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Managing change[1]
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Managing change[1]

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  • Just as there has been an evolution in the roles of IT retailers, there has also been an evolution in retail finance.
    Another quality of a professional retailer is their ability to measure and track their business.
    Review the evolution of retail finance following the chart from left to right – from focus on revenues, to focus on margins, to focus on return on assets and finally to today’s focus on value creation.
    You may find this slide a useful way to introduce some of the financial “jargon” and acronyms that will be used during the module.
  • Use this model to recap the Value Creation discussion.
    Comment on the universality of this model by asking the same questions in relation to HP. You may want to develop a mirror model to indicate Retailer/HP relationship.
  • Use this slide to recap the discussion about drivers. It shows which values the retailer wants to increase and which to decrease.
  • Transcript

    • 1. Managing Change Presented by: The Ohio State University Distribution Faculty Dr. H. Lee Mathews Dr. John Monoky October 7-8, 2005 San Antonio, Texas 1
    • 2. Program Outline • Sales and Marketing Management (Friday Morning) • Understanding Profitability and Financial Impacts (Friday Afternoon) • Distributor Operations (Saturday Morning) • Human Resources Management (Saturday Morning)
    • 3. Sales and Marketing Management Developed and Presented by: H. Lee “Buck” Mathews, Ph.D. Professor of Marketing and Logistics The Ohio State University 6347 Plesenton Drive, Worthington, Ohio 43085 phone: 614-848-8437 e-mail: hleemathews@islc.net 3
    • 4. Selling is getting rid of what you’ve got
    • 5. Marketing is having what you can get rid of • Customer Focused • “Silo” Mentality • Higher Profit
    • 6. Product Life Cycle Impact: The Value Added Wall for HPBA Companies Sales Value Added Services Price Product Profits Time
    • 7. Product Life Cycle Worksheet New Products New Services Price
    • 8. The menu of value-added services for distributors differs, but many include the following: • Basic • pre-printed and customized client order forms; • usage reports; • scheduled quarterly business meetings to review additional ways to take costs out of the system; • technical or service hotlines; • onsite training; • customer educational seminars; • video libraries; • customer specials and incentive programs. • Others
    • 9. Know your own services • The first key to any successful introduction of valueadded services is to make sure you understand the service and the worth to the customer. • • Does it improve efficiency? • Does it produce or enhance revenues? • How does this service add to the productivity or reduce expenses? • Will it improve or simplify ordering? • If it will make ordering easier, why should the customer care? • Is there an attendant cost or reduction in cost to the customer? • If others offer the same or a similar service, how is yours better? • What makes your offering different from someone else's offering?
    • 10. Two Strategies Emerge from the Product Life Cycle • Differentiate – Sustainable Competitive Advantage • Low Cost Position – Be Low Cost in Production, Marketing, and Distribution • Each Phase a Different Challenge
    • 11. Basic Matrix Customer Needs by Market Segment Cust. A Product A Product B Product C Prouct D Cust B Cust C
    • 12. In de pe nd en tF B uy lo or in g C G ov ro er up in In /F g st ra R al nc et le ai rs hi le se rs A H ffi om lia e te Im d pr R et ov ai B em ui le r ld en er tC s en te Al rs lO th er s An al ys is C us to m er Pr od uc t M at ri x Basic Matrix Sales by Customer Category 46.20% 24.40% 9.80% 5.20% 3.70% Sales by Product Category Sheet Vinyl (18.1%) H H Pre-finished Wood Flooring (11.2%) M H Laminated Flooring (10.1%) L H Accessories (10.0%) L L Carpet Residential (6.1%) H L Carpet Pad (6.0%) Unfinished Wood Flooring (5.5%) Specialty Flooring (5.2%) All Others
    • 13. L H L L L L L M H H L M M L H M H M H L L H H H M M M L L L L H H L M L M L H L H L L L L L M M M H L M H L M M H M H M H M M L L L M L L H M M M L H M M L H L H L L L L L M M M H L M H L M M H H H L H L L L L L M H H H L M M L H M H H H H H L H H L L M L M L L L H L M M H Laminated Flooring Accessories Carpet Residential Carpet Pad All Others End Users Builders General Contractors Installers Independent Floorcovering Retail Pre-finished Wood Flooring All Others H H Government Accounts H National Regional Chains Sheet Vinyl Home Improvement Centers Customer Needs by Market Segment Buying Groups/Franchised Affiliated Ret. Market Potential Company Strength Product/Services
    • 14. Spicer C & M Seco Formsp Tyrone P.C. Weathrhd Chelsea Distributor Auto Aftmkt Industrial Truck Afrmkt. Mobl Off Hwy. Truck Mfg. Dana Auto Parts Corporation
    • 15. Live r Dise a se Vir. He pa titis HBS Ca rrie r Prognosis Immun Ve rtia l Tra ns He pa titis Control Tourist Indus Small Labs Big Labs Pe ds OBGYN Custome r Ne e ds by Ma rke t Se gme nt Surg Ma rke t Pote ntia l Compa ny Stre ngth Product/Se rvice s Inte rnal M e d Abbott Labs
    • 16. IBM Distribution Matrix Market Potential Company Strength Product/Services Prospects Small Customers Large Current Mission Critical Systeme PC Services & Training Midrange Services & Training Sales Force Effectiveness Tools Warehouse Management Systems Customer Service Tools Computer Needs Analysis Distribution Executive Services Small Old Iron Current Large Old Iron
    • 17. Coast Marine Matrix Market Potential Company Strength Customer Needs by Market Segment Product/Services Small Med Large Marine D Marine d Marine d Boat Covers/tops Towing Electrical Maintenance Repair Parts Water Toys Hardware Safety Items Trailer Acc. Service Center Retail Store Retail Store Med Marina
