Solving the Small Order Problem

Many companies are finding that achievement of the desired growth rate in corporate profitability is becoming increasingly difficult. Consequently, management must search for ways to improve the efficiency of existing operations. One area of significant potential which is often overlooked in the search for improvement is the small order problem. Small orders may represent a large percentage of the total orders processed but usually represent a relatively small percentage of sales volume and, therefore, become an obstacle to channel efficiency and a drain on corporate profitability. Evaluation of the extent of this problem and the establishment of an acceptable minimum‐order quantity can result in a significant improvement in profitability for the corporation and its partners in the channel of distribution.