| Background | | | | complete we looked at every step and asked two |
| The CEO of this Transportation Equipment Distributor | | | | questions: |
| had executed a successful growth strategy and in a | | | | Does the customer value us doing this step? |
| few years grew sales 400%. This is outstanding | | | | Is it preventing Sales Representatives from spending |
| sales performance. However, what was even more | | | | more time with customers? |
| outstanding is his realization that the company had | | | | If the task does not add value to the customer, or is |
| out-grown its Sales and Sales Support Process. | | | | preventing Sales Representatives from selling, we |
| He knew this growth had created inefficiencies in his | | | | considered it a task that should be eliminated or |
| sales process, but didn’t know how to find and | | | | streamlined. |
| eliminate them. Sales Representatives should be | | | | We removed these non-value added tasks from the |
| working with customers, adding value and closing | | | | Process Flow Map and created action items to either |
| deals. Instead, he saw them doing a lot of | | | | eliminate them or reduce the time they require. |
| paperwork. | | | | Then we quantified each step to determine how |
| Deploying Lean Tools to find and eliminate this | | | | much time we were saving the Sales |
| administrative (non-value-added) work was the | | | | Representatives and the Sales Manager. These |
| answer. | | | | action items are show below. |
| Lean Versus Re-engineering | | | | Savings for the Sales Manager: |
| There are two ways to redesign a process. One | | | | Sales Manager approves payment to vendors – |
| option is to start with a “clean piece of | | | | Should be handled by Accounting (13.8 hours per year |
| paper” and design the process you want. This | | | | saved) |
| was popularized in the book “Re-engineering the | | | | Sales Manager reviews leasing information for Sales |
| Corporation” in the early 1990’s. It was | | | | Reps – Sales Support can do this (1.7 hours per |
| extremely popular and then fizzled very quickly. | | | | year) |
| There are many problems with this approach. First, | | | | Sales Manager reviews prep sheet for incomplete |
| the new process takes too long to design because | | | | information – Should be entered into IT system, |
| every step is debated by team members trying to | | | | not paper, which requires complete information prior |
| protect their turf. It was not uncommon for | | | | to saving (2.5 hours per year) |
| re-engineering projects to take 6 months to 2 years | | | | Savings for the Sales Representatives: |
| to complete. Second, the newly designed process | | | | - Sales Reps writing proposals, mailing proposal, filling |
| usually did not work because it didn’t integrate | | | | out vendor-option form, bid info sheet, financing |
| the company’s existing information systems. It | | | | form, mailing contracts, updating used equipment |
| is too difficult to start over. | | | | database, completing market share form and |
| The Lean method is much simpler and faster. We | | | | proofreading proposals |
| map the current process, then identify and eliminate | | | | - All of this can be done by Sales Support Admin |
| the non-value-added steps. The new process is | | | | - Sales Reps manually prepare bid based on customer |
| simply the old process with the non-value-added | | | | specifications |
| steps taken out. Lean projects are completed in 4 | | | | - Use IT System to kick out bid based on Sales |
| weeks and have lasting improvement. | | | | Support entering customer specifications |
| Current State Process Flow Mapping | | | | We eliminated 219.8 hours or work per year done by |
| The sales process of this Distribution Company | | | | each Sales Representative by eliminating these 10 |
| includes: | | | | tasks. |
| Creating proposals | | | | Results |
| Configuring orders | | | | Eliminated Sales Representatives doing administrative |
| Customizing standard product (coming from the | | | | work by using existing company information systems |
| manufacturer) to customer specifications | | | | or moving tasks to Sales Support Admin |
| Delivering | | | | Each Sales Representative was given 5.5 weeks of |
| Billing | | | | extra selling time per year |
| Accounting for payment & paying commission | | | | Over the following 2 years gross profit margins |
| We created a process flow map, including all the | | | | increased 40% |
| detailed steps, decisions, paperwork and databases | | | | This project entailed identifying the non-value-added |
| that are part of the Sales Process. The Mapping | | | | tasks that Sales Representatives do, and eliminating |
| team included people from each department that | | | | them or moving them to lower paid sales support |
| touch the process including: | | | | personnel. There were 10 tasks a Sales |
| Sales Representatives | | | | Representative had to do for each customer inquiry |
| Sales Management | | | | that were eliminated from their workload. While this |
| Sales Support | | | | doesn’t sound like a significant reduction in steps, |
| Parts Department | | | | we created 5.5 weeks of additional selling time for |
| Service Department | | | | every Sales Representative. |
| Accounting | | | | Sales Representatives should be selling, not doing |
| We created this very detailed process flow map to | | | | paperwork. This Lean project freed up time for this |
| identify all the tasks that are wasting Sales | | | | company’s Sales Representatives to spend more |
| Representatives’ time and do not add value to | | | | time with customers, understanding their needs, |
| the customer. See a section of the process flow | | | | adding more value. The result was that they closed |
| map on the link | | | | deals at much higher profit margins. |
| What the Current State Process Flow Map Showed | | | | The 40% increase in gross profit margin, happened |
| Us | | | | as sales continued to grow. This equated to a |
| Once the Current State Process Flow Map was | | | | multi-million dollar increase in profit. |