Bridging the gap between supply and demand is the prime objective of any business.
When mass manufacturing was at its peak, demand was generally higher than supply and customisation options were limited. Standardisation was seen as key to maximising efficiency. Henry Ford’s famous quote, “Any customer can have a car painted any colour that he wants so long as it is black”, encapsulated this approach.
Today, customisation is becoming increasingly common and there is a constant tug-of-war between the sales and production teams. The success of today’s manufacturing organisations depends on managing this effectively.
The key here is to understand how value is generated in a company, and how it flows throughout the supply chain – from the procurement of raw material to the end product.
Retail: The new catalyst of organisational efficiency
Retailers have now become a key party in driving organisational efficiency among manufacturers. However, manufacturers could stand to benefit from this relationship. Major retailers collect huge amounts of data regarding customer buying patterns, which presents a great opportunity for manufacturers – if they could find a way to access this information and leverage it to modify their production patterns.
Changing the way your departments interact and the way your company interacts with both suppliers and retailers requires organisation-wide behavioural change.
Identifying the barriers between sales and production
One of the most common barriers that hamper interaction between sales and production is the failure of managers to understand how their area affects the company’s overall efficiency and profitability. It doesn’t help that manufacturers often don’t analyse the impact of production variation on a day-to-day basis.
Data, even when it is available, is often not shared across the organisation. Cross-departmental meetings tend to happen at most quarterly, but often no more than annually.
All too often, key performance indicators (KPIs) for production and sales are not interrelated, resulting in each department working towards optimisation separately without keeping the overall objective in mind.
These factors cause each unit within the company to have an insular focus rather than concentrating on the overall success of the organisation. This is especially true in the case of organisations that are dependent on suppliers for their end product. Effective information sharing can be the cornerstone to their success.
We came across an example of this during our work with a paper manufacturer. Once the relevant people understood the impact of variation in production parameters, everyone became more aware of the impact of their work on the overall value to the organisation. This then became a catalyst to optimising production.
Bridging the gap between sales and production
Some of the steps that manufacturers can take to bridge the gap between sales and production include:
Improving the forecasting process
Manufacturers need to take stock of what they have and how the playing field is set up. This means looking at variables such as how big their market footprint is, how it’s segmented and what is their percentage share, among others. This knowledge can really change the way a company thinks about its potential and its opportunities, informing decisions on how many sales staff are needed, where, and doing what.
Delivering end-to-end accountability
Work to bring down the numerous silos that exist between departments. In other words, avoiding separate functions that operate in isolation, with no one working to resolve conflicts to ensure customer satisfaction.
Identifying the critical success factors
Help sales teams to understand their role in maximising their chances of success, as well as the value proposition for their portfolio of products. For example, this can be in the form of a clear statement that:
- Explains how their product solves customers’ problems or improves their situation
- Delivers specific benefits, and
- Tells the customer why they should buy from you instead of the competition
Monitoring and improving sales productivity
This includes things such as:
- Detailed plans on how sales figures are to be achieved by geography, sector, product and customer type
- Pipeline management and targeting of conversion rations
- Guidelines on how to handle non-sales activities
- Effective route planning
- Performance reports that cover both financial and activity outcomes by type, product, conversion ratios, KPIs and various other categories
In organisations where sales and marketing teams work closely together, customer retention rates go up by 36%, leading to a 38% higher rate of sales close rates. In other words, breaking down the silos between the various departments within an organisation not only leads to better morale, it also results in higher sales and a shorter pipeline.
Ultimately, to enable the effective sharing of information, identify the organisation’s value drivers and create systems and processes based on these. Then, create a culture of discussion and analysis within the organisation – this will empower all departments to focus on improving organisational efficiency and driving customer satisfaction.