Creating a Lean Sales Process

White Papers

Download White Papers: Creating a Lean Sales Process

Abstract

Selling is a process. Like many processes it includes tasks that directly add value to customers and tasks that are “non-value-added.” Enlightened sales executives are learning Lean Six Sigma tools from their operations counterparts to streamline and simplify the sales process. This white paper will case study how a CEO of a Distribution Company deployed Lean to reduce steps in the sales process, giving his Sales Representatives more time with customers. This resulted in a 40% increase in profit margins.

Background

The CEO of this Transportation Equipment Distributor had executed a successful growth strategy and in a few years grew sales 400%. This is outstanding sales performance. However, what was even more outstanding is his realization that the company had out-grown its Sales and Sales Support Process.

He knew this growth had created inefficiencies in his sales process, but didn’t know how to find and eliminate them. Sales Representatives should be working with customers, adding value and closing deals. Instead, he saw them doing a lot of paperwork.

Deploying Lean Tools to find and eliminate this administrative (non value added) work was the answer.

Lean Versus Re-engineering

There are two ways to redesign a process. One option is to start with a “clean piece of paper” and design the process you want. This was popularized in the book “Re-engineering the Corporation” in the early 1990’s. It was extremely popular and then fizzled very quickly.

There are many problems with this approach. First, the new process takes too long to design because every step is debated by team members trying to protect their turf. It was not uncommon for re-engineering projects to take 6 months to 2 years to complete. Second, the newly designed process usually did not work because it didn’t integrate the company’s existing information systems. It is too difficult to start over.

The Lean method is much simpler and faster. We map the current process, then identify and eliminate the non value added steps. The new process is simply the old process with the non value added steps taken out. Lean projects are completed in 4 weeks and have lasting improvement.

Current State Process Flow Mapping

The sales process of this Distribution Company includes:

  • Creating proposals
  • Configuring orders
  • Customizing standard product (coming from the manufacturer) to customer specifications
  • Delivering
  • Billing
  • Accounting for payment & paying commission

We created a process flow map, including all the detailed steps, decisions, paperwork and databases that are part of the Sales Process. The Mapping team included people from each department that touch the process including:

  • Sