MeetPrescott.com

I’m noticing a lot more trends in managing excess capacity this year, across a wide array of industries.  One of the top Inc 500 businesses, in terms of growth, grew successfully with managing backhaul in the transportation industry, which means filling the excess capacity of freight trucks on return from their original destinations.  Amazon’s explosive growth with AWS (Amazon Web Services) was implemented when they realized they could manage excess capacity on their servers and sell it to third-party organizations that needed the additional computing power for their own operations.

Panera’s new “MyPanera” customer appreciation program appears to be an offshoot of capacity management, too.  Panera usually donates all their extra unsold baked goods to charitable organizations at the end of the day, thus their customer loyalty program also cuts down on potential waste while increasing customer satisfaction.  And this allows them to award baked goods earlier in the day when they are more fresh.  I was initially confused by the seemingly random awards offered to their customer base, which is not necessarily driven by purchasing decisions but, it seems, by repeat visits to a store.  This allows a statistical spread so they can randomly assign the “outliers” of baked goods and other minor items to an additionally randomized spread among consumers who visit their store.  Instead of giving away free samples to anyone, they are ensuring that their repeat customers benefit from increased attention.  If this is what they are doing it’s very smart, and if it’s not then I just gave them a cutting edge way to manage their inventory fluctuations.  =)

After speaking with several senior Marines who have assisted in my job search, it appears that much of the entrepreneurial work is also headed toward managing excess capacity for government contracts.  One program in particular adopted mathematical formulas from the oil industry and migrated them into a software modeling program that was applied to aviation platforms.  When the operational tempo was taken into consideration in a simulated environment, it was determined that several major corporations were unnecessarily selling the government additional replacement parts for their contracted components based on a linear maintenance curve.

Capacity management is nothing new, but the ways in which businesses are calculating their formulas are causing significant downstream effects for streamlining business operations, and also for shifting the revenues of suppliers involved in manufacturing replacement parts.  Often times the “giant” suppliers are offended by new advances in capacity management, because it means their revenue is coming under the chopping block.

In addition to capacity management, increasing the longevity of maintenance parts is also a frustration for major suppliers.  If you increase the life of brake rotors by 200% or 300% after cryogenic processing, that means a brake manufacturer is potentially seeing a 200-300% decrease in their profits if all of their customers find out about the matter.

For providers of specialized maintenance-related items, a reduction in demand might also mean the value in doing a factory production run for replacement parts is lost.  Often times in small part production runs, the cost per unit becomes prohibitively high with this shift in demand.

Just something to think about, but it’s a trend I’m seeing.  I’m looking forward to seeing how America’s entrepreneurial community can capitalize on this trend in the near future, too.