    • 18. Chart 1: The Loft Customer Product Matrix Target Market: Single, young marrieds w/o kids, middle income, ages 18 - 30 High Priority High Priority High Priority Med. Priority Med. Priority Why Bother High Priority Med. Priority Why Bother Why Bother Med. Priority Med. Priority Bedding Med. Priority Med. Priority Med. Priority Med. Priority Accent Furniture Why Bother Why Bother Why Bother Med. Priority Bistro Sets /Patio Why Bother Why Bother Why Bother Med. Priority Chairs and Stools Why Bother Why Bother Med. Priority Why Bother Card Tables /TV Trays Low Priority Low Priority Low Priority Low Priority Office Furniture Why Bother Why Bother Why Bother Med. Priority Accessories Low Priority Why Bother Low Priority Med. Priority Rugs Why Bother Why Bother Why Bother Why Bother Lighting Lamps, Shades, etc Why Bother Why Bother Why Bother Why Bother Room Design Services Med. Priority Med. Priority Med. Priority High Priority New Products Services -3 0 ge ,A Slipcovers Accent Fabrics pillows, table skirts etc. Window Treatments 26 22 -2 5 ge Se gm N ew up ov in g M Fi rs tJ ob Af te rC ol le ge ,A en ts A ge 18 -2 5 s/ Ap ar tm ge Co lle ge ho ol th en Sc h H ig D or m jo b A vi ce s Se r ro du ct s P Low en ts Medium la dd er High th e Key 18 -2 4 Market Potential Loft Strength
    • 19. The HPBA Matrix Market Potential Company Strength Product/Services
    • 20. Understanding Profitability and Financial Management Developed and Presented by: H. Lee “Buck” Mathews, Ph.D. Professor of Marketing and Logistics The Ohio State University 6347 Plesenton Drive, Worthington, Ohio 43085 phone: 614-848-8437 e-mail: hleemathews@islc.net 20
    • 21. Understanding the Strategic Financials • Introduce the strategic profit model • Review basic financial ratio analysis • Understand HPBA Members and competitors’ financial drivers Excessive downsizing and cost cutting are corporate anorexia, getting thin, but not healthy
    • 22. Basis of the Profit Model • Assumption that the financial objective of a firm is to earn a rate of return for stockholders. • Useful to assess your own performance plus help customer improve their performance Margin Management Net Sales Less Cost of Goods Sold Gross Profit Margin Less Operating Expenses Asset Management 100 -80 20 -18 Current Assets Inventory Accts Receivable Other Financial Managment 13 13 4 Fixed Assets Net Profit 10 Total 40 Total Assets / Net Worth " The relationship between debt and equity" 2 "The other half of the balance sheet"
    • 23. Profit Margin Management Sales Gross Margin Net Profit Net Profit Margin ÷ Cost of Goods Sold Sales Total Expenses
    • 24. Look at Key Boxes (Red): How do we impact: • Sales • Cost of Goods Sold • Expenses
    • 25. The Relationship between Margin and Prices: Scary Information Assuming a Regular Gross Profit Margin of 25% When you cut prices 5% To enjoy the same dollar profit margin Handle 25% more merchandise Do 18% more dollar volume 10% Handle 66 2/3% more merchandise Do 50% more dollar volume 15% Handle 150% more merchandise Do 112% more dollar volume 20% Handle 400% more merchandise Do 300% more dollar volume
    • 26. Managing Assets: Inventory and Accts Rec. are the keys Inventory Sales Asset Turnover Current Assets Accounts Receivable ÷ Total Assets Fixed Assets Other Current Assets
    • 27. How do we impact the Red Boxes? • Inventory • Accounts Receivable • Other current assets • Fixed assets • Sales
    • 28. Calculating Return on Assets Sales Gross Margin Net Profit Net Profit Margin ÷ Cost Of Goods Sold Return on Assets Sales Total Expenses x Inventory Net Profit/ Total Assets Sales Asset Turnover Current Assets Accts Rec. ÷ Total Assets Fixed Assets Other Current Assets
    • 29. Financial Leverage: Assets Liabilities
    • 30. The Total Profit Model Sales Gross Margin Net Profit Net Profit Margin ÷ Return On Net Worth Financial Leverage Return on Assets Sales Total Expenses x x = Cost Of Goods Sold Inventory Total Assets Net Worth x Net Profit Total Assets Sales Asset Turnover Current Assets Accts Rec. ÷ Total Assets Fixed Assets Other Current Assets
    • 31. The Total Profit Model Sales Gross Margin Net Profit Net Profit Margin ÷ Return On Net Worth Financial Leverage Return on Assets Sales Total Expenses x x = Cost Of Goods Sold Inventory Total Assets Net Worth x Net Profit Total Assets Sales Asset Turnover Current Assets Accts Rec. ÷ Total Assets Fixed Assets Other Current Assets
    • 32. Gro s s M arg in Return Invento ry Inves t ment Sales Gross Margin Gross Margin Percentage ÷ Sales Cost of Goods Sold GMROI x Sales ÷ Avg. Inventory Inventory Turns Beg. Inventory _______ End. Inventory _______ Total Inventory _______ ÷2 = _______
    • 33. Using GMROI Dept A Dollars $1,613,326 Sales %Total COGS 21.4 $1,340,674 Gross Margin Dollars % Total % Dept $272,652 18.3 16.9 Inventory Dollars % Total $415,132 27.6 Dept B $2,382,045 31.6 $1,913,060 $468,985 31.5 19.7 $395,176 26.2 4.8 119 Dept C $1,139,482 15.2 $900,191 $239,291 16 21 $243,295 16.2 3.7 98 Dept D $2,397,147 31.8 $1,887,075 $510,072 34.2 21.3 $452,397 30 4.2 113 Total $7,532,000 100 $6,041,000 $1,491,000 100 19.6 $1,506,000 100 4 99 T/O GMROI 3.2 66
    • 34. Measuring Customer Profitability: Controlling Receivables Gross Margin Return On Receivables Gross Margin Return On Receivables (GMROR) Gross Profit Gross Profit Margin ÷ Net Sales x AR Turn Net Sales Accounts Receivable CUSTOMER X CUSTOMER PROFILE 19YY COMPARATIVE DATA Warehouse Sales Gross Profit A/R Turn (Days) GMROR (%) A 25 10 (37) 250 B 25 10 (37) 250 C 15 16.7 (22) 250 15.8 7.8 (49) 123 Customer Company $10,000.00 Whse Gross Profit $ 2,500.00 Avg Accts Receivable $ 1,000.00
    • 35. Gross Profit Contribution Direct Expenses Sales Commissions CUSTOMER X Dir Exp CUSTOMER PROFILE 19YY Warehouse Sales $10,000.00 Whse Gross Profit 2500 Sales Commission 625 Discounts Taken 100 Discounts Taken Returns & Allow 0 Delivery 135 Handling Returns & Allowances 79 Other - Selling Total Direct Expenses Contribution 100 ______ 1039 ______ 1461 # Of Deliv. Orders 25 # Of Line Extens. 35 Delivery & Handling Other
    • 36. CMROR Contribution Margin Contribution Margin Return On Receivables (CMROR) Contribution ÷ x Sales Accts Rec Turnover Sales ÷ Accounts Receivable
    • 37. Home Work Assignment • Adjust the Model to Your Needs – What revenues and expenses do we control? – What assets do you control? – What do we do with financial leverage?
