What's In Your Big Data? Connecting the Dots in Your Sales Data to Drive Growth

Editor's Notes

• #5: What’s in Your Big Data? Connecting the Dots in Your Sales Data to Drive GrowthWe are going to make this very concrete for you – talking about the automation industry first: the business strategies, complexity challenges, hidden assumptions and reality.THEN we will touch on the software and big data that can help you see the reality, correct the assumptions, and win in the face of the complexities of your business.Radhika will present a case study that will tie this all together.
• #6: So on the left are strategies that automation providers have as businesses (– as well as other complex discrete businesses - )I’m guessing that everyone on today has at least 3 of those 5 objectives.And of course, the goal is to have a lifetime customer where both parties see escalating value.This is an enterprise strategy,
• #7: So Everyone is involved. Each department or discipline is part of creating the total experience:Marketing sets the expectations, drives the vision and strategyR&D is a fundamental driver of value and experience for the customerPlanning must be on the ball to ensure that the business can deliverSales is the “face of the company” and is instrumental in matching customer needs with solutionsFinance can determines one facet of the overall experience – Ts&Cs are criticalSupply chain is key to making sure that materials and resources are lineds up at the right momentManufacturing must execute the plan, even though the exact resources and conditions are almost certainly not in placeUnfortunately, each group often works in silos without a “single version of the truth”.
• #8: So what happens is a fragmented view of what the customer needs, and specific configurations of the offering for each customer or small group of customers.This is a piecemeal and reactive approach: I call it “Just Say Yes” and it can create chaos! Not very systematic usually.Each objective creates its own set of configurations/variants for the product line – additional layers of complexity – both in products and processes and DATA!Radhika to comment?“Julie – you are right when you said that every business unit has its own version of the truth. The product teams create the product. Sales has a customer view of it. Manufacturing has a BOM view of it. The Finance guy look at it as a bunch of numbers. All this becomes a bigger issue when the product proliferate as the market grow. “
• #9: The goal is to increase revenues – and there are many angles on that.The problem is that we’ve been doing this without addressing the assumptions hidden behind these desired outcomes. Sales and Marketing have the levers to make a big impact on profitability – through shaping the demand as opposed to reacting to it.
• #10: The hidden assumption is that whatever the customer wants, the customer gets. But what’s the impact of being reactive in this way?What are you pretending not to know? Do you really believe that all of that added complexity will generate more revenue with more additional cost? In your gut, and in your operation – you know this. But…
• #11: What you probably don’t really know is the true Cost-to-Serve: Based on the number and type of configurations or variants, based on their varying levels of demand, based on their mix through the planning, supply, manufacturing and distribution processes….There are KPI’s that you can use to get a handle on your costs – even down to operations. In each one of these departments, you can determine cost-to-serve based on the product complexity.RadhikaThe cost to serve is a KPI for the business. What is it costing the business to serve this customer profitably?Can we do that? This hinges around the ability to offer, deliver and service the products you sell to your customers – and make money doing it. Product proliferation will eat into this profit …. And can completely erode it. SOPOLL QUESTION:Now it’s your turn to tell us about your environment.Which of the other departments do you believe is most impacted by complex product lines, variants and options in your company? Is it R&D, Planning, Supply Chain, Manufacturing, or Service and support?While you are voting,I’ll just point out
• #12: That there are REAL costs to the approach most companies have been taking – and that the profitability is not clear.So What is the real Cost-to-Serve based on the current “Just Say Yes” approach?These are a few very simple examples of how costs rise in each department:Marketing, R&D, Planning, sales, Finance, And also how the added profit we hope for may not materialize.Julie, you are very right. The total cost of the system rises. A great example here is a computer company that offered a lot of choices. When they started they were very profitable. But as the complexity grew, suppliers could not keep up with the low volume parts caused by the proliferation. But customers expected to get their machine when they ordered it. They had been trained that they would. This resulted in a warehouse of obsolete parts that continued to grow each year.
• #13: In fact, you in marketing and sales have a much larger impact than you realize.You can cause problems, or you can have a positive impact.Let’s just take a couple of examples.Product management decisions tie in closely toProduct line engineering and reuse in R&DComplexity of planning to the customer/SKU levelHow many suppliers you need to pull in and how much volume you can do with eachHow much training the people need, how sophisticated the equipment to make your products must be, and how often the work instructions will changeHow complicated the support “playbook” must be to handle all of the configurationsSales and deal decisionsAbility to anticipate credit risks by solution offering and shiftHow much he advance notice you can give the suppliers based on predictability of sales of configurations with their parts or materials includedHow quickly production must respond and how many changeovers they must do to handle the mix you sell and the expectations you set in promising ordersWhat the support team has in the as-sold or as-delivered information to ready resources for that ongoing relationshipHow fast planning has to re-jigger the schedule to accommodate rush orders and specialsJulie – I agree. Product Management is a very critical business function, and a core competence for a company. The product managers decide the product offering. The product offering and the number of variants is the single biggest driver of cost to serve.
