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Thursday, January 28, 2010

Leveling your organization thru Lean Sales And Marketing

I am not sure that Lean will ever work within a company unless sales and marketing are on board. In fact, why start with production if we want to look from the customer’s eyes. Would it not be tainted if we do not Lean sales and marketing first?

Have you ever won a large order and watch your production department roll their eyes? You could never understand why the frustration. In fact, you wonder why they just don't have the same enthusiasm you do. Instead, you wonder why they just can’t take the attitude of lets “gitter-done!” I would encourage you to take a little deeper look in the frustration and especially if you've been trying to become a Lean operation.

Let's face it, a manufacturing manager who does not meet the promised date or deliver quality parts does not keep his job long. There is an expectation to be on schedule. What about Sales? Is there the same level of accountability? That new order causes a wide variation in demand from what was planned to be booked. Who makes up for that deviation? The production department does. It is justified of course by the age old sayings; Customers don't know what they want or our type of business is hard to forecast. I read once where it was stated that greater than 90% of this delivery dates are missed at the time the order was accepted. This double standard is unacceptable and in fact quite detrimental to a Lean Transformation. But for this not to happen, you must learn how to market and sell products differently.

Boy Leveling First, just think about how you typically measure sales people and for that matter your customers. Companies usually provide incentives to their salespeople based upon the volume of sales. You even have pricing policies that reward customers for buying large quantities of products. Does this sound like Lean principles in action? In fact, they are just downright harmful to a lean operation.

A lean operation works best when there is a level production load. So you must try some new approaches to pricing and most particularly to incentives and measurements. If your sales and marketing understand the Value Stream of your company, they will also recognize the capacity restraints or bottlenecks that are within it. All at once they will start recognizing value over the cost of the product. If a part is difficult to get they will assessing more value to it. They may not be as willing to discount that product or at a minimum hesitate to promise an unrealistic delivery.

Can you create a linear demand with your customers? Sales and Marketing could work with customers to develop processes more conductive to lean operation. Such as many of the initiatives that Xerox has done. Maybe setting up Kanban systems, vendor managed inventory, smaller daily orders, rather than large weekly or monthly orders, forward forecast requirements, and others. You would also expect sales and marketing to develop more appropriate incentives to increase demand for non-bottleneck products. This is especially important because these sales can be increase without increasing other costs.

The purpose of all this is to recognize the Value Stream of your operations and maximize all the components of it. BY the WAY - How much would a Leveling Sales and Marketing initiative cost to implement? What value would you receive from it?

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