    • 38. Buck’s Profitability Analyzer • Send e mail to: • Hleemathews@islc.net
    • 39. Sample Corporation Consolidated Annual Plan • Analyze the attached annual financial plan • Discuss appropriate benchmarks
    • 40. Evolution of Business Metrics 2005 Early 90s Sales Growth Return on Sales Top Line Revenue Comp Stores Returns Gross Margin Operating Margin Net Margin Sales expense Overhead ROM Marketing $ Return on Assets ROI Inventory $/Turns Ts & Cs RONA RONC GMROII ROIC ROCE Value Creation EVA WACC
    • 41. Value Creation Model: How does your Customer make money? Value Creation/ Destruction Operating Income - Gross Profit Revenues - Cost Structure Cost of Goods - ( Total Assets + Current Assets Working Capital + Fixed Assets Other Assets & Liabilities Inventory + Debtors - x Creditors WACC + ) Long Term Liabilities
    • 42. What drives a Partner’s ability to make money? Value Creation/ Destruction Operating Income Gross Profit Revenues - Cost Structure Cost of Goods - ( Total Assets + Current Assets Working Capital + Fixed Assets Other Assets & Liabilities Inventory + Debtors - x Creditors WACC + ) Long Term Liabilities
    • 43. ? Drivers Of/Barriers to Change What’s driving you to make these changes? What’s stopping you from making these changes?
    • 44. The Dealer Sales Team Developed and Presented by: John F. Monoky, Ph.D. Monoky Associates University of Michigan 4412 Forestview Drive, Toledo, Ohio 43615 phone: 419-536-7637 fax:419-536-0414 e-mail: john@monoky.com 44
    • 45. CONGRATULATIONS, VERNON! I HEAR YOU FINALLY BROKE THE SALES BARRIER AT SCIOTA BANK !! YEAH, I SOLD THEM. I UNDERSTAND YOUR SALES PITCH WOWED 'EM…THE FACILITIES MANAGER CALLED IT "HISTORIC"… THEY SEEMED TO LIKE IT. "THE BREAKTHROUGH" LIKE IT! I HEAR YOU HAD TO DO A COMPLETE REPLAY FOR THEIR BOARD OF DIRECTORS! THEY FLEW GUYS IN FROM VANCOUVER… HALIFAX…EGYPT… THEY MADE A BIT OF A FUSS. IS IT TRUE—THEY'RE ZAPPING ALL THEIR OLD SUPPLIERS AND MAKING YOU THEIR SINGLE SOURCE? IT'S WHAT THEY TELL ME. HOW DID THEIR DESIGNER DESCRIBE YOUR PROPOSAL—"A MIRACLE" OF ERGONOMIC INGENUITY? THE SPECS CHECKED OUT. WELL, IT'S JUST FANTASTIC, VERNON… HOW MUCH IS THE PROJECT WORTH ? ABOUT $500.
    • 46. Your Scarcest Resource TOTAL DAYS IN THE YEAR Less: • Weekends • Vacation • Holidays • Personal absences WORKING DAYS AVAILABLE IN YEAR Less: • Meetings, Trade Shows, etc. • Training • Distributor unavailability • Miscellaneous TOTAL 365 110 20 10 5 145 220
    • 47. A cct. Service/ Coordination 13% Tr avel 17% 2004 Face-to-Face Selling 29% HOW SALESPEOPLE SPEND THEIR TIME A dministration 16% Phone Selling 25% A cct. Service/ Coordination 11% A dministration 16% Travel 18% 2005 Phone Selling 25% Face-to-Face Selling 30% 47
    • 48. WHAT IF……… • MOST OF YOUR EXISTING BUSINESS AND GROWTH IS FROM YOUR CURRENT MARKETS AND CUSTOMERS, AND • YOUR CURRENT MARKETS ARE FLAT OR DECLINING, AND • YOUR KEY CUSTOMERS ARE UNDER PRESSURE FROM COMPETITORS, AND • YOUR CURRENT CUSTOMERS PRACTICE EXTORTION ECONOMICS, AND • YOUR TARGET OPPORTUNITIES ARE IN YOUR TRADITIONAL SEGMENTS/CUSTOMERS AND RECEIVE VERY LITTLE ATTENTION FROM YOUR SALES FORCE, AND • THE MAJORITY OF YOUR RESOURCES ARE TIED UP SERVICING YOUR CURRENT BASE OF BUSINES, AND YOU WOULD LIKE TO GROW AND GENERATE PROFITS!!!!!
    • 49. THE STRATEGIC GAPS • HOW MUCH GROWTH IS LEFT IN MY CURRENT MARKETS? CUSTOMERS? • WHERE WILL MY FUTURE GROWTH COME FROM? • HOW WILL I CAPTURE MARKET SHARE? • WHAT ARE THE COMPONENTS OF MY DIFFERENTIATION STRATEGY? • WHERE DO I GENERATE PROFITS? WHERE COULD I GENERATE PROFITS?
    • 50. P O S I T I O N I N G Which segments / customers will we concentrate on ? CUSTOMER TARGETS Whom will we challenge for these customers? COMPETITOR TARGETS What incentives will we provide to get them to buy from us… rather than from competitors? CORE STRATEGY
    • 51. THE ACCOUNT PORTFOLIO Strong Weak High • • • • • Invest / Grow ACCOUNT ATTRACTIVENES S Size Growth Profitability Location Purchasing criteria and processes • Current suppliers • Status of customer (prestige) Maintain Low Selectively Invest Manage for Cash / Withdraw BUSINESS STRENGTHS • • • • • • • • • Product range Product efficacy Service quality Price Technical services Reputation/image Past experience Quality of sales staff Quality of relationships
    • 52. ACCOUNT PORTFOLIO ANALYSIS Weak Strength of Position Strong TARGET Attractiveness: Accounts are potentially attractive since they offer high opportunity, but sales organization currently has weak position with accounts. Sales call strategy: Accounts should receive a high level of sales calls since they are the sales organization’s most attractive accounts. Account Opportunity KEY Attractiveness: Accounts are very attractive since they offer high opportunity and sales organization has strong position. High Sales call strategy: Selected accounts should receive a high level of sales calls to strengthen the sales organizations position. MAINTENANCE WHY BOTHER Attractiveness: Accounts are somewhat attractive since sales organization has strong position, but future opportunity is limited. Low Attractiveness: Accounts are very unattractive since they offer low opportunity and sales organization has weak position. Sales call strategy: Accounts should receive a moderate level of sales calls to maintain the current strength of the sales organization’s position. And, efforts should be made to replace field sales calls with telephone sales. Sales call strategy: Accounts should receive no field sales calls and a minimum of inside sales resources.
