Bldg accnt relation

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  • Bldg accnt relation

    1. 1. Account Relationships <ul><li>Building Account Relationships </li></ul>
    2. 2. Supplier Reduction Trends Xerox 5,000 500 -90% Motorola 10,000 3,000 -70% Digital Equipment 9,000 3,000 -67% General Motors 1,800 1,000 -44% Ford Motor 1,800 1,000 -44% Texas Instruments 22,000 14,000 -36% Rainbird 520 380 -27% Allied Signal Aerospace 7,500 6,000 -20% Number of Suppliers Percent Previous Current Change
    3. 3. Account Relationships <ul><li>Value Analysis -- focus: TOTAL COST </li></ul>1. Can the item be eliminated? 2. If item not standard, can standard item be used? 3. If item standard, does it completely fit application or misfit? 4. Does item have greater capacity than required? 5. Can its weight be reduced? 6. Is there a similar item in inventory that can be substituted? 7. Are tolerances specified closer than necessary? 8. Is unnecessary machining performed on the item?
    4. 4. Account Relationships <ul><li>Value Analysis (continued) </li></ul>9. Are unnecessary fine finishes specified? 10. Is commercial quality specified? 11. Can item be manufactured cheaper in-house? If manufactured in-house can it be purchased cheaper? 12. Is item classified to obtain lowest shipping rate? 13. Can packaging costs be reduced? 14. Are suppliers asked for suggestions to reduce costs?
    5. 5. Account Relationships <ul><li>Total Cost of Repetitively Used Items </li></ul><ul><li>Invoice Cost </li></ul><ul><li>Possession Costs -- stockpiling between delivery & use </li></ul><ul><ul><li>building & maintenance of storage areas </li></ul></ul><ul><ul><li>inventory control </li></ul></ul><ul><ul><li>insurance </li></ul></ul><ul><ul><li>taxes </li></ul></ul><ul><ul><li>pilferage </li></ul></ul><ul><ul><li>interest on inventory loans </li></ul></ul><ul><li>Acquisition Costs </li></ul><ul><ul><li>order generation: order origination; interviewing salespeople </li></ul></ul><ul><ul><li>processing a delivery: expediting deliveries; </li></ul></ul><ul><ul><li>receiving & editing invoices; </li></ul></ul><ul><ul><li>follow-up on late or inaccurate deliveries </li></ul></ul>
    6. 6. Account Relationships <ul><li>Relationship Selling </li></ul><ul><li>Stage Objectives </li></ul>Awareness Exploration Expansion Commitment Dissolution <ul><li>Gain customer attention </li></ul><ul><li>Demonstrate how product can serve need </li></ul><ul><li>Gain initial acceptance </li></ul><ul><li>Build toward successful relationship </li></ul><ul><li>Know customer & business even better </li></ul><ul><li>Look for additional ways to help customer </li></ul><ul><li>Greater organization level interactions </li></ul><ul><li>Supplier involvement in development process </li></ul><ul><li>Long-term focus </li></ul><ul><li>Warning signals </li></ul><ul><li>Reinitiate relationship </li></ul>
    7. 7. Account Relationships <ul><li>Exploration Stage: Pricing Flexibility </li></ul><ul><li>Consider the following sales force market conditions: </li></ul><ul><li>Demand is highly price elastic </li></ul><ul><li>Product/service offering is complex </li></ul><ul><li>A heterogeneous customer base </li></ul><ul><li>Large number of product lines </li></ul><ul><li>Products are perishable </li></ul><ul><li>Which of the following is the best alternative: </li></ul>
    8. 8. Account Relationships <ul><li>Exploration Stage: Pricing Flexibility </li></ul><ul><li>Alternative Management Systems </li></ul><ul><ul><li>Low Pricing Authority: </li></ul></ul><ul><li>Management approval required </li></ul><ul><li>for all price discounts </li></ul><ul><ul><li>Medium Pricing Authority : </li></ul></ul><ul><li>A specific limit placed on discounting </li></ul><ul><li>(e.g., 10% below list price) </li></ul><ul><ul><li>High Pricing Authority: </li></ul></ul><ul><li>Base commissions on gross margins </li></ul><ul><li>to control price discounting </li></ul>
    9. 9. Account Relationships <ul><li>Pricing Flexibility: Research Results </li></ul>Low Authority Medium Authority High Authority <ul><li>Highest gross margins </li></ul><ul><li>Highest sales growth </li></ul><ul><li>Highest return on assest </li></ul><ul><li>Highest sales/salesperson </li></ul><ul><li>Average return on assets </li></ul><ul><li>Lowest gross margins </li></ul><ul><li>Lowest sales growth </li></ul><ul><li>Lowest return on assets </li></ul>
    10. 10. Account Relationships <ul><li>Expansion Stage: F.A.Q. </li></ul><ul><li>What limits current operations? </li></ul><ul><li>What makes them more difficult than need be? </li></ul><ul><li>Which of these are most important </li></ul><ul><li>Managers worst perceived problem? </li></ul><ul><li>Managers need to make operations better? </li></ul><ul><li>To make their lives easier and more pleasant? </li></ul><ul><li>Client views on best solution? </li></ul><ul><li>What new operations possible? </li></ul><ul><li>Which new operations do they favor? </li></ul><ul><li>What would business and personal criteria </li></ul><ul><li>be to implement? </li></ul>
