Sales, Marketing, and Manufacturing Improvement

The following reader question popped up in another blog:

“Does Lean apply to sales? We’re trying to introduce Lean thinking throughout the company and have found very little on how to lean the sales department.”

The response was a set of tactical recommendations on the behavior of sales reps with customers. Strategically, however, you need to think about the role of Sales within the business. It is not just to provide a flow of orders every day. Marketing is often mentioned in the same breath as Sales, with good reason, because sales are the business’s best source of market intelligence. Contrast, for example, the following approaches:

  • Selling through dealers. Selling through dealers protects you against market fluctuations but also cuts off direct contact with the end-users of your products. This may delaying you noticing changes in demand volume or customer tastes. This is one reason why Apple opened its own stores. In another industry, as recounted by David Simchi Levi, Italian pasta maker Barilla introduced a form of vendor-managed inventory with dealers to get a better handle on the popularity of different products.
  • Door-to-door sales, as Toyota did in Japan into the 1980s, provided direct access to the market. But it was too expensive and was abandoned. In 2000, Toyota established the Gazoo business division that operates the gazoo.com internet portal for Toyota customers, providing used car prices, maintenance tips, shipping for devices to keep kids entertained during long rides, and road trip recommendations. To my knowledge, no other car company has done anything similar. According to Alexa, Gazoo ranks 799th among all web sites in Japan. Toyota does not explain the motivation to start Gazoo, but it is not difficult to guess that it strengthens the bond between the company and the car owners, while their clicks provide the kind of first-hand market information the company used to get from door-to-door sales.
  • eCommerce. Online sales also establish a direct link between end-user and supplier, providing information that is easier to get than to interpret, and not as rich as an in-person, direct human interaction. Also, when selling through an online retailer rather than directly, the information is shared with that retailer, which may be better equipped to exploit it than the manufacturer.

As manufacturing performance improves, so does the business’s ability to respond to the market in at least the following ways:

  • With timely market information and short manufacturing lead times, the business is both better able to dial aggregate production volume up and down, and to adjust the product mix. The months-long lag you often observe between changes in demand and in production cause companies to pile up finished goods during industry downturns and miss out on sales during booms. Reducing this lag to one week directly translates to more cash available to weather downturns and more income during booms.
  • Sales often receives requests for small runs of new products for test marketing. A responsive manufacturing organization is also able to promptly produce them, and then ramp up to high volume when the tests are successful. This alone can drive explosive growth.

 

12 comments on “Sales, Marketing, and Manufacturing Improvement

  1. To ask if lean/TPS can be applied to a specific activity is like asking if improving an athlete’s fitness will increase their performance.–

    What we need a holistic view of the weapon we have to use on the global business battlefield. It has two edges; one is manufacturing the other is sales and marketing. The body of the blade, which provides the mass behind the edges, is forged from our people’s abilities. The handle through which we wield this awesome weapon is made from the skills of the management team. Lean and TOC are sections of the manufacturing blade edge. The sales and marketing blade also has its own individual sections. Both blade edges must be kept sharp. —

    I find too many people think one small section of the blade is the weapon. We must teach our companies to understand the complete weapon and how to use it. . Too many of our leaders are qualified in the ‘Management of Battle Administration’, but don’t know how engage all their people to fight and win the war..

    I think the sword analogy describes the holistic nature of the business warrior’s task.

    • The more you broaden the range of applicability, the more you have to filter any technique, approach, or tool that is specific to one type of activity. At the end, all you are left with is not much more than “Be good!”

      Every business has sales, some also have marketing, and some also have manufacturing. A manufacturing business revolves around factories. That’s why we call it a manufacturing business. Everything else is about selling the products the factories can make today, developing new ones for the future, building new factories, retooling or closing old factories, developing the factory work force, maintaining facilities and equipment, etc.

      Their focus on making things makes factories a special kind of organization, with technical and human dynamics that I don’t believe you find in car rental, retail, health care, or public service.

      Concepts from manufacturing may have crossover value in other industries, but I would not claim it always does. I think the relevance to TPS to an industry has to be established case by case,

  2. My definition of Lean is “Making the Right decision, at the Right time, at the Closest point to where value is Added and/or Created in the Process”.

    This definition allows those typically biased to believe that “lean is only about Manufacturing” to broaden their horizons..or at least consider that it could, maybe, apply to their process.

    However, the biggest barrier I encountered is that Sales people, and, (some) R & D people tend to think that they do not have processes. Sales, to many of them is a combination of a creative and mysterious activities, with a few transactions…

    To get their attention, it is necessary to map the sales activities, even maintaining the perception of a few of the “mysterious” steps. When visualised as a process, with inputs, outputs, deliverables, performance criteria, etc the realisation that maybe such a process could actually be improved, by making decisions closer to where the value is added/created, finally starts to dawn… But it takes time and effort!

  3. Comment in the TPS Principles and Practice discussion group on LinkedIn:

    I have infinite respect for the Toyota Production System and indeed it can be transposed in many other areas (a lot of interesting examples in hospitals these past 10 years for instance). But I am not sure why Toyota should be considered world class best practise in terms of Sales and Marketing. I have read several of the books dedicated to this “Lean Sales and Marketing” topic but have not found them very convincing. I hope someone in this group will explain why I am wrong with my point of view and provide some real world examples.