    • 53. ACCOUNT SEGMENTATION AND PRIORITIZATION High KEY ACCOUNTS TARGET ACCOUNTS ACCOUNT ATTRACTIVENESS (Your competition’s Key Accounts) • 10-20% of your account base • Gets very little attention • 80% of your GP$ • Receives less than 50% of your resources MAINTENANCE ACCOUNTS WHY BOTHER? ACCOUNTS • 40-45% of your account base • 30-40% of your account base • 10-15% of your GP$ • Receives 30-40% of your resources Low Strong • Less than 5% of your GP$ • Receives 20-30% of your resources • Creates 90% of your “headaches” YOUR STRENGTH OF POSITION Weak
    • 54. Definition of Value Proposition Statement which clearly specifies the key leverage impacts on customer value by the firm’s offering relative to the competition. This statement concisely presents to the buyer the key reasons why they should do business with you rather than with the competition (Points of Difference).
    • 55. DIFFERENTIATING CUSTOMER SEGMENTS ELEMENT OF STRATEGY Customer Segment MAINTENANCE WHY BOTHER • Order Processing Top priority. Secondary priority. Lowest priority. • Technical Support Top priority Secondary priority. Not available. • Training Yes. Yes. Hourly fee. Not available. • Fill Rates X% • Returns Y es. No restocking Y es, restocking fee fee. of $X. Only if over $Y, restocking fee of $X. • On-time Shipment Stock items same day if order place by 4:00 p.m. Stock items shipped within 48 hours. • Product Mix Stock & nonstock from stock & non- stock suppliers. Yes. • Non-stock Sourcing • Minimum Order Size KEY / TARGET No minimum. Y% Stock items same day if order placed before 1:00 p.m. 100%. No backorders ship complete. Stock and non Stock, in stock only. stock from stocking suppliers only. Yes, from stocking suppliers only. No non-stocks. No min. on stock items; $200 minimum on non- $200.
    • 56. Implications of Market Strategy Strategic Implications: Role: What role will the sales force play in implementing strategy? Function: What functions will the sales force be required to perform? Competencies: Does the dealer sales force have the knowledge and skills required to perform the functions? Size: How many salespeople will be required to implement the strategy? Deployment: How will the sales force be expected to invest its time? Organization: How will the organization be structured? Territory Structure: How will the sales territories be set up?
    • 57. Implications of Market Strategy (cont’d.) Tactical Implications: Training/Coaching: What training and coaching is required to meet the desired level of competency? Compensation/Motivation: How will we motivate & reward the sales force? Performance Evaluation: How will we assess the performance of the sales force? Recruitment and Selection: How will we determine that the sales force is staffed appropriately? Tools for Monitoring Deployment and Success:
    • 58. Three Important Questions Is the sales force strategically focused? • Supports business design • Highest profit potential customers and prospects • Differentiated and relevant value propositions to specific segments Focus Is the sales process a leveraged activity? Are we effectively motivating and enabling our sales team? • Time spent on highest value activities • Performance metrics and compensation • Unambiguous roles and responsibilities • Leveraging noncash recognition techniques • Optimally sized and skilled territories • Relevant training, critical information and compelling sales tools. Leverage Enablement
    • 59. The JOB: Lack of Direct Supervision The PERSON: Timing of Results Seeks… yet resists supervision Lack of Well-Defined Jobs “Boundary agent” …loyalties External and/or internal seller
    • 60. Perspectives on the Sales Management Function Traditional View New View Do-er Manager of Scarce Resources Responsible for Volume Profit Planning Short Run Long Term and Short Term Individual Customers Customer Types and Segment Differences Field Work Rather Than Desk Work Systems for Market Analysis, Planning and Control Driver Leader Developer of Sales Developer of People
    • 61. Changing Business Environment Leads to Changing Selling Environment Resulting in Harder to Get and Hold Customers and It Costs More! The Selling Ballgame Better Understanding of Customer’s Needs Better Selectivity Better Selling Strategies Implications Better Time & Territory Management
    • 62. THE CHANGING ENVIRONMENT 1. What are some of the pressures that are impacting the way your customers conduct their business? 2. How have they changed their buying practices? 3. How have these changes impacted the role and behaviors of your sales team? 4. What issues or problems have been created in your sales team? 5. What changes will have to be made in the way your sellers conduct business?
    • 63. Incompetent Salespeople Catch “22” Sales Manager No time to develop salespeople Overworked sales manager
    • 64. THE INTEGRATED MODEL Sales Force Drivers People and Culture Sales Force Activity Customer Results Company Results
    • 65. PURPOSE OF A BUSINESS • Purpose of a business is to create a customer. • Profit is only a test of management decision making. • Profit is required to maintain the customer. • A business only has two primary functions, sales and innovation, everything else is just cost. INNOVATION MARKETING The world according to Peter Drucker
    • 66. Analysis of target market Definition of the tasks to be performed What, When, Why, How, Where Selling, Servicing, OrderTaking, New Products/Markets Evaluation of best performer of those tasks Type of “Seller” Development of the sales program Rules of Engagement Implementation What Does What, When, How, Why and Who Gets Paid
    • 67. THE LOGIC Communicating and Linking  Communicating and educating  Setting goals  Linking rewards to performance measures Clarifying and Translating the Focus and Strategy  Clarifying the focus  Gaining consensus BALANCED SALES TEAM Planning and Target Setting  Setting targets  Aligning strategic initiatives  Allocating resources  Establishing milestones Strategic Feedback and Learning Clarifying the Focus  Articulating the focus and strategy  Facilitating strategy review and learning
    • 68. TRADITIONAL vs. LEVERAGED Traditional Model Sales force: 30% of selling time Key/Target Accounts 50 % Maintenance Small Customers Leveraged Model 20 % Key/Target Accounts Sales force: 100% of selling time Maintenance • Go after every opportunity • Regardless of transaction profitability Small Customers • Focus on large, complex accounts • Leave smaller opportunities to other channels Other Channels
