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Adaptive enterprises have a close balance between supply and demand, resulting in resource efficiency. They rely on routine deliveries and quick distribution of finished products to reduce taxes and storage costs. They can also make rapid adjustments to meet market demands.
Sometimes referred to as an adaptive organization, the adaptive enterprise is any organization where the demand for the goods or services produced by the business entity is very close to the supply that is within reach. Typically, adaptive enterprises provide an excellent model for resource efficiency, as they use what they need but very little else.
There are many benefits to trying to operate with an adaptive business model. One of the key areas has to do with the inventory of raw materials used in the production of the goods and services offered by the company. In addition to the cost of building and maintaining a place to store raw materials, there are also often a number of taxes that must be paid on the value of the materials for whatever time they are kept on hand. Adaptive organizations will build supplier relationships that rely on routine deliveries that deliver just enough to keep production in step with sales, but don’t allow for months-long raw material inventory build-up and storage. The end result of this strategy is less taxes to pay, smaller warehouses to maintain, and lower incidence of missing materials from production materials.
Another point in favor of the adaptive business model has to do with finished product storage. Just as it’s in the company’s best interest not to stockpile raw materials, a lot of resources are used up when finished products have to sit in warehouses for months before being shipped to buyers. Having quick distribution of finished products to customers means less taxes paid on finished products. A smaller inventory of finished products also means fewer taxes to pay in the long run and smaller storage facilities that cost less to maintain.
A third benefit of an adaptive firm is the ability to make rapid changes in output when market conditions require some adjustment. For example, a textile company that produces broadline corduroy may find that the taste leans more toward fineline corduroy. With no large inventory of finished goods to worry about, the adaptive enterprise simply begins to change machinery incrementally, phasing out large-line production as orders are filled, and begin taking orders for fine-line material. . There is no panic over what to do with several tons of fabric that is no longer desirable, nor worries about how to fill a new market need.
There are companies in almost every industry that are using the adaptive business model to keep expenses down while still meeting the demands for goods and services. Unburdened by large inventories and with an ability to respond quickly to the changing tastes of their customer base, companies that choose the adaptive business method are much more likely to remain successful for many years to come.
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