Streamlining Sales and Fulfillment
The first thing most of us hear about success in business is, "the customer is always right" and many salespeople think this is a justification to agree to every customer demand in order to win the purchase order. But this tendency isn't limited to the rank and file. I've been involved with several companies where the marching orders from the senior executives were, "Just tell them we can do it and get the order. We'll worry about delivery later." In public companies, under pressure to meet Wall Street numbers, the predilection to over-promise is so great that many sales VP's are willing to jeopardize long-lasting customer relationships for the sake of bringing in an immediate sale. This is obviously a poor sacrifice and extremely short sighted.
In order to build a long-term, growth-oriented sales strategy we need to ensure our salespeople behave like the consultative sales partners that our customers expect. But addressing this problem requires a much deeper analysis of how we manage our sales and fulfillment processes.
Many sales departments consider their production/fulfillment counterparts to be the bane of their existence and vice versa. The typical complaint sounds something like, "I got the P.O., it's those clowns in production who can't deliver and they're losing the sale." Is it possible production departments are really sabotaging sales? Possible, but highly unlikely. So why are salespeople so convinced production is conspiring against them? The fault can most often be found in the conflicting goals of the two departments. In most companies, the goal of the sales team is a set sales quota while the goal of the production department is performance against a promised delivery date. While it's easy to point the finger at production and say, "They need to work harder and cooperate with sales," at best this would be a Band-Aid solution, and at worst it would fuel the animosity between the two groups.
To really address the problem we need to change the performance measurements most companies set for the two departments. No longer can sales be measured by what gets sold, while production gets measured by how efficiently product is built. The two departments need to be given a single and congruent goal of product delivered. Without a congruent objective they will continue to feud, resulting in sales over-promising and production under-delivering while your customers suffer and seek out new vendors.
First let us consider the sales side of the issue. As we know, sales departments are generally measured against a set quota. Salespeople often point to this fact as evidence that they are the ones most responsible for a company's success. It's difficult to argue with this position because a quota number seems to be a very tangible goal not open to interpretation, but most companies have inadvertently given its salespeople a scapegoat in the structure of their booking report. As many of you are aware, a typical booking report consists of two columns, one for purchase orders booked and the other for actual orders shipped. This double metric unintentionally provides a sales person with a way to shift responsibility to his production counterparts. By artificially stacking the booking column, salespeople can blame production for falling short on the shipments. What's the easiest way to get purchase orders into the booking column? You guessed it! Over-promise to the customer without regard to the actual ability to deliver, and let production worry about making the shipment. While the sales person may still miss his quota, the blame is now conveniently shifted to his nemeses in production.
As mistakenly constructed as the booking report may be, at least it attempts to gauge an actual customer-related measurement in sales. On the other hand, many production departments have abandoned all attempts to meet customer requirements and are measured either by cost efficiency or their ability to deliver product in relation to an internally set promise date that bears no consideration of the customer's actual needs. This is simply absurd. Could you imagine a restaurant taking five hours to serve a meal because it was the most efficient way to run their kitchen? Or worse, imagine them telling you they were performing at 100% effectiveness because every meal was served within the five-hour time frame they promised. Such actions would be intolerable and yet thousands of companies run their production departments by these same standards of cost efficiency and internal promise dates.
In order to stop disappointing customers, production's performance must be tied to the expectations communicated by the sales personnel, while sales must realize that a purchase order that is impossible to deliver is not only worthless but can cause serious damage to the company's reputation. Until they align their objectives, the divergent agendas of the two departments will continue to result in the familiar refrains of "It's production's fault the customer canceled" and, "We delivered by our promise date. Those guys in sales shouldn't have promised something we couldn't do." By giving both departments the single goal of product delivered, an environment is created for sales and production to work together. Only when sales and fulfillment are a unified process can we consistently meet our commitments and serve our customers.
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