While Just-In-Time inventory systems, such as Dell's web-based 'design your computer' service, provide the capability to design specific orders without risking excess inventory, there are only a fixed number of potential orders available and an accompanying distribution of consumer preference. Using this data, Dell can attempt to forecast future demand and purchase the appropriate amount of raw material, usually in bulk. Unfortunately, at this stage, the ability to minimize risks of excess inventory becomes far more difficult since forecasting works on probabilistic principles.
We can use this example to define an ideal just-in-time inventory system that can take advantage of bulk pricing whilst minimizing inventory in stock after purchase. It seems that to reduce holding costs entirely the organization would need to act as an intermediary with full knowledge of demand, thus providing the manufacturer with the specific details of the order and the destinations of its recipients. Thus, the role of the organization becomes one of demand centralization, compiling a list of all willing recipients of the product and ensuring their participation in the purchase of the product.
One particular organization, GroupOn, has done just this and can provide a number of local services and products at outrageous prices.
While this is an intriguing business model, I would like to see it extend into the realm of education. Certification examinations for a variety of positions and fields are outrageously expensive, since costs are usually cross-subsidized in case there is little turnout. One organization, certifying Nurses already does this. I would like to see this practice extend to educational programs that operate below capacity. This practice will bolster their attendance and hedge their operating risk, allowing them to remain competitive in the market.
Educational institutions motivated to remain competitive provide a far more enriching experience to the student - just ask the Ivy League.
Supporting an Educationally Competitive Future,
Jared Leichner
Jared L, I do agree with your post and I like the idea of transforming the Groupon business model to education. As a entrepreneur I would see a great problem that arises. Certification examinations are offered by businesses (i.e. hospitals etc.). These businesses would like to make profit.
ReplyDeleteThe mindset I have is, that people who want to become nurses will become nurses because they like that profession. Consequently they will take that exam anyways. Lowering the price will be a nice add on, but not the main reason why they take that examination. So the businesses will lose profit for sure, and the amount of certified nurses will probably stay the same.
LCzap
Hey Jared,
ReplyDeleteI think Lucas has a valid point here - that the people intending to pursue a course will do it any way, regardless of whether it is subsized or not.
However, I would like to add here that the idea is not really impractical, and there are certainly ways in which it can gain popularity, particularly, if one aims at the correct market segment.
For instance, such programs if marketed online could be quite popular in developing countries, where people have limited resources. Also, if marketed properly to home-makers, for whom it is often difficult to venture out of home, it could be a success. It might encourage and bolster women entrepreneurship at a micro-scale.
Pls excuse the typo in 'subsidized' in the previous comment :)
ReplyDelete