the 80 20 rule

[greenoak]

i like the 80/20 rule and use it a lot in thinking about business....this week we have seen it in real life.... we have a huge sale coming up this weekend and part of it is a big half price area..i have sorted thru the whole store and put all the problems out there... ... all the dregs, mistakes, damage, tail ends, many of the things that have been in inventory for a year, ..... it is a graphic view of the choices we made in buying and where we went wrong, and what companies let us down, and where the bad quality was...and how bad we read some customer cues....
its a good thing really and a big reminder of where the money is...
the 80/20 is so flexible...in this case we are putting out the lowest 20% of our inventory and hoping to just get our investment out of it.... and turn it into cash to spend on our top 20% of inventory....

[Spider]

Excellent use of an old standard "rule." I never thought of "inventory close-out" as being a learning exercise and a microcosm of a company's business. Gosh! You could do all sorts of analyses to give you all sorts of useful information. I'll bet DH is in his element!

[greenoak]

right...and its really good for me. because i do most of the buying for the store.......
.....
how have you seen the the 80/20 used?
i like mind mapping too...dh doesnt get that at all!!! he likes facts not doodles...
he dreads this sale, becasue of the massive work....but he likes the payoff...i had about 8 workers all day today....

[vangogh]

Ann just for your information it's also called the Pareto Principle. Just in case you ever see that mentioned you'll know it's the same thing. It seems to apply to so many things though not strictly as an 80/20 split.

One place I always see it mentioned is with software. 80% of of the people who use your software will use only 20% of the features.

[Nfauerbach]

I love the 80/20 Principle! We use it daily in our firm and to help clients apply it to their businesses. When we teach clients about 80/20, we have them start in their closet as a simple illustration about the power of the concept. You only wear 20% of your clothes with any frequency, but the remaining 80% are obscuring your daily wardrobe, making it more difficult to find your favorites. Move the 80's to a different location and cut your morning routine time dramatically. Apply that lesson to inventory, customers, markets, employees and you will improve profitability.

I actually just started a blog about it. www.lifeinan8020world.blogspot.com (http://www.lifeinan8020world.blogspot.com).

Cheers!

[DeniseTaylor]

I use the 80/20 rule to prioritize my work. It's great to use when you have a lot of conflicting items all demanding your attention. :-)

The only thing I don't like about the 80/20 rule is when it is applied to me and I end up on the wrong side of it. (Meaning I fall to bottom of priority list. ) :p

[huggytree]

the 80/20 thing doesnt really apply to my business anymore....my bad customers are way under 20percent...i really only have 1 or 2 bad customers and ive raised my prices to cover their issues...as long as they pay for it i dont mind them using more of my time...

the economy put the bad customers out of business