Har­mon­is­ing sales and production

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.