Improving performance, how do I start?

All companies, apart from those just starting out, are in midstream. You have a budget and a result, maybe things are not going as you would have liked, maybe you need to way your options, you need to look at your possible scenarios. This is not easy to manage. Do you really have all the pieces of history that you need to judge what has happened? Do you know what the real problem is? It could be low turnover, or poor margin, bad product mix, poor delivery performance, quality issues, unutilized capacities in production, unstructured work process; and so on…the list is endless. You cannot deal with all of them.

You need to find a starting point and I believe that you should start at the customer end and work yourself down the processes until you reach the end of the chain. Like locking a zip lock bag, if you try and close it by pushing the two sides together in the middle you can’t get it tight, but if you lock it in one end and pull your finger along the bag it zips tight on one attempt. I wish it was this simple in business, but by starting in the right end it at least becomes possible.

Use the SalesScenario tool (iPhone/iPad or Web) to see if your sales force is in balance with your sales goals (HOW are you capable to sell according to your plan), check your product mix (WHAT are you Selling, is this according plan, is the gross margin mix correct), what’s in the pipeline for the future, what’s in the production pipeline, what’s the back-log, what’s the capacity utilization, what’s the scrapping ratio, what’s the delivery performance and finally, what’s the feed-back from the customers?  Once you looked at this you should know:

  • Is my sales force correctly dimensioned?
  • Is my sales force focusing on the right tasks (creating leads, making calls, meeting potential clients, sending quotes, closing deals, reconnecting with current clients to expand offer)?
  • Is my sales force selling the planned mix of items?
  • Are there any unexpected developments in sales in the future?
  • Is my production performing well?
  • Is there unutilized or over utilized capacities I need to act on?
  • Are there quality issues I need to act on?
  • Are we delivering on time, do I need to prioritise among planned shippments?
  • Do I need to adress any customer issues?

Once you have identified what is wrong you need to find a way to make it right. Short term you will need to find tactic that will move you in the right direction, your options are probably few. Long term is whole other story, Stefan and I have blogged about the key factors you need, and we will keep blogging on this topic. To summarize what we have said so far:

  1. Make sure you have a sales strategy that supports you sales team and keep them on track.
  2. Make sure you have “One Plan” as a means to have a common platform creating a translator for communicating between sales and supply chain.
  3. Go for an S&OP approach. It is all about making “it” happen together, the supply chain makes “it” possible; sales make “it” happen; two roles, one objective.
  4. Understand what the core elements of Demand Planning are.
  5. Forecasts are needed to connect sales with production; it is a tool to communicate a lower level goal not merely a number.
  6. Make sure that you steer the process in a way that you manage all levels; strategic, tactical and operational.  It has to be kept together at the same time as you need to ensure that lower levels have the possibility to change and adapt to customer behavior.
  7. Learn how to navigate your business, KPI’s and OPI’s help you see where you have been and what will happen.
  8. In order to make this all happen you need an implementation strategy, you need an understanding of change management, to keep your staff focused on the right things and avoid misunderstanding. This saves time and energy.

Stefan and I believe so strongly that we can make a difference for companies that we decided to take this path and make sales the leading process, we believe in it so strongly that we started a new company that has this as a mission.  The company’s name is Sales Scenario, because that’s where we will start, in midstream where companies are, in order to find a way to bring our customers down this path of change.

Together, we have many years of experience in how the sales process actually functions and how it should be connected to other units within the organization, especially to Supply Chain. It is not only about selling more; you have to sell right, too. To sell lots of products, which the company has not planned for and secured in stock is devastating for customer relations and can even harm the brand.

The challenge is to separate between how you sell and what you sell. Key is to make the sales unit understand its part in a wider context and create bridges to other units within the company. This is what we decided to become specialists in.

Check us out at www.salesscenario.com

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Launching the Sales Scenario App

Many days ago, I was involved in a large vending business enterprise, trying to set the amount of phone calls an individual sales rep had to do, to be sure achieving his sales quota. We started to define the steps necessary to perform; from the cold call to the signed order – the sales process.

