Ramp up

Ramp up is a term used in economics and business to describe an increase in firm production ahead of anticipated increases in product demand. Alternatively, ramp up describes the period between product development, and maximum capacity utilization, characterized by product and process experimentation and improvements [1] .

Ramp up typically occurs when a company strikes a deal with a distributor, retailer, or producer, which will substantially increase product demand. For example, in June, 2008, after launching a joint venture with Guangzhou Automobile, Toyota announced that it would “ramp up” production in China to meet expected increases in market demand by constructing a plant in Guangdong, which would produce some 120,000 additional Camry sedans [2] .

As ramp up is typical in early stages of firm or market development, the term and process is widely associated with venture capital, which seek to rapidly increase rate of return on investment, just prior to exit. For example, Wrightspeed, the producer of the lightning fast X1 electric car prototype, began to seek out capital in order to hire on 50 well-trained employees in order to “ramp up” production in anticipation of sales successes [3] .

References

1. Terwiesch, Christian & Roger E. Bohn. (1998). Learning and Process Improvement during Production Ramp-Up. Information Storage Industry Center Report 98,01

2. Toyota says to ramp up production in China. Space Mart, June 17, 2008. Retrieved July 16, 2008 at http://www.spacemart.com/reports/Toyota_says_to_ramp_up_production_in_China_999.html

3. Bruce, Chaddus. Wrightspeed’s X1 Electric Supercar Sparks Hybrid Dreams. Wired. April 4, 2007. Retrieved July 16, 2008 at http://www.wired.com/cars/futuretransport/news/2007/04/xonecar_0402