From Order Acceptance to Order Portfolio Management for Small Manufacturers

Small manufacturers often experience great volume variability of potential orders. Orders can make up a greater percent of the firm’s volume than in larger firms. Order acceptance strategies based on traditional accounting techniques, or even newer techniques such as Activity Based Costing may not yield the best results. With large orders and high variability, the wisdom of accepting an order is impacted by the work already accepted. Treating the entire set of accepted and potential orders as a portfolio can lead to smoother, more profitable operations. Advances in Information Technology can make this approach easier to implement, and outsourcing more common.