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Applying Lean Thinking To Distributed Sales Environments

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Lean thinking presumes that as waste is eliminated, quality improves while cost and time is reduced. The challenge for manufacturers is how to move away from the old, inefficient ways of doing business to something that is more efficient and better integrated. Simply stated, how can we raise the quality of dealer support while reducing the cost?

Step one in the process is to define who your customer is. For purposes of this discussion, we'll limit it to the dealer, although the same process can be applied to the end customer as well. Since the dealer, and the employees that work for that dealer, can be viewed as customers, the question becomes how do you define and then measure quality?

One way to measure quality is to compare the level of support that the manufacturer believes they provide to their dealer partners, and what the dealers feel they receive. Often the manufacturer believes support in the four core areas is adequate, while the dealers have a different perspective.

In our ongoing research, which is consistent with what we find when we benchmark our data against studies conducted across multiple industries, we consistently find gaps between perception and reality. We've found that stakeholders at the manufacturer who are responsible for supporting dealers perceive that they are providing adequate support, while dealers perception of that support is lower. The gap between these two perspectives defines the level of quality. The greater the gap, the lower the quality. The more narrow the gap, the greater the quality. The key then to improving quality is to close the gap.

Once the gap is identified, one has a place to start improving quality. The challenge here is two-fold. First, you have to focus on each of the four core areas and assess what's working and what's not working. Second, integration is a key to achieving breakthrough quality levels. If each of the four core areas remains disjointed, then world-class quality cannot be achieved. With disjointed systems, it's quite common for dealers to have to log in and out of a multitude of systems each day just to get the job done (selling and servicing your product). Over time, this environment leads to frustration - sometimes to the point of excessively high tension between the manufacturer and its dealers.

A Partner Relationship Management (PRM) system, by design, achieves this integration. Well-designed PRM systems can provide the core four functions in an integrated way, right out of the box., More commonly, it can leverage existing systems in each of the four core areas into an integrated solution, while filling the gaps where functionality in each of the four core areas may be weak.

Applying lean thinking in a manufacturer-dealer environment entails:

Step 1: Defining the customer - The dealer principal, his/her salespeople, service technicians, parts/aftermarket specialists, and others.

Step 2: Measuring. Measure the gap between perception and reality. Asking the dealers how well they perceive the support they're receiving in each of these key areas, and then comparing their answers to similar questions that are asked of each functional stakeholder at the manufacturer level as to how confident they are that current systems and programs adequately support the dealers.

Step 3: Inventorying existing systems. Quite often, few people actually know how many systems there are that reach out and support the dealers. Inventorying the existing systems, assessing which ones have value, which ones don't (and should be retired), and which ones should be replaced by better systems is the key activity here

Step 4: Removing waste. Once existing systems are leveraged and integrated into a single, easy-to-use environment, gaps that remain in each of the four core components of support can be analyzed and re-engineered.

Now What? Reengineering Key Business Processes

Every manufacturer has to run at least four common, related plays with their dealers:

New product introductions. Most manufacturers have a "bet the farm" product that gets rolled out each year or so. The pace of new product introductions has accelerated. The time a manufacturer has to reap the benefits (and profits) of the first mover advantage when introducing a new product is shrinking. Hence, planning for and then preparing the dealer network to accept, sell and service a new product is as crucial to market success as the product itself. Assess the current NPI process, apply lean practices and achieve break-through performance, faster product introductions, accelerated conversions to new revenues and lower total costs.

Ramp up. Dealers are constantly hiring new staff in sales, service, aftermarket/parts, finance, etc. These new staff members must be ramped up to a level of competence that ensures they can represent the manufacturer's brand properly and consistently across dealerships. Quality here is defined by two variables: the standard that must be achieved (and measured) to deem a new hire "ramped up", and the time it takes to do so. Ramp up also applies to entire dealerships as well, for manufacturers who are growing by recruiting new dealers. Assess the current employee ramp-up process, apply lean practices and achieve more engaged employees who are ready to be productive selling and servicing products on your behalf.

Training and Certification. Certification is the standard by which a manufacturer determines a person or dealership competent to represent their product to the end customer. Certifications are commonly tailored for the sales, service, aftermarket/parts, and finance functions within a dealership. Certifications have become increasingly complex. They take the form of training, assessments, and increasingly on-the-job demonstration of competency. All aspects of certification must be recorded and measured. Currency of certification must be monitored. In addition, training is ongoing. Safety and compliance related training, as well as training in support of new product rollouts and business process changes never ends. Assess the current employee training environment, apply lean practices and achieve break-through performance, more knowledgeable employees, employees that are enabled to represent your brand well and who are ready to sell and service your products.

Sales and service quality. Every manufacturer relies on salespeople in the dealerships to sell their product and service technicians to maintain that product or fix it when it fails. Manufacturers owe their dealers an environment where salespeople and service technicians can succeed. Part of the solution is good training, but an environment for collaboration, sharing best practices and providing incentives all collectively contribute to sales and service quality. Assess which employees are ready to sell, and which are ready to service your company's products, apply lean thinking to determine how these dealer employees obtain the knowledge and training they need and how incentives are aligned with the goals of the enterprise.

Indirect sales channels are the next domain for the application of lean thinking. Lean distribution can be achieved by the application of the lean thinking strategies and tools used within the manufacturing plant, and across the supply chain. Lean distribution can be achieved by:

Defining quality for your two types of customers - the end user of your product and the dealers that sell and service your product.
Defining quality in terms of measuring your Ease of Doing Business.
Integrating the four core components required for supporting your dealers.
Focusing on helping your dealers optimize the business processes common to all dealer networks.
Leveraging technology.
Reducing costs.
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