S&OP for sales executives

2. Lead Time. Most sales professionals are familiar with the concept of lead times. It is essential to define and clarify what it means to both the customer and your companies supply chain though. Let me give you a real life for instance, a sales department landed a prestigious big box retailer as a new account. They had never done business with this company before and had no idea what they fully expected. The salesperson informed the supply chain group that the agreed upon lead time was five days. The internal supply chain team took that as once they received the order they would have five days to deliver the product. The product was seasonal in nature. The customer’s actual expectations were for delivery of the product to be made within two days (order to delivery) during the seasonal spike. You can imagine the boisterous discussion that occurred in-season when the company delivered the product on the stated fifth day and the customer called to complain about orders that were three days late! The loss of face with the customer and hefty expedite charges needlessly happened simply because of an upfront communication error. The sales professional needs to define the stated lead time and confirm both sides agree upon the definition.

3. Service Levels. Defining lead times is an excellent way to bring up different price points associated with different service levels. Maintaining the example from above, the expectation of going from a five day lead time to two day lead time during portions of the year is setting a different service level and should present the opportunity to be priced differently. At the very least, the company will know the total financial impact of agreed upon pricing.

4. EDI. Make sure you understand how the customer is going to place their purchase orders and how that might impact the stated lead time especially if they are submitting them via EDI (Electronic Data Interchange). Often times, as in the example above, purchase orders go through an EDI clearing house, which can delay them by as much as one day. As an aside, there really needs to be a governing body to incorporate a standard EDI protocol (similar to the UPC and EAN barcode initiative undertaken by major retailers) but that is a topic for another article.

5. Deduction Avoidance. The sales professional also needs to clarify seemingly simple expectations that most often end up as deductions taken by the customer.

6. The payment terms need to be agreed upon.

7. The appropriate unit of measure for the purpose of ordering and invoicing.

8. Understand the Bar Code requirements, if any, and insure your information technology and manufacturing teams can process it accordingly.

9. Documentation. Does the customer require an ASN (Advanced Shipper Notice) or email shipment notification. Do they need a C of A (Certificate of Analysis)? MSDS sheet (Material Safety Data Sheet)? All of the above or other important documentation?

11. ^ Palmatier,George E., "The Need to Lead"About the Author: Paul A. Fischer is a father, husband, a former college athlete and a supply chain professional. He passionately believes in the benefits of Sales and Operations Planning (S&OP) as an important tool to succeed in business.