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A Few Thoughts on Using a Distribution Company

Transaction Costs 

An economist won a Nobel Prize for his work in trying to understand why firms exist in the first place.  His conclusion was that having everyone under one roof in the firm lowers transaction costs.  You do not have to enter into specific contracts with your staff once you hire them and if you ask someone to do something, he or she will do what you ask without presenting an invoice afterward.  When you are using a distribution company, you are operating at arm’s length.  If you ask our staff to perform a service, they will charge for their time and any outlay of expenses.  These transactions must be billed and accounted for.   Most new customers have never considered what it costs to perform specific tasks.  I remember when I was new at delegating how shocked I was that when I asked my assistant to get me a cup of coffee, the actual cost was not $1.56, but $5.00 or more.  I had to pay for her to take the elevator to the street, go to the food concourse with the coffee bar, wait in line, prepare my coffee, and then bring it back.  When you ask our staff to perform a service, the meter will be running. 

Underestimating What is Involved to Perform a Task 

Customers frequently underestimated what it takes to perform a task.  A typical assumption is that something will only take “a minute or two” or will only take “about 15 minutes.”  These are frequently poor guesses that do not reflect reality.  Our staff time their work and bill for what the project actually takes, not what someone thinks it will take to do.

Chichester, Inc.
2045 Niagara Falls Blvd., Unit 9
Niagara Falls, New York
14304-1675
 

Toll Free  1.800.206.6544

Phone  +1.716.298.1183

Fax  +1.716.298.0313

E-mail  info@chichesterinc.com

 

Copyright © 2014, Chichester, Inc.  All rights reserved.