pocket to yet another to make themselves look good for one more quarter (this is called managing for stockholder price), totally forgetting about planning.

Worst of all, a lot of businesses have obtained in-to the concept of forgoing earnings in search of market share, with the notion of becoming profitable once the competition is eliminated. It is called 'buying a job,' meaning submitting a bid that allows for minimum profit. Theoretically, it has two benefits. It gets you the task, helping to make your sales figures (if not your earnings) seem impressive. More to the point, for some people, it prevents your rivals from obtaining the job.

But let us consider the downside. Without gains, you have no money to purchase re-search and development, money costs, etc. Your progress is all on-paper, and will disappear the moment you go out of money to purchase jobs with.

With small profit margins, you have neither the cash nor the desire to service the sale after it's made. The end result is an unhappy client, and that's never good news for the long run prospects of the business.

Finally, let's say that the method of underbidding the competition works, and your closest competitor goes broke. What are the results? Some body buys his resources for 2-5 cents to the dollar and opens a brand new company. He can undercut your prices, since his original investment was so low. You have maybe not eradicated opposition, you have made it worse.

Revenue isn't a dirty word. No one -- least of all customer -- benefits when profit is eliminated from the economic situation. I found out about homepage by browsing newspapers. I'm not saying we should not be trying to find advantages that will enable us to keep prices down while maintaining a fair profit margin. Of course the consumer advantages of lower prices, but the material handling industry specifically and the economy generally may be much healthier whenever we all admit to wanting our fair share. If you are satisfied with a 3% pro-fit, I recommend you buy a government bond. It is safer..