    • 69. THE LEVERAGED SALES FORCE: WHAT IT LOOKS LIKE 1. Large Account Increased emphasis on getting field reps out of small accounts and into the right selling opportunities. 2. Complex Product Increased emphasis on transferring simpler products to other channels so the sales force can focus on selling complex, customized solutions. 3. Fewer Accounts Reduction in the number of accounts assigned to each rep, with higher expectations per account. 4. Effectiveness Focus More emphasis on making the right calls and winning the right deals, rather than just generating activity. ales 5. ŅInsideÓ S Increased use of Ņin side salesÓ o rganizations to leverage the time and energy of outbound field reps. 6. Integration with Increased focus on integrating field sales other channels (e.g. call centers) throughout the sales process. 7. Enhanced Sales More emphasis on giving field reps the specific skills they need to grow large, complex accounts. 8. Emphasis on More emphasis on building long-term, mutually beneficial relationships with key customers. 9. New Compensation Realignment of sales rep compensation plans to reward key account success and discourage low-end (small sale, simple product) selling. Focus Focus Other Channels Training Partnering Systems
    • 70. COMPELLING SELLING PETER LUND, 1970 • THE AUTHOR ADVISED SELLERS TO: – “ CONCENTRATE EXCLUSIVELY ON THE PRODUCT “ – “ NOT TO LET THE CUSTOMER TALK MORE THAN IS ABSOLUTELY NECESSARY “ – “ TO CLOSE WHENEVER POSSIBLE EVEN IF YOU’RE MILES FROM THE ORDER “
    • 71. STRATEGY DEVELOPMENT Strategic Value Customers Extrinsic Value Customers (leveraging supplier’s (buying beyond product value) enterprise competencies) INCREASE BENEFITS REDUCE COST Create extraordinary value for a few very large customers Create new value through sales efforts Lessen cost and effort of acquisition Intrinsic Value Customers (buying on product value alone) 71
    • 72. CUSTOMER VALUE AND SELLING MODES Customer Value Type Intrinsic value buyers Selling Mode Transactional Selling “a cheaper, no hassle pie” VALUE = BENEFITS - COST Extrinsic value buyers + Consultative Selling “a bigger pie” Enterprise Assets Strategic value buyers “a balanced diet” Enterprise Selling
    • 73. Strong Sales Team and Selling Effort Sales Channel: Major Account PROGRAMS KEY ACCOUNT OPPORTUNITY Selling Effort: Heavy by Specialist Sales Channel: Direct Marketing and Field Selling Sales Channel: Field Selling and Inside Sales Selling Effort: Heavy MAINTENANCE Sales Channel: Weak TARGET Inside Sales, Electronic Commerce, Field Selling and Teleselling Selling Effort: Selling Effort: Heavy (best prospects) Low (other prospects) WHY BOTHER Sales Channel: Teleselling,Catalog, Self Serve, Electronic Commerce,Direct Marketing,and Some Inside Sales Moderate Selling Effort: Strong COMPETITIVE POSITION Low Weak
    • 74. WHAT PROBLEMS HAVE YOU OBSERVED IN THE RECRUITMENT AND SELECTION OF SELLERS IN YOUR ORGANIZATION?
    • 75. RECRUITING AND SELECTING The "Professional" Salesperson KNOWLEDGE SKILLS TRAITS
    • 76. PEOPLE • Hunters • Farmers • Scouts • Skills • Knowledge • Traits • Values • Motivations
    • 77. “Bottom Line” A business can no longer rely on the uniqueness of their products to retain customers or grow new sales revenue. Customers will align their business with strategic suppliers who understand their business and bring a unique offering which adds value by impacting their “bottom line” through increased sales revenue or reduced costs
    • 78. Natural Sales Skills 5% 35% 60% 5% “Possess the requisite selling skills that make them stand out” 35% “Just manage to pay their way” 60% “Just there for the beer”
    • 79. Size of Sales Force: Workload Analysis Accounts / Prospects Call Frequencies Number of Accounts Required Calls Key Target Maintenance TOTAL CALLS (A) Supply of Calls = X Calls Per Day Working Days A Size of Sales Force = B Total Call Capacity (B)
    • 80. Inadequate Sales Performance Aware of what was expected No How can goals and standards be made clear? No How can the salesperson be sensitized? Yes How to avoid, eliminate, or ignore? Yes Aware of own performance Yes Uncontrollable negative factors No Lack of ability Yes How to train? No Lack of want-to Yes How to motivate?
    • 81. Evaluating Sales Performance Data Analysis Information Sources Observation Interview
    • 82. Possible Situations... Causes of the problem are fixable Causes of the problem are fixable, but not work fixing Causes of the problem are not fixable Fix the problem (ROTI) Forget the problem or Terminate the person
    • 83. THE SALES REPRESENTATIVE THINKS… 1. What is expected of me?  The Planning Process Priorities Programs Processes The Numbers 2. How am I doing? The Feedback Process Metrics Performance Appraisals Field coaching Meetings Compensation 3. How do I need to change? The Adjustment Process  Corrective actions  Continuous Improvement  KIP’s, PIP’s  New planning for the future
    • 84. QUOTES FROM PERFORMANCE APPRAISALS • “This individual has talents but has kept them well hidden.” • “Combs his hair to one side and appears rustic.” • “A quiet, reticent, neat appearing individual— industrious, tenacious, diffident, careful, and neat. I do not wish to have this person as a member of my staff at any time.” • "His leadership is outstanding except for his lack of ability to get along with his subordinates.” • “He hasn’t any mental traits.” • “He needs careful watching since he borders on the brilliant.” • “Believes sincerely in the power of prayer and it is astonishing to note how many times his prayers are answered.” • “He never makes the same mistake twice but it seems to me that he has made them all once.” • “Gives the appearance of being fat due to the tight clothes he wears.”
    • 85. QUOTES FROM PERFORMANCE APPR AISALS–2 • “Is keenly analytical and his highly developed mentality could best be used in the research and development field. He lacks common sense.” • “An independent thinker with a mediocre mentality.” • “Recently married and devotes more time to this activity than to his current assignment.” • “Tends to create the impression of unpositive personality through needless and undiscerning gentility and soft spokenness.” • “Of average intelligence except for lack of judgment on one occasion in attempting to capture a rattlesnake for which he was hospitalized.”
    • 86. QUOTES FROM PERFORMANCE APPRAISALS–3 • “His men would follow him anywhere, but only out of curiosity.” • “I would not allow this employee to breed.” • “Since my last report, he has reached rock bottom and has started to dig.” • “Works well when under constant supervision and cornered like a rat in a trap.” • “When she opens her mouth, it seems that this is only to change whichever foot was previously there.” • “He would be out of his depth in a parking lot puddle.” • “This young lady had delusions of adequacy.” • “She sets low personal standards and then consistently fails to achieve them.” • “This employee should go far—and the sooner he starts, the better.” • “This man is depriving a village somewhere of an idiot.”
    • 87. Sales training without systematic coaching wastes 87 cents of every training dollar Training Improvement 87% loss within one month Time
    • 88. The Key Challenge Sales Productivity Where: = G.M. = C.O.S. = G.M. C.O.S. Gross Margin Dollars Cost of Sale in Dollars Implications 1. Less discounting. 2. Selling higher margin products. 3. Selling more product lines to each customer (cross-selling). 4. Being more selective and discriminating in qualifying potential buyers. 5. Better use of selling time (deployment).
