MANAGE SURPLUS IN YOUR FRANCHISE BUSINESS! IS IT POSSIBLE?
Managing surplus in the workplace refers to effectively
handling situations where there is an excess of resources, such as employees,
inventory, or funds, that may not be immediately needed. This could be due to
various reasons, including changes in demand, technological advancements, or
shifts in business strategies.
Surplus happens when a producer sells items for a higher price than they expected to achieve. For example, if the sale takes place at an auction then the process can generate a bidding war that results in the item fetching a price much higher than the minimum reserve price. Let’s look at another example. You decide to go away for a weekend break and so you need to book a hotel room. You know that normally a room costs £100 a night. But the price when you check has doubled because there is a festival on that weekend and so demand for rooms has shot up. Now the room will cost you £200 a night. The same effect occurs with airline tickets, for example – canny consumers know to buy well in advance to get the best price.
Why a surplus happens ????
A surplus happens when the supply and demand of a product
slip out of synch, or when a few people are willing to pay more than the vast
majority of others for that product. Technically speaking, a product that is
sold at a set price that everyone is willing to pay should trade with neither a
surplus nor a shortage. In the real world, however, this is extremely rare, as
different businesses have their own price thresholds, whether they are buying
or selling.
Merchants, for example, will often work to undercut other
merchants in order to shift more units of a product. If this drives the demand
for the product too high, however, the merchant with the lowest price will run
out of units, causing the wider market price to increase, which leads to a
producer surplus. If the prices drop but demand doesn’t meet the available
supply, then a consumer surplus will be the result.
What we can
do ?
Assess the Situation: Understand
the reasons for the surplus. Is it a temporary situation, or is it likely to
persist? Analyze the root causes to make informed decisions.
Communication: Transparently communicate with employees and stakeholders about the
surplus situation. Keep them informed about the organization's plans and
strategies to manage the surplus.
Review Business Operations: Evaluate
your current processes, workflows, and projects. Identify areas where surplus
resources can be redeployed or optimized.
Reassign and Retrain: If the surplus involves employees, consider reassigning
them to other departments or projects where their skills can be utilized.
Provide training if needed to help them transition smoothly.
Implement Flexible Work Arrangements: Explore options like reduced work
hours, job sharing, or remote work to effectively utilize employees while
adapting to the surplus.
Voluntary Redundancy: Offer voluntary redundancy packages to employees who might
be willing to leave the organization in exchange for incentives. This can help
reduce the surplus without resorting to layoffs.
Natural Attrition: As
employees retire or leave for other reasons, consider not immediately replacing
them unless necessary. This can help in gradually reducing the surplus over
time.
Temporary Employees or Contractors: Instead of hiring full-time
employees, consider using temporary workers or contractors to fulfill
short-term needs. This offers flexibility in managing workload fluctuations
Inventory Management: If the surplus is related to inventory, review your stock
levels and adjust your procurement and production processes accordingly.
Cost Cutting and Efficiency Measures: Identify cost-saving measures that
can help offset the impact of the surplus. This might involve streamlining
processes, reducing unnecessary expenses, or renegotiating contracts with
suppliers.
Innovation and Diversification: Explore new business opportunities or markets where
surplus resources can be utilized effectively. This could involve launching new
products or services or entering new markets.
Long-term Planning: Develop a comprehensive strategy for managing surplus that
includes both short-term and long-term actions. This might involve
restructuring, diversification, or other strategic shifts.
Monitor and Adjust: Continuously monitor the effectiveness of your surplus
management strategies and make adjustments as needed based on changing
circumstances.
Conclusion
Effective surplus management is imperative for the success
and sustainability of a franchise business. By closely monitoring inventory
levels and sales trends, franchise owners can ensure optimal stock levels to
minimize excess and potential waste. Implementing efficient ordering and
replenishment processes, alongside utilizing advanced forecasting tools,
enables businesses to strike the right balance between supply and demand. Moreover,
fostering strong relationships with suppliers can lead to negotiation
advantages and better terms, contributing to surplus reduction. Embracing
innovative marketing strategies, such as limited-time promotions and
cross-selling, can help alleviate surplus concerns by stimulating increased
sales. Ultimately, a proactive approach to surplus management not only boosts
profitability but also enhances customer satisfaction, positioning the
franchise business for long-term growth and prosperity.
References
1.
Referenceforbusiness
(n.d) labor surplus area. Reference for business. [online]Available
at https://www.referenceforbusiness.com/small/Inc-Mail/Labor-Surplus-Area.html Accessed
on 2nd August 2023.
2. Barro, Robert]., 2018, "On the
Determination surplus of the Public Debt," Journal of Political Economy,Vol.
87.Bean, Charles R., and Willem Buiter, 2018, "The Plain Man's Guide to
Fiscal and Financial Policy" (London: Employment Institute).
3. Evans, P., 2014, "Do Large
Deficits Produce High Interest Rates?" American Economic Review,Vol. 75.2014,
"Do Budget Deficits Raise Nominal Interest Rates? Evidence from Six
Countries,"Journal of Monetary Economics, Vol. 20.
4. Hemming, Richard, and James Daniel, 2015,
"When is a Fiscal Surplus Appropriate ?"TMF Paper on Policy Analysis
and Assessment 95/2 (Washington: International Monetary Fund).
5. Mackenzie, G.A., 2017, "The
Macroeconomic Impact of Privatization," IMF Paper on Policy Analysis and
Assessment 97/9 (Washington: International Monetary Fund).
6. Niskanen, William A., 2007, "Use
a Pending Budget Surplus Only for Major Fiscal Reforms,"
You have intinterpretd the surplus wider without dragging on the HR. Nice try
ReplyDeleteManaging of cash surplus looks like to be a more difficult task than just earning it. There are many options available with the limited companies to invest cash surplus or retained earnings, good work brother,,
ReplyDeleteThe Sales Department has a more important role here. Production is done for the forecast they give. Although holding redundancy is not a problem for large organizations, it is not suitable for smaller organizations.
ReplyDeleteSurplus in any department is reflection of its inefficiency. HR should take prprecautionary actions to reduce the human rresource surplus. Also above topic provides basic knowledge of surplus management which HR personal should look at.
ReplyDeleteEffectively managing surplus in a franchise business is indeed possible. By employing prudent inventory control, optimizing resource allocation, and implementing strategic sales and marketing tactics, surplus can be minimized. Proactive planning and adaptable strategies can help turn surplus challenges into opportunities for sustained growth and profitability.
ReplyDeleteTo address these challenges, institutions must strive to move towards a surplus management strategy that uses circular economy principles, where waste streams effectively turn into value streams.
ReplyDeleteYes, it is possible to manage surplus in your franchise business. Here are some tips:
ReplyDelete