Refer back to Figure 2.1 in Chapter 2: it shows a Pareto curve for the sales per sku of a book stockist. A small number of ‘hot sellers’ constitute most of the sales, while there is a lengthy tail of slow-selling lines and new introductions. The operations people are pressing for the ‘tail’ to be chopped in half, arguing that it adds cost, not value, to the business. They argue that each order is taken at fixed cost, regardless of size. Sales order processing and pick and dispatch from the warehouse are examples of such fixed costs.

‘Instead, we should focus on the core of the business: