April 16, 2021. – New business ventures are often valued by their ability to scale. Scalability describes a company’s capability to adapt easily to increased market demand. It makes a difference whether you are producing physical items or software. At the moment, many plywood mills have long order books. How does plywood business scale with the increased market demand?
Sales is not really the bottleneck in increased demand. Higher order volumes can be handled with the same sales guys. They are welcoming all the extra volumes the mill/mills can offer.
In plywood production, the scale-up toolbook is limited. Operation mode (work shifts) can be raised if the mill is not already running on a 24/7 basis. The mode changes come with a delay, and there is a danger that they arrive too late.
After the mill’s capacity is reached, the output cannot grow. The options to increase supply are to outsource (buy panels from others) or build a new mill. In high demand, outsourcing is hard because all the other mills are sold out as well. Starting a new mill takes two years if you make the decision today.
I guess it’s safe to say that producing bulky items from natural resources is not scalable. However, in times of high demand, companies should make good business. Keeping the finger on the market pulse makes it easier to adapt. Forget scalability, choose flexibility!