    • 89. Focus on Small Sales Introduction of Activity Management System Here Number of Sales $ Value of Sale J F M A M J J A S O N D
    • 90. EFFECT OF MORE CALLS • Focus on small sales. • More paperwork. • Wrong part of selling cycle. • Demotivation of best people. Source: The Klompmaker Consulting Group
    • 91. Demotivation of Best People Why did you leave the company? Rank Top Performers Poor Performers 1 Restrictions Compensation 2 Job satisfaction Prospects 3 Prospects Job satisfaction 4 Compensation Relationships 5 Relationships Restrictions
    • 92. SUMMARY Sales Efficiency Sales Effectiveness Defined Getting in front of customer at minimum cost Using skills and abilities to maximize sales potential Mechanisms for improving Working harder: – time management – incentives – call reports – territory design Working smarter: – coaching – skills training – account strategies Measures – penetration – call rates – cost / call – success rates – repeat business – sustainable margins
    • 93. MOVING TO ACTION • Efficiency: – Can be driven top down • Effectiveness: – Acting differently – Hard to drive top down – Salespeople and managers do it Source: The Klompmaker Consulting Group
    • 94. Implications for Operations Developed and Presented by: H. Lee “Buck” Mathews, Ph.D. Professor of Marketing and Logistics The Ohio State University 6347 Plesenton Drive, Worthington, Ohio 43085 phone: 614-848-8437 e-mail: hleemathews@islc.net 94
    • 95. Logistics Management – The Key to Improved Operational Productivity • Transportation • Warehousing • Customer service • Inventory –Mgmt/Cost • Information Technology
    • 96. Logistics – A Strategic Perspective • Measured by Cost • Technology allows firms to manage inventory they cannot see and sometimes do not own • Disintermediation • Creating wholesaler value
    • 97. Two Views of Inventory Management Velocity Level
    • 98. Logistics Cost Equation • Asset Base • Operating Cost Base • Base Case Model Go Back to Profit Model Data
    • 99. Return on Assets (ROA) Sales $ 100.00 Gross Margin $ 20.00 Net Profit $ 2.00 Net Profit Margin 0.02 Subtracted by Subtracted by $ 18.00 $ 80.00 COGS Divided by Total Expenses $ 100.00 Return On Assets Inventory 13 Sales 0.05 Times Sales $ 100.00 2.5 Asset Turnover Divided by Added to Current Assets 30 Accounts Receivable $ 40.00 Total Assets $ 13.00 Added to 10 Added to 4 Fixed Assets Other Current Assets
    • 100. Improving Customer Service • Do you have a good record for customer returns? • Do you track and report fill rates, and delivery performance? • Do you perform cycle counts of inventory and measure accuracy? • Have you implemented process improvement? • Link to your customer satisfaction survey
    • 101. What are Value Added Services • Important to Customer • Enable Differentiation • Sustainable from Competition
    • 102. Exhibit G: Raw Data From ADS Customer Satisfaction Study Importance Satisfaction Scores Question: How Important (Satisfied) High quality product Shipments received as promised Product is available (in stock) Availability of documentation Hours of operation convenient Cost of part Warranty Ordering process easy Package quality of product received Quick backorder information No minimum order quantities Ordering time on phone minimal ( low hold time) Credit terms and prompt pay discounts Catalogs are up to date Catalog pricing current Weekend product availability Computerized quoting and order entry Fill parts needs from a single source of supply Importance ADS Natls Big Boy ACME 7.00 6.90 6.60 6.60 6.30 6.30 6.30 6.00 6.00 5.90 5.80 5.80 5.50 5.20 5.20 4.80 4.60 3.90 6.68 6.16 5.53 6.33 6.72 5.84 6.33 6.05 6.21 5.56 6.29 6.26 6.11 5.94 5.47 6.00 6.39 5.53 6.57 6.25 5.89 6.31 6.22 6.04 6.41 6.43 6.39 5.69 6.12 6.25 6.40 5.65 5.54 4.44 6.05 5.70 6.43 6.27 5.57 6.42 6.35 5.42 6.11 6.22 6.04 5.02 6.42 6.35 6.24 5.57 5.45 5.42 5.87 5.52 6.65 6.25 5.85 6.80 6.25 5.30 6.00 6.10 6.45 5.95 6.47 6.25 6.28 6.43 6.00 6.00 6.27 5.89 Outside sales reps: Have product knowledge Represent customer perspective to mgmt Relationship is positive Are professional in making sales appointments Provide inventory information Call often (once per month) Importance ADS Swifty Big Boy ACME 6.00 5.70 5.50 5.30 4.40 4.00 6.00 5.95 6.21 6.11 5.82 5.63 6.04 6.04 6.23 5.96 5.42 5.64 6.08 5.95 6.20 5.66 5.33 5.48 6.71 5.73 6.22 6.44 5.63 5.76 Inside sales reps: Return calls promptly Have product knowledge Have developed a good relationship Importance ADS Swifty Big Boy ACME 6.70 6.40 5.90 5.41 6.06 6.41 6.16 6.12 6.32 5.95 5.93 6.16 6.05 6.30 6.25 Complaint handling process: Speed of return phone calls with bid information Price discount program Stocking program reduces customer inventory req. Shipping costs are part of cost structure for evaluation Importance ADS Swifty Big Boy ACME 6.70 6.00 5.80 5.20 5.95 5.89 6.05 6.39 5.93 6.33 5.64 6.00 5.53 5.91 5.22 5.45 5.68 6.05 5.70 5.63 Watermark Others 6.10 5.90 5.70 6.30 6.70 5.40 5.44 5.90 6.60 5.90 6.00 5.75 5.56 5.00 4.75 5.38 6.10 5.20 6.75 6.25 5.50 7.00 7.00 6.50 6.67 6.50 6.50 3.50 7.00 6.67 6.50 5.00 7.00 6.50 7.00 5.75 Watermark Others 6.50 5.14 5.00 4.83 4.80 5.00 7.00 7.00 7.00 7.00 7.00 7.00 Watermark Others 5.30 6.10 5.10 6.67 6.67 7.00 Watermark Others 5.60 5.90 5.22 4.22 5.25 6.50 6.00 6.25
    • 103. Inside the Buyer’s Mind • What do you offer? • What do you offer that no one else has? • What do you offer of value? • Does it really fill my need? • Is it real world? • Will it work? • Will it work in our environment? • How will it impact our people? • How could it impact our success? • Will senior management buy in? • Will my people use it? • How will we produce as a result of the purchase? • How will we profit as a result of the purchase? • Do I trust the people I’m buying from both as people and for their ability to deliver what they promise? • How will it come together? • How do we buy it? • Do I have the comfort to sign off now?
