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 in the first sense often 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] In the consumer electronics industry, manufacturers often ramp up production in the early fall to meet demand during the holiday selling season.^[3]

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 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.^[4]

References

1. Christian Terwiesch & Roger E. Bohn. Learning and process improvement during production ramp-up. International Journal of Production Economics, 70(1), 2001
2. Toyota says to ramp up production in China. Space Mart, June 17, 2008.
3. "Apple Ramps Up Production Of iPad Ahead Of The Holiday Season". Retrieved 2014-09-10.
4. Bruce, Chaddus. Wrightspeed’s X1 Electric Supercar Sparks Hybrid Dreams. Wired, April 4, 2007.