The Director of the Transportation Equipment Distributor had executed an effective growth strategy that within a couple of years, the company the company’s sales increased by 400 percent. This was a remarkable sales performance. What was more impressive was the realization that the organization had outgrown its Sales and Support Methodology.
He recognized that the growth caused issues in his sales processes. However, he didn’t know how to eliminate the inefficiencies. Sales representatives should be working with their customers in a positive way, adding value and closing deals. Instead, he noticed the reps completing lots of paperwork.
Implementing Lean Tools to find and remove this administration (non-value-added) job was the best solution.
Lean and Re-engineering ways to redesign a procedure.
One approach is, to begin with, a “clean sheet of paper” and create the method you would like to use. This idea was popularized by the author of “Re-engineering the Corporate” in the 1990’s early years. It became trendy but was then quickly dissolved.
There are many issues that come with this method. The first is that the new process requires a lot of time to design because each step is contested by team members who want to defend their own territory. It is not unusual for projects that were reengineered to take between 6 and 2 years to finish. The second reason is that the new method was usually not successful due to the fact that it didn’t incorporate the existing information systems in the company. It’s too complicated to begin from scratch.
Lean is a Lean method that is much more simple and more efficient. The process is mapped. Then, we identify and eliminate those steps that are not value-added. The new procedure is essentially an old procedure but with the non-value-added methods removed. Lean projects are completed within four weeks and are able to sustain improvements.
Current State Process Flow Mapping sales process for the Distribution Company includes:
Customizing the standard product (coming directly from the manufacturer) to meet the requirements of the customer
After completed, the Current State Process Flow Map was completed, we inspected each stage and asked two questions:
Does the customer appreciate our taking this step?
Does it hinder Sales Representatives from having more time with their customers?
If the task doesn’t bring value to the client or prevents Sales Reps from selling, we deem it to be a job that could be eliminated or reduced.
We eliminated these tasks with no value out of our Process Flow Map and created actions items that either stopped them altogether or decreased the amount of time required for them. Then, we analyzed each process to determine how much time we were saving for the Sales Representatives as well as the Sales Manager. These actions are listed below.
Savings for the Sales Manager
Sales Manager approves payments to vendors. This should be managed by the Accounting department (13.8 hours saved per year)
Sales Manager reviews lease details for Sales Reps Sales Support has the ability to perform the same (1.7 minutes per year)
The sales Manager checks the prep sheet for missing information. It should be entered into the systems for IT, and not on paper, which needs complete information before saving (2.5 hours each year)
Savings for Sales Reps
Sales Reps write proposals, mailing proposals filling out the vendor-option form bid information sheet, financing forms, contracting for mailing, updating databases for used equipment, filling out market share forms, and proofreading proposals.
All of this is accomplished through Sales Support Admin
Sales Reps create bids by hand upon the specifications of the client
Make use of IT System to kick outbids Based on Sales Support’s input of customer requirements
We have eliminated 219.8 hours of work or time annually performed by each Sales Representative through eliminating the following ten tasks.
Eliminated Sales Representatives from administrative work using Information Systems of the company or shifting the tasks to Sales Support Administration
Each Sales Representative received 5.5 weeks of additional selling time per year.
In the next two years, gross profit margins grew by 40 percent.
This project was about identifying tasks that are not worth the effort Sales Representatives perform in order to eliminate them or shifting them to lower-paying sales support staff. There were ten tasks that Sales Representatives had to perform for each customer inquiry that was removed from their daily work. While this might not seem like a substantial reduction in the number of steps, however, we have made 5.5 weeks of extra selling time for each Sales Representative.
Sales Reps must be selling and not just doing paperwork. This Lean project allowed time for the sales representatives to be more in touch with customers, gaining an understanding of their needs and adding value. As a result, they completed deals at more significant profits.