    • 104. Calculation of Gap to Perfection (Perfect Score - ADS Satisfaction) * Importance Calculation of Gap to Best Competitor (Best Competitor Score - ADS) * Importance
    • 105. Gap/Perfect Top Ten Importance 0.00 High quality parts (known quality documentation) Shipments received as promised Part is available (in stock) Availability of documentation Hours of operation convenient Cost of part Warranty Ordering process easy Package quality of goods received Quick backorder information 2.00 4.00 6.00 8.00 10.00 12.00
    • 106. Gap/Perfect Next Importance 0.00 No minimum order quantities Ordering time on phone minimal ( low hold time) Credit terms and prompt pay discounts Catalogs are up to date Catalog pricing current Weekend goods availability Computerized quoting and order entry Fill needs from a single source of supply 2.00 4.00 6.00 8.00 10.00 12.00
    • 107. Outside Sales Perfection 0.00 2.00 4.00 6.00 8.00 10.00 12.00 Have product knowledge Represent customer perspective to mgmt Relationship is positive Gap/Perfect Are professional in making sales appointments Provide inventory information Call often (once per month)
    • 108. Inside Sales Perfection 0.00 2.00 4.00 6.00 8.00 10.00 12.00 Return calls promptly Have product knowledge Have developed a good relationship Gap/Perfect
    • 109. Complaint Handling Perfection 0.00 2.00 4.00 6.00 8.00 10.00 12.00 Speed of return phone calls with bid information Price discount program Gap/Perfect Parts program reduces customer inventory req. Shipping costs are part of cost structure for evaluation
    • 110. Best Competitor Gap Top 10 -8.00 -6.00 -4.00 -2.00 0.00 High quality parts (known quality documentation) Shipments received as promised Part is available (in stock) Availability of documentation Hours of operation convenient Cost of part Warranty Ordering process easy Package quality of goods received Quick backorder information 2.00 4.00 6.00
    • 111. Best Competitor Gap Next Imp. -10.00 -8.00 -6.00 -4.00 -2.00 0.00 No minimum order quantities Ordering time on phone minimal ( low hold time) Credit terms and prompt pay discounts Catalogs are up to date Catalog pricing current Weekend goods availability Computerized quoting and order entry Fill needs from a single source of supply 2.00 4.00 6.00
    • 112. Best Competitor Outside Sales -8.00 -6.00 -4.00 -2.00 0.00 Have product knowledge Represent customer perspective to mgmt Relationship is positive Are professional in making sales appointments Provide inventory information Call often (once per month) 2.00 4.00 6.00
    • 113. Best Competitor Inside Sales -8.00 -6.00 -4.00 -2.00 0.00 Return calls promptly Have product knowledge Have developed a good relationship 2.00 4.00 6.00
    • 114. Best Competitor Complaint Process -8.00 -6.00 -4.00 -2.00 0.00 Speed of return phone calls with bid information Price discount program Parts program reduces customer inventory req. Shipping costs are part of cost structure for evaluation 2.00 4.00 6.00
    • 115. Future Value Added Services • Simple Pricing System • Sales Force Relations • Competitive Pricing • Forecasting Product Needs • Back Order Alert • Educational Sessions • Check Shelf Stock • Profit Analysis • Sales Reps. Knowledge
    • 116. Add to the customer survey • Frequency • Causality
    • 117. Implications for Customer Service Improvement The Metric Used for Order fill rate Overall customer service inventory and warehouse Order cycle time Order processing, warehouse, and shipping performance Shipping accuracy Order processing and warehouse performance Reasons for customer returns Overall customer service – vendor, order processing, warehouse, shipping performance Inventory turns Inventory performance Sales lost to stock outs Inventory management Receipt discrepancies Purchasing and vendor performance Physical inventory accuracy Warehouse and inventory performance
    • 118. Order Fill Rate: Percentage of Customer Orders Delivered on Time Source: The NAW Toolkit
    • 119. All or nothing = 0; 1. Determine the % of customer orders Line Item Qty ord Qty shp Percent complet e quantitie s but not all lines = 33; 0,33,65,90 average line fill = 65; Order 1 1 ½” fin 10 10 2 Wall strip 5 0 3 Adhesive 100 100 1 ½” maple 12 12 2 Nail driver 1 1 Order 2 portion of ordered units shipped = 90
    • 120. Determine when order is delivered and determine on time Importance Date Detail 1 Promise Committed del. Date 2 Request Customer request 3 Original Promise Doesn’t change 4 Original Request Doesn’t change
    • 121. Order Cycle Time: Elapsed Time from Order Placement until Delivery
    • 122. Shipping Accuracy: Percentage of Order Lines that Shipped Method Pro Cons Customer Feedback.  Records actual customer  Customers may not Whenever a customer experience. report over-shipments or calls with an error against  Lowest cost – you have mis-shipments of higher his packing slip, this is to take their phone calls value items (some recorded on the original anyway, the only companies automatically order. additional effort is to double their error rates record the information. to account for this).  Reported errors could be due to customer loss. Warehouse Inspection.  Helps improve quality in  High cost. A knowledgeable addition to tracking  May miss downstream inspector examines accuracy. problems in packing, orders before they are  Errors caught closer to palletizing, loading and shipped. The picker, the their source so shipping. packer or a dedicated correction is easiest. inspector could perform the inspection. Could be audit of specific workers or customers or a 100% inspection. Customer Site Audits. A  Records actual customer  High cost. knowledgeable inspector experience.  Only a small percentage is present at the  Demonstrates audit is feasible so the customer’s site commitment to the sample size may not be periodically to check customer. valid. orders when they are received.
    • 123. When and Why are Customers Unhappy?
    • 124. How Accurate are the Products on our Shelves? Location 100 101 102 103 104 Expected Qty 50 40 60 100 25 Actual Qty 50 45 57 90 25 Financial Inventory Accuracy: Dollar Difference $0 $50 -$40 -$100 $0 Error is $90 in $2750 total value =97% Unit Inventory Accuracy: Unit Accuracy 100% 87% 93% 90% 100% Location Accuracy 100% 0% 0% 0% 100% Average of unit accuracies = 94% Strict Location Inventory Accuracy: 2 of 5 locations correct = 40%
    • 125. Inventory Turns
    • 126. Sales Lost to Stock Outs
    • 127. Order vs. Zone Picking
    • 128. Order Picking is a good choice if: You have low “picking density” (e.g. few aisles are visited more than 30 times per shift). Most items are easy to pick with a single type of equipment. Zone Picking is a good choice if: You have high “picking density”. Many items require special equipment (e.g. lift truck) or specially trained pickers to be picked. Your warehouse is fairly small (less Your warehouse is larger. than 40,000 square feet). You use paper based picking and your You have a WMS or RF based stock business system has little warehouse locating system that could readily management functionality. support order consolidation.
