Production and retail

Manufacturing and retailing are seemingly directly opposite things. In fact, there is no contradiction between producer and retailer.

The strategy and tactics of a manufacturing company can only be built on sales.



When at seminars I utter the phrase: “The main task of a manufacturer is sales,” in response I hear bewildered exclamations: “How is that possible? I am a MANUFACTURER! You can only call a cow a producer – because it’s a closed ecosystem to which nothing is introduced. Each of us, including me, a producer, is assembling from many “puzzles” some kind of final product. I stress this so that you don’t have a confrontation in your head between the seven links (manufacturer, processor, packer, logistician for transport, storage, and kitting, and only then the retailer) because all of us in this chain are assembling something from something.

Production is not much different from retail, logistics, or anything else. There are at least seven links in the supply chain. For most non-professionals, the main part of the supply chain is hidden. Producers believe that the supply chain must somehow earn its own money. The milk you produce in the factory is not the same milk that is on the shelf at the chain operator. Transport, storage, and picking logistics to impose enormous costs. There is a global imbalance in these supply chains in Russia.

The manufacturer’s task is to utilize at least 86% of the production capacity. And with a single product. Because in terms of production it is profitable to have one product line and one set of ingredients. The retailer’s job is to take the manufacturer’s price list for 100 items, choose the two most marketable ones, and put them on the shelf.

The retailer doesn’t peddle the product. Every day as you enter the produce room, repeat this phrase to yourself. When you come into the store, you pay for cold, electricity, janitorial work, and so on. The retailer sells location and assortment. And the assortment with the price. Price is an integral indicator. The customer’s benefit and the retailer’s benefit – that’s what the manufacturer’s strategy should be aimed at.

Constantly ask yourself questions: “Why am I doing this? Am I doing nothing?” Hang these questions at the front door of your office.

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