Ramp Up
Categories: Company Management
So why is it "ramp" and not "step" or just "up"? Like...you can up production. You can step up production. But here we're...ramping it. Why?
Well, think about the shape of a ramp. It gradually slopes upward, and that gradual thing is key. Lots of companies that make stuff can't just suddenly switch a flip and blink eyes twice like Jeannie and do double production next month. If you make Ford Trucks, you simply can't go from 10,000 units this month to 20,000 next. There just isn't the infrastructure to scale up to do that. And even if you do, what are the odds that, in the next few years, the economy softens and demand dampens and then you'd have doubled production capacity at big cost for...nothing.
So most of the time when companies need serious capital and infrastructure and have complex products, they can only ramp. Like...could Ford add 500 trucks above the 10,000 next month? Sure. And the next and the next and the next? Sure. But then they'll have taken almost 2 years to double capacity if, say, the new release of Hulu-in-a-truck suddenly drives massive demand for Ford trucks. But they'll have ramped. And, well, that totally fits with the product they make.
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Finance: What does it mean to "scale"?57 Views
Finance allah shmoop What does it mean to scale Well
here's a squid eyeball from space fifty miles away and
here's a squid eyeball from our boat the pesca squid
alia's from a mile away and here's a squid eyeball
from the view of our iphone we just dropped in
the water when the squids when right beneath the boat
scaring the crap out of us literally at one scale
we could barely see the ocean At another scale We
saw way too much eye ball scale and business has
the same kind of dramatic effect as operations come into
play That is it's One thing to serve lemonade drinks
to one hundred people a week It takes one stand
a permit grocery store visits worth of supplies it's completely
Another thing Toe serve a million drinks a week for
the latter You need infrastructure trucks storage and armies of
servers to you know serve Yeah that's what they do
someone's gotta get lemonades to the people So when a
company scales it means that they have gone from a
modest few million dollars of sales to sales of maybe
one hundred million and then a billion Some like that
The skill set for the former is a vastly different
set than for the ladder and some people are able
to do both Howard schultz founder and ceo of starbucks
We're looking at you well starbucks started off is just
one store in seattle in like five minutes later there
were a gazillion of them all over the world thinking
of coffee in any language So yeah that's How a
company scales from you little toe Big big Incidentally you'll
want to stay off the scale if you consume venti
caramel frappe with whip on a daily basis but on 00:01:44.897 --> [endTime] there so good