In each of these steps we counted the numbers – how many cold calls that turned into a sales meeting, how many sales meetings were followed by the submission of a quote and how many quotes were won or lost. The sales managers used the numbers to coach the sales reps to achieve a little better next week, the week after and so on. Still on an individual basis – an operational level.

The sales manager got a nice tool for coaching; he shaped his own OPI (Operational Performance Indicator, see a recent blog post), for every single sales rep matching the sales budget for that rep.

Connecting strategic and operational goals

I was wondering if I could use the same technique, but on a strategic level.

On a strategic level you are dealing with the entire sales organization, so you have to work with averages and use the strategic numbers; naturally the number of orders and the total revenue. By having the number of sales reps, I easily calculated the average order as well as the number of orders and budget per sales rep; that’s typical KPI’s (Key Performance Indicators). With these figures on hand it was not a big thing to see what had to be done to achieve the strategic goals.

But my ambition was to connect these strategic goals to the OPI’s defined above, to be able to coach on an operational level, from one week to another. So a slight deviation in a specific week could be handled as an early warning and corrected in an easy way by coaching from sales manager to sales rep.

To get the connection between the strategic goals and the operational, I set up a simple excel calculation, where I started to go backwards from the number of orders needed for each sales rep every week. With a little investigation I was also able to define hitrates between all steps in the sales process and the mission was completed.

Changing the overall strategic goals had an impact on the operational numbers, for example a strategic growth scenario would increase the number of sales meetings to perform.

The App

The news is that we from today, the 17th of December 2012, are launching exactly this as an App, available for iPad and iPhone at http://itun.es/se/-x4oH.i (soon for Windows 8 Tablets as well). The tool will also be accessible on our web www.salesscenario.com/tool

SalesScenario

Even if the tool still would be very usable for sales manager’s coaching, it’s designed to be used as a sales scenario tool in the management group meetings. Typically you would be able to run different strategic sales scenarios to see how these will affect your sales process activities and provide a discussion platform in this group.

The app won’t tell you what to do; since it’s your business, but it will help you to define your questions so you may be able to look in the right direction. The ambition is also to provide you with the easiest answers – but when it becomes more complicated, please don’t hesitate to contact us.

The results from app is in no way the complete truth, it’s  a simple tool to compare different sales scenario approaches as best case or worst case, growth or down-turning economy; based on your perspective, how you see your business and your available options.

Making an app is a new way of sharing our experience in this area of Sales and Supply. If you like it or not, feel free to comment. If it turns out positive, we may continue our development. If that’s a promise or threat, it’s up to you all to decide 😉

The app is free, it’s our Christmas gift from all of us to all of you.

http://itun.es/se/-x4oH.i (AppStore)

www.salesscenario.com/tool (on our web)

Merry Christmas,

Stefan

Commitment drives more turnover than trust

I have been part of a long and interesting conversation on LinkedIn about who should own the Demand Planning Process (I explain my view Demand Planning in an earlier blog). It was great getting all the different inputs of this conversation and I learned a lot from all the input because there was a lot of different experiences of how to go about getting the Demand Planning to get the best possible quality. My take away was that there are three main drivers to succeed with the Demand Planning process:Three elements of Demand Planning

You need to work with setting a well-defined strategy, you need to work process driven and you need to educate the entire company in the power of planning and what forecasts mean for your company and the fact that you create and use forecasts as an integrate part of your planning. You need all of them. It’s like starting a fire, where you need three elements as well: Heat, Fuel and oxygen. If one element does not exist or is removed you have no fire. Here the strategy is the heat, the inspiration that will carry your company further and faster than your competitors. The process is the fuel, the structure that allows you to efficiently work across functions. The forecast is the oxygen; it gives you the details you need to secure plans for the future.

