What is resource availability?
Resource availability is a measure of how easy or difficult it is for your poultry farm business to get access to inputs.
Every market has its own unique reach and unique mix of useful inputs.
Why is resource availability important?
In other words,
When the resources necessary for your poultry farm to operate are plentiful in your environment…
…there is no delay in satisfying your need for production input.
Inputs arrive just-in-time and your outputs are delivered likewise.
Whether it be:
- poultry feed
- building materials
…any shortages in these items, when you need them, can lead to a grinding halt in egg or meat production.
Backlogs, bottlenecks or general operational inefficiencies in an agricultural business can lead to perishing stock.
The losses due to resource shortage can be staggering.
Just in time management
Holding inventory costs.
Both by absorption, if not also by opportunity…and finally as waste (if perishable).
Here’s what I mean…
You need 5 bags of feed per week,
But because in that market the availability of feed is inconsistent – you buy 4x as much in hope of avoiding scarcity.
Holding onto the additional stock takes up space in your storage.
Plus, holding the stock carries at least a theoretical proportion of your overall storage costs. More inventory held for a longer period incurs a greater cost, by proportion (absorption).
Also, inventory held which is not converted into profit costs your business the opportunity of having it converted into profit.
In other words,
“Whilst feed is still feed, it is neither meat nor eggs (for which you get paid).”
Finally, if the feed is held long enough it runs the risk of perishing whilst being in your possession.
When this happens it is neither good for feeding flocks not yet as fertiliser.
As Toyota car manufacturers found in Feb, 1997 – to have all your eggs in one basket can lead to costly calamity.
Famed for its Just In Time resource management strategy, Toyota found itself undone by an unexpected disaster at a supply part plant.
The company’s ultra-lean procurement manner meant that it relied only on one supply for a mission-critical car part for its production line.
Also, it held ZERO inventory to avoid stockpiling costs.
But when fire hit the Aisin Seiki Co.’s Factory Plant in ’97 – Totyota found its high-paced state of the art production line come crashing to its knees.
The crisis took nothing less than senior leadership in both companies holding a ‘war cabinet’ to obtain and release blueprints of the prized part.
Once they had it in hand, Toyota leadership team sanctioned it distribution to their highly loyal network of parts suppliers for other components.
Within 5 days only, the necessary volume of parts was made and losses recouped by the corporation against existing client orders.
A MAJOR (perhaps irrecoverable) catastrophe was avoided.
ALWAYS spread your eggs & keep faithful relationships.
Further reading: Toyota Motor shows its mettle after fire destroys parts plant – (Wall Street Journal)
As in the example above,
In a time of great need, Toyota was able to draw upon the goodwill of a whole host of commercial suppliers to help dig them out of a hole.
Toyota was entirely at the mercies of their suppliers and faced being wiped out if they couldn’t obtain favour.
What resulted was a 5-day turn around which preserved the company from almost certain ruin.
A truly amazing story…
Here are some of the best quotes:
“Suppliers never asked Toyota or Aisin what they would be paid for rushing out the valves, says Somic’s Mr. Ishikawa. “We trusted them.” (Source)
“Indeed, as the first valves arrived at Toyota factories, Aisin told the suppliers it would pay for everything, from drills and overtime pay to lost revenue and depreciation. And Toyota promised the suppliers a bonus totalling about $100 million “as a token of our appreciation,” says Mr. Okuda, its president. He adds that the automaker will certainly remember the companies that pitched in during its crisis.” (Source)
Consider the seasonal flux of your trade.
There will be times where you perhaps peak in activity,
And should this occur at times of national holiday you could find yourself caught out.
Always, factor in the effects of seasonality on your poultry trade.