  4. Comment in the Lean Six Sigma Worldwide discussion group on LinkedIn:

    Can we compare KPIs between production and sales? OEE, AOV, productivity… Also production losses : brake downs, adjustments, lack of resources with sales “losses” 4M, 5 Whys, PM Analyses, Kaizens is absolutely applicable for analyses of the sales losses. If we take in consideration and that loss is the realization of the negative potential of a risk…we can apply Lean to sales. Please send me info if anyone tried it?

  5. Comment in the Lean Six Sigma discussion group on LinkedIn:

    In addition to providing Standard Work for sales associates and reducing administrative burden in order to increase face time and sales calls, there is the concept of Value Selling and Intentional Selling.

    • Comment in the Lean Six Sigma discussion group on LinkedIn:

      Yes it does. Knowing value of customer starts at sales! Just one example. In production we speak of the client decoupling point as the point where we know for which client we are working. In production we try to put the point as far in the end as possible, in order to produce standard products before making them variant. For sales i defined the “reverse” which i called the customer demand decoupling point. This point is the point in which the salespersons knows enough to have a ‘sure’ sale. Ususally customers want to know the price and sales people tend to provide an offer but the customer didn’t want what the sales described so the sales person starts another offer and again the customer has other expectations. The decoupling point is to know when a sales persons knows enough to formule the answer to the question of the customer. This methods saves time and increases quality. Optimising the flow of information is key to improve. A sales person is the heart of a lean ambassador.

  6. Comment in the Continuous Improvement, Six Sigma, & Lean Group discussion group on LinkedIn:

    In-depth knowledge of Lean Methodologies is more imperative for a top-notch technical salesman than any other function. If you can efficiently navigate a lead’s mind through the process to quantify the purchase via ROI and Payback Period, then you have reached the pinnacle of your respective profession.

  7. Comment in the TPS Principles and Practice discussion group on LinkedIn:

    Philip MARRIS: Please feel free to elaborate on what you consider to be the weaknesses of TPS when it comes to Sales and Marketing. I certainly agree that TPS is NOT Sales-centered. I think that is a strong point, however.

    • Comment in the TPS Principles and Practice discussion group on LinkedIn:

      Dear Frederick and Michel,

      Michel, thank you for the wisdom and free thinking mindset of your post. Too many people fall in blindly in love with TPS and end up thinking “the Toyota system is the answer, what is your question?”

      Frederick, Thank you for your interest and support.

      As I wrote in my post above I would be interested in being convinced by people more experienced in this field than me that I had missed something.

      It seems to me that so far all operational improvement schools of thought have missed the marketing and sales functions completely. Sales remains unchanged (apart from the impact of internet): good or bad salesmen + weak processes and management systems + doubtful incentive packages = unsatisfactory results. By the way I have the same problem with the Theory Of Constraints.

      I find the literature on Toyota Sales and Marketing not very convincing.

      For instance, whatever people write, the obvious key success factor of “client oriented behavior” is globally weak in sales and marketing. In my amateur opinion, it is not significantly better in Toyota’s sales and marketing than in other companies. It seems to me that only the Fast Moving Consumer Goods multinationals are any good at marketing. In business to business the average efficiency and pertinence of sales and marketing is very low. And in the automobile industry it is somewhere in between.

      Again, in my uninformed opinion, Toyota suffers less from this imperfect sales and marketing performance than other companies because the cars are so good that they sell themselves. And that is because of the Toyota Product and Process Development System that no-one has yet managed to copy properly.

      So, I am totally seduced by the Toyota Production System’s power in improving operations (buy, make, distribute) but I am not yet convinced that the “Toyota Sales and Marketing System” is as powerful or revolutionary.

      I would love to be convinced by the eminent members of this LinkedIn discussion group that I am wrong.

  8. Comment in the Continuous Improvement, Six Sigma, & Lean Group discussion group on LinkedIn:

    There may be many lean thoughts on sales, and some examples are, 1). integrate sales and marketing function that realizes an agile action to the market, 2) delete sales support function, which handles orders from customer, and transfer this function to plant’s production planning (this means direct order fulfillment at the plant).

  9. Comment in the TPS Principles and Practice discussion group on LinkedIn:

    Michel – it depends on what version of TPS people are talking about.
    There are many more elements to what Toyota calls TPS than what most people think TPS means.
    In ALL business everyone (as in other functions) hides behind the “broken” manufacturing system. ( or uses it as an excuse not to improve)
    Once manufacturing is “fixed” using TPS – the next function of the business that reveals is that our Design and development system is “broken” and must be fixed – hence the Toyota design and development system (TDDS) – once Design is “fixed” the next function revealed as “broken” is sales and marketing. Hence TSMS. ( as in they don’t know how to take full advantage of the new unlimited potential of production and design capabilities.)

    So if we try and use the “technique” version of TPS otherwise known as “Lean” – we will find it spectacularly fails when we try and apply it to Sales and Marketing.
    So in that sense Philip is correct – TSMS does not work as well in Sales as TPS works in production.
    Once we get into sales it is far more important to use the “Human oriented management” version of TPS thinking than it is to use the “process” version.
    Can it work in sales?
    Yes – very well.
    But it is just that as mentioned above ( or perhaps in your blog ) that there is no substantial information out there about how TSMS works other than what has been publicly written about Toyota’s version – which I agree with Philip is lacking in both content and detail.

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