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Measure your sales order backlog and track it by upcoming months. Measure what is due by month against your breakeven sales level (fixed costs/ (1 minus gross profit %)). Do you have enough sales booked to breakeven next month? How about making a profit next month? Do you normally get sales booked and shipped during the same month? How much is this normally; so you can reasonably forecast your net sales?
Post this chart to let sales people know what level of orders is missing. In some cases they may be able to establish customer contacts that are willing to fill in gaps in your company’s production schedules if offered work at reduced prices. The cost cut helps the customer and the flexible orders help fill in immediate production gaps. This helps boost overall plant capacity.
Posting the chart for this statistic is very important. Let everyone know in the sales department whether you have adequate sales booked or not. Drawing attention to this chart helps focus the sales organization on a mutual goal so post it consistently. Keep it updated as often as sales orders are booked.