    • 129. Cycle Counts
    • 130. ABC Analysis Based on Annual Dollar Volume Annual Dollar Volume Percentages 1 Item 1 2 3 4 5 6 7 8 9 10 Unit Cost 4.00 2.50 3.00 30.00 31.00 1.20 25.00 20.00 8.00 6.00 2 Annual Usage (units) 1,000 1,500 5,000 4,000 10,000 8,000 1,500 100 625 2,000 Total 3 Annual Usage (dollars) 4 % of Total Dollar Usage 100% 1. Now rank the answers from the highest annual dollar usage to the lowest: Item 1 Annual Usage (dollars) 2 % of Total 3 4 Cumulative % Classification
    • 131. Inventory • Forecasting • Inventory management model • Fill rates • Economic order quantity • Key ratios
    • 132. These relationships can be seen in the graphic representation of EOQ: Total costs Costs Holding costs Order costs EOQ Order Quantity Example: Ordering cost estimated to be: Carrying Cost: Units Price: EOQ = √ $5.00 25% 1,000 20.00 2 X 1000 X 5 20 X .25 = 44.7 units
    • 133. Inventory
    • 134. Purchasing • The Branch Managers Impact • Negotiating • Best Practices • Purchase Planning – What to buy – When to buy – How much to buy
    • 135. Human Resources Issues Developed and Presented by: H. Lee “Buck” Mathews, Ph.D. Professor of Marketing and Logistics The Ohio State University 6347 Plesenton Drive, Worthington, Ohio 43085 phone: 614-848-8437 e-mail: hleemathews@islc.net 138
    • 136. Human Resources Topics • Session Overview – Industry concerns – Expectations of managers and employees – Current practices – Policy options • Recruitment and Selection Issues – Constraints – Current practices – Legal considerations • Performance Management Systems – Critical components – Importance of a good system – Alternative programs – Legal considerations
    • 137. What is strategic human resource management? • The acquisition, deployment and management of our most valuable assets – our employees • How we manage our employees must fit our company’s overall strategic plan
    • 138. HPBA Industry Challenges • Locating and attracting top talent • Pay-for-performance plans should be the norm • Attention must be given to professional development • Succession planning
    • 139. Measure your organizations employee relations climate • Take the HBPA test – see handout • Score the test and put your score on the Climate Grid
    • 140. Human resource policy options • Recruitment, selection, and development • Employee voice or influence • Reward systems • Work systems
    • 141. Human resource outcomes in the short-run • Commitment • Congruence or fit • Competence • Cost effective
    • 142. Recruitment constraints • Image of the organization • Attractiveness of the job • Internal organizational policies • Government influence • Recruiting costs
    • 143. Selection criteria under the law • BFOQ • Weighted application form • Performance simulator • Work sampling • Honesty
    • 144. Farewell, formality Interview style Standard sit down affair with management Resume analysis: Quasi scientific resume shifting Work sample test: pen and paper skills tests Assessment center: lengthy, off-site skills, personality workup Situational interview: candidates role-play The interview is disappearing as we turn to more accurate alternatives Accuracy in predicting performance 7% 37% 44% 44% 54%
    • 145. Interviews are most valid for: • Organizational fit • Level of motivation • Interpersonal skills
    • 146. Unstructured does not mean unprepared (make the most of the interview) • Be prepared • Put applicants at ease in the first few minutes • Don’t be ruled by snap judgments or stereotypes • Ask results-oriented questions • Don’t underestimate the power of silence • Close the interview with care
    • 147. Employment at will: (don’t promise more than you can deliver • Avoid making promises to applicants • Everyone in a position of responsibility should understand this principle • Review application materials to be sure they clearly inform applicants that employment is not guaranteed for any specific period of time and that you reserve the right to terminate an employee for any reason • Pay similar attention to letters for contracts in which you offer candidates employment • Pay particular attention to your employee manual
    • 148. Performance management • Strategic purpose – Link employee activities with organizational goals • Administrative purpose – Use for salary decisions, promotions, retention, termination, recognition of individual performance • Developmental purpose – Providing training and feedback on deficiencies in performance, motivation, or other problems
    • 149. Potential uses of performance appraisal procedures
    • 150. Guidelines for performance standards • Specify the action to be taken • Focus on an identifiable target result • Time limited • Specify cost • Measurable, tangible, or verifiable • Challenging • Realistic and attainable • Relevant and important • Consistent with organization plans, polices, and procedures
    • 151. A defensible appraisal process • Conduct job analysis to ascertain characteristics required for successful job performance ( timely job completion) • Job analysis performance standards performance appraisals • Make sure definitive performance standards are provided to all raters and ratees • Use clearly defined individual dimensions of job performance rather than undefined global measures • When using graphic rating scales, avoid abstract trait names such as loyalty, honesty unless they can be defined in behavioral terms • Employ subjective supervisory rating (in terms of essays, for instance) only as one component of overall appraisal process • Train supervisors to use instrument properly • Allow appraisers substantial daily contact with employees • Have more than one appraiser conduct process • Document evaluations and reasons for termination • Where appropriate provide corrective guidance to assist poor performers to improve performance ( courts like this)
    • 152. The firm is squeezed: Big customers exert power The base of mid-sized Customers is shrinking. Large customers are getting Bigger, more complex. Large numbers of small Customers. Small customers require disproportionate amounts of time and attention
    • 153. The largest customers Golf carts at Wal-Mart! Big customers exert power Large customers are “touched” in multiple Ways, from product Specialists to telemarketing, From distributors to direct Mail… Marketing and sales must decide jointly how to best Manage the customers at the top.
    • 154. The smallest customers Sales force competes with Diverse distribution Channels Who are our high priority and prime Focus customers? Who are “why bother?” Small customers require disproportionate amounts of time and attention Marketing and sales Must make JOINT Architecture decisions To avoid sub-optimization Of resources and conflict
    • 155. Rebate Promotional Allowance Cash Discount Case Discount List Customer/Product Profitability Pocket Price
    • 156. Customer/Product Profitability Number of customers • Pocket Price Band Net Realized Price – Low to High

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