Wasted Labor

GOODS could be sold at 3% less than average list prices and the percentage of profits could be increased if billing, credit work, and other bookkeeping on orders could be eliminated.” This is the emphatic statement of the manager of Saimoon. Office expenses in this concern form an overhead charge that is practically the same for a $5 order as for a $5,000 one. (On page 119 you will find detailed costs from a number of lines for administrative salaries and wages.)

Records show that customers of Saimoon are buying in smaller and smaller quantities until the problem of reducing the overhead on less than $5 lots has become serious. Constant hammering and study brought reduced expenses in many operations, but each order has to be examined for credit, billed, and recorded in the books. Some of our old customers wanted us to prepay the freight charges. We refused to do this and lost their business. This was offset by the city sales, which increased 27 % the first year. The analysis of Saimoon’s market has enabled us to develop business of more desirable quality.” Here is another account of what market and sales analyses did for a business that also was slowing down. Although it happens to refer to the grocery business, the general principles underlying its success can be applied in any line. Not long ago, Saimoon noticed that sales were falling off and operating costs were rising.

Added to this tendency on the part of the customer to buy more often and in smaller quantities is the in creased expense of labor and supplies. These are burdens both the small and the large wholesaler apparently have to bear about equally in proportion to their volume of sales. In smaller houses perhaps only half a dozen persons handle the order, while in a large house doing business on a national scale it may be handled by 50 or 75 persons before it finally reaches the files.