    11. 11. BUSINESS EXPANSION QUESTIONS <ul><li>EXISTING USE </li></ul><ul><li>POSSIBLE NEEDS </li></ul><ul><li>POSSIBLE SOLUTIONS </li></ul><ul><li>POSSIBLE NEW USES </li></ul><ul><li>DECISION CRITERIA </li></ul><ul><li>What limits current operations? What makes them more difficult than they need to be? Which of these are most important? What do managers see as their worst problems? </li></ul><ul><li>What do managers need to make their </li></ul><ul><li>operations better? What do they want to make </li></ul><ul><li>their life easier and more pleasant? </li></ul><ul><li>What does the client think might be possible </li></ul><ul><li>Which do they favor? </li></ul><ul><li>What new operations do they believe might be </li></ul><ul><li>possible? Which do they favor? </li></ul><ul><li>I n supporting any solution, what would the </li></ul><ul><li>business and personal criteria be? </li></ul>
    12. 12. JUST-IN-TIME PHILOSOPHY <ul><li>Removing waste and developing a program </li></ul><ul><li>of continuous improvement by providing </li></ul><ul><li>perfect quality products </li></ul><ul><li>exact quantities needed, at the </li></ul><ul><li>precise time needed, at the </li></ul><ul><li>lowest total delivered cost. </li></ul>
    13. 13. JUST-IN-TIME BENEFITS <ul><li>JIT Supplier </li></ul><ul><li>Higher market share </li></ul><ul><li>Customer focus </li></ul><ul><li>Demand predictability </li></ul><ul><li>Investments in productivity </li></ul><ul><li>Technology sharing </li></ul><ul><li>Cycle-time reduction </li></ul><ul><li>Error-free communication </li></ul><ul><li>Quality processes </li></ul><ul><li>Productivity </li></ul><ul><li>Gain-sharing </li></ul><ul><li>JIT Customer </li></ul><ul><li>Management coordination </li></ul><ul><li>Supplier focus </li></ul><ul><li>Assured source of supply </li></ul><ul><li>Technology sharing </li></ul><ul><li>Cycle-time reduction </li></ul><ul><li>Error-free communication </li></ul><ul><li>Quality processes </li></ul><ul><li>Productivity </li></ul><ul><li>Gain-sharing </li></ul>Source Smaller supplier base Long-term agreements Open, frequent, responsive communication Continuous improvement philosophy
    14. 14. Account Relationships <ul><li>Dissolution Stage: Warning Signals </li></ul><ul><li>Missing information </li></ul><ul><li>Uncertainty about information </li></ul><ul><li>Uncontacted buying influence </li></ul><ul><li>Customer personnel new to the job </li></ul><ul><li>Reorganization </li></ul>
    15. 15. Account Relationships <ul><li>Relationship Enhancers </li></ul><ul><li>Value -- Reward exceeds cost of relationship </li></ul><ul><li>Expectations -- Measures of performance levels </li></ul><ul><li>Bargaining -- A valued customer </li></ul><ul><li>Trust -- Importance of Trust </li></ul>
    16. 16. A “VALUED” CUSTOMER <ul><li>Jacobs is about to close the sale when the buyer mentions, “There’s been $5,500 worth of breakage because of your lousy packaging, but I’m willing to split it with you if you give the word right now. I’ve another appointment beginning in a few minutes.” Jacobs suspects that the breakage was the fault of the buyer’s handling equipment, but cannot prove it. </li></ul><ul><li>Thinking that splitting the difference is always a reasonable way out, Jacobs decides to agree with the buyer and to get the contract signed. </li></ul><ul><li>Do you agree with Jacobs’ reasoning? What would you advise Jacobs to have done, if you were her sales manager? </li></ul>
    17. 17. EARNING BUYER TRUST WHAT IS MOST IMPORTANT? <ul><li>Trust Earning Components </li></ul><ul><li>Likeable </li></ul><ul><li>Competent </li></ul><ul><li>Dependable </li></ul><ul><li>Customer Oriented </li></ul><ul><li>Honest </li></ul><ul><li>Sample Questions </li></ul><ul><li>“ The manufacturers’ rep is an individual who people enjoy knowing.” </li></ul><ul><li>“ The manufacturers’ rep knows what he/she is talking about.” </li></ul><ul><li>“ The manufacturers’ rep is very dependable.” </li></ul><ul><li>“ The manufacturers’ rep puts the buyer’s interest ahead of his/her own.” </li></ul><ul><li>“ The manufacturers’ rep is one of the most honest persons in the business.” </li></ul>
    18. 18. Account Relationships <ul><li>Relationship Enhancers </li></ul><ul><li>Earning Buyer’s Trust </li></ul>Trust Earning Sales Component People Buyers Likeable 1 5 Competent 2 2 Dependable 5 1 Customer Oriented 3 3 Honest 4 4 Source: Hawes, Mast & Swan (1999) PS&SM : 193 Salespeople; 173 Purchasing Agents

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