One thing that has struck me in this long debate about ownership is that it comes down to two choices on who should drive the demand planning process: Trust or Commitment? If you decide to let the supply chain to take ownership of the demand planning process you build the setup on the fact that the supply chain is more mature and capable in handling plans. The supply chain is also closer to the stock numbers and suppliers so the understand the consequences of their actions better,  you will secure there will be more trust by placing demand planning here. On the other hand you can put the demand planning process as sales responsibility and let them drive the process through commitment, commitment to achieve the plans set.

I believe commitment is more powerful than trust, it will take you further. I believe that there is more to a sales process than just fighting to land deals at any cost and if sales are not up to the task, lend them a hand. All the arguments I have seen to why sales are not capable to manage the demand process can be dealt with. So sales can’t count, give them a navigator. They can’t forecast, make them accountable and give them tools and staff to support and follow-up. They can’t stick to their plans; once again, make them accountable, set goals and measure. Take away all the excuses and replace them with solid solutions. Empower them to make it happen.

It’s a little bit like when I want my children to do something, like “put on your shoes”. My seven-year old may say “I caaaan’t”, I would reply ” I know you can”, he replies back “No, look” and then stands in the most awkward position, making it impossible to put his shoes on and proves his point. Proving that you can’t do something isn’t hard. If he on the other hand wants to go out, the shoes are NEVER a problem, because he’s in charge, he makes the call and is committed to HIS plan. I’m not saying sales people are like children, they are simply human.

How I learned about the shades of grey in life, a summary

Supply Chain need to be able to understand the sales capabilities in their company and not just shrug off the sales input as a nuisance. In the end, if sales can’t do it or won’t do it, it won’t get done. The earlier in the chain you can take the cost, the lower the cost is, no matter what budget it affects.

No matter how much you want to protect your investments in the supply chain, you cannot jeopardize your sales.

Sales people are always going to exaggerate the numbers, it’s in their nature. So ask them about the commercial value. What is their plan? Ask how this compares to the information, the numbers, you have available:

  • how is this new product different from product X, Y and Z
  • what commercial actions are you going to take and how are they different to how you are working with product X
  • when will you take these actions
  • is there a synergy effect  within the new offer
  • is there a synergy effect  between the new offer and current articles
  • is there any cannibalism on related articles
  • are there any customer values in the design or material that we do not have in our current range

If they cannot answer your questions, base your forecast on the statistics of similar items, because sales is most likely going to manage the item as they manage the current items.

When a goal is over achieved, don’t grieve what you couldhavewouldhaveshouldhave done to sell even more, that’s just greedy. If your goals are right for your business then you should hit the goals not exceed them, that’s when you get good forecast quality, that’s when you get good profitability.

Change happens all the time and on different scales. Be aware of what you are changing and prepare yourself and the organization you are about to change. To get the demand process right you are going to have to initiate change.

Change is driven by communication and motivation not good ideas alone. In order to achieve change you need to take the following into consideration:

  • Don’t change everything at once, no matter how tempting this is, that will only prolong the process and is a great recipe for failure
  • All managers need to be ahead in the change cycle, in acceptance, so they can support their people where they are (if both managers and co-workers are in the Immobilization phase, you’re in trouble)
  • Give people time to reflect on the idea of change (the pure fact that there will be change) before you start implementing it
  • Respect individuals, everyone handles change differently and will regress or act out differently (I have been yelled at a few times)
  • Never overstep managers, they have the responsibility to do the job and know their teams (connects to the previous point)
  • Involve people in the process, you need some early adopters that can speak within the ranks about the benefits of the change
  • Set goals that can be measured in order to provide feedback on the progres
  • Ask for help, if the change is not going the way you expected, turn to your colleagues to find a way to move things along
  • Communicate, communicate, communicate! Tell people are we, where have we been and where are we going
  • Allow people to speak out and address their input, or you have to take care of rumors or bad seeds sown in your change project
  • Land one change before you throw in the next one

Take care out there!

Håkan