• #14: Cost to serve costs can be significant, and as product line complexity rises, difficult to combat.You can see that even among the best – Business Movers were those who improved their financial performance significantly – Business Movers are those who improved their performance either dramatically on EBITDA or Net Operating Profit or broadly across most of the business metrics in the study. They make up 30% of this population of study respondents.Even among those high performers, fewer than one in four respondents could improve these things by 10% per year on average.But it being difficult to achieve is only part of the challenge.If you don’t have the right KPI’s around the different business functions that measure the cost around this, the costs will snowball. Note that 16% of these discrete manufacturers don’t even measure cost of quality as a % of revenue. The same portion do not measure the time to make a product changeover or transition! If you are not paying attention to those, That could be a problem.
• #15: Even among the best, closely linked metrics are not common.If your business objectives have to do with delivering an experience, and your metrics are still stuck in building products, you will struggle to see where you need to improve to achieve the results you want.Even if you do have appropriate metrics
• #16: If you keep making those hidden assumptions when you know reality is different, You know that costs will rise from that additional complexity – but you are not measuring it.ThenWho is held responsible for the cost of this additional complexity? Supply Chain Sustainability?
• #17: Just as lean was a journey that re-set assumptions and created new cultures, this awareness of profitability and cost to serve based on complexity will permeate everything.You really need a new way of working – with new objectives and metrics.This is not a project, but a transformationJulie – I think this is the next frontier of supply chain improvement. Connecting the supply chain to the product mix – so that the cost of what we offer, how we sell and deliver is part of the equation.
• #18: This is a new approach to business SLIDE – a new frontier. Find an executive champion – make your mark – have an impact across the enterprise. Profitability based on Cost-To-Serve You can be a hero if you can master cost to serve and improve both cost and customer value.HOWEVER you might have a challenge.
• #19: The data most companies have on products is scattered and in completely different formats – it’s messy.Your R&D team has CAD and PLM; the supply chain team has materials management, forecasting and production planning; and finance have ERP views, and everyone has spreadsheets.Because they are separate and focused differently, it may result in controversy.You are right. Every business unit has a different view of the product and how to serve the customer. Product managers are creating cool variants. Manufacturing would like one configuration. A black car. Ford was right here. Sales would like it all. And now for they hate to make their customers wait. While I say this – this is not to say that of any of them are wrong. But it needs to a concert with an eye toward the total cost to serve. That is mandatory today in today’s competitive environment.
• #20: What is need big data analysis to examine product portfolio and customer buying trends. S and M – you have enterprise portfolio planning opportunity so you can change the conversation around cost-to-serve. What is the mix for the entire enterprise – base it on cost-to-serve – and improve the customer experience. when you look at data around products, it’s messy and sits in spreadsheets. It’s a complex data problem that can only be solved with a Big data analytics solution. That’s why marketing and sales can help shape demand rather than react to it.
• #21: Data-driven decisions mean you can be systematic – drive buyers to places where you can best serve them and THEN say Yes.Salespepole know it’s important to say no sometimes –and so should marketing – This new approach using your data can drive greater profits.And with that, I’ll turn it over to Radhika to tell you about an example from one of Emcien’s customers.
• #22: Thanks Julie. I would like to start with the core business challenge the company realized.This is a very high level diagram. There are three key business functions. Product management, Supply Chain and Sales. Product variety is created by product management. They are pushed to the supply chain and sales teams. There is no feedback loop back to product management to say – hey, customers are buying this. Lets tighten the offering. More importantly – there is no feedback from the supply chain. Product variety is the biggest driver of material cost. The supply chain should be able to say – can you please give me a portfolio that does not use these parts. The suppliers is not reliable. Similarly – supply chain should be able to tell sales – I have this. Sell more of this. Like when you are at a restaurant and the waiter says – the salmon is very good tonight. The lack of coordination and feedback loops is causing huge waste in the system.
• #23: This is the orchestra. And Mike Groesch says it best of all. The demand signal comes from the sale team. The supply chain is responding with product availability. But is the product mix fixed??? What is the product could be changed to improve the supply response??That is a very powerful thought.
• #24: Thanks Julie.The value is tremendous. NCR is accomplishing a perfect orchestra. Step 1 – listen to the buying patterns. Ste 2 - Use that to determine the product mix and go to market strategy. Step 3 – While you have done the best to listen to the demand, you know it is going to change. It keeps changing. The ONLY way out is to guide the customer at point of sale.
• #25: Lets dive into how this is done by business function. How does this change product management.
• #27: Lets demystify guided selling. What is it really. Customers think of your products in features and feature sets. That is KEY to guided selling. I want a computer with 10GB and 500RAM. I want a red car with leather seats, ipod connector and mobile phone stereo. I want a chicken sandwich without mayo. There are hundreds of ways to complete the order. That is the opportunity the customer gives you every day. You want to make it easy for the sales person to guide the customer to the best choice. That is guided selling. The chicken sandwich is really good on rye bread and we have a special with chips and and a drink. DONE!You increased your margin. Pushed the rye bread. And completed the order fast. Customers wants you to help them. That is why Amazon reports 33% lift in sales with suggestive selling.
• #28: SO the role of the sales person is very key. They can make the customer very happy. They can make more money. They can make the supply chain more efficient. When guided selling is in place the sales person can complete the order in the way that is very good for the customer. There are studies that show that the fastest one to complete the order, wins the deal 95% of the times. SO it is imperative that we help the sales people to complete the order FAST.This is what NCR has in place. Kate Laneve will talk about it a the conference. It’s amazing what NCR has in place to improve sales efficiency.
• #29: The last piece is the supply chain.
• #30: A systemic solution.