In the formation of a business, an ideal entrepreneur always has to be a future oriented business person. He should project of how his small business unit will evolve and grow to become a big corporation. With time and strategic planning, he should replace himself as the sole manager and install a board of directors to take up his functions.

The commonest way to increase the size of a firm is by increasing its capital base. Some methods to achieve this could be, plough back profits, taking loans or engaging in financial partnership. More capital means more funds will be available to increase factors of production like labor and hence increase scale of operation. A firm with a strong financial base will also enjoy certain advantages, for example, they can obtain loans at low interest rates and their assets can act as collateral.

Availability of funds will enable a business to employ qualified staff. This will lead to division of labor and specialization hence increase output. Qualified staffs are able to make viable decisions that can go a long way to necessitate a company’s growth. It will also enable the business put in place better organizational structures which will allow departmentalization and subsequently division of labor.

As the scale of operation increase, the company is able to buy and sell goods in large quantities. Such a company is likely to get trade discounts. It is also likely to incur less cost per unit in transport, advertisement and distribution.

With effective planning, coordination and directing initiatives by the management of a company, economies of scale will increase. Once a firm turns large-scale, it will further be able to enjoy such benefits as research in new production techniques, new market and new products are being introduced.

Belsheba is a business management expert. She researches and studies on big and small business strategies. Website: Business Management Solutions for efficient business operation.

Article Source:http://www.articlesbase.com/small-business-articles/benefits-of-transforming-your-small-business-to-a-big-company-1196452.html

In the world of supply chain, I always strongly believe the most and significant area require effort and can generate immediate benefit would be ” Product Segmentation”

Product Segmentation

How many category we need to segmentize?
How to segmentize your product ? 

1) How many category we need to segmentize?

Segmentation of Demand and Supply Chain capabilities is to Identify key drivers of differentiation for Demand and Supply, Volatility of Demand, Product Count, Inherent Supply Chain Flexibility (capacity, lead times, sources) Segment business by these characteristics into High Runnder, Medium and Low Runner designations.
Develop focused capabilities from demand and supply chain perspective to accommodate these inherent differences while maintaining profitability.

For a start is recommended to categorized the product into 3 group :

• High Runner
• Medium Runner
• Low Runner
  

2) How to segmentize your product?

High Turn Over products( High Runner) by limited to no risk for inventory liability and allow 10 -15% upside flexibility for product that drive ~ 70% of revenue.

Medium Turn Over products( Medium Runner) with some risk of slow moving inventory exposure and provides flexibility to cover profiled demand upsides

Low Turn Over product ( Low Runner)by drive better profiling of attach rates and big deal forecasts and place appropriate material buys and focus on cost effective service delivery.

What would be the Segment Performance Metrics:
Poor Accy / Reasonable Accy / Better Accy
Long LT / More predictable LT / Near LT Goal

Why Small Medium Enterprise SME need to venture into the Lean &  Supply Chain Management to stay competitive?

The main reason is there is too much waste in Small Medium Enterprise Supply Chain and directly and indirectly hit the bottom line as well as the profit margin.

Few simple reason SME need Lean in Supply Chain :

1) Stay competitive in the industries
2) Reduce waste.
3) Effective financial planning. Invest your money in more productive area.
4) Less worry on your inventory and fully focus on your business driving.
5) Indirectly knowing your marketing and product strength.
6) Strengten your company profile if you need to expand your business and sound customer base.

Do you know why Multinational company like Apple, Nokia, Dell, Procter & Gamble, IBM, Wal-Mart, Toyota, Cisco System and etc can doing so well and they will continue to stay strong in their own business area. Those big giant have the common area as below :

1) Strong Supply Chain Planning
2) Sound financial performance
3) Stong market leader
4) Big gap on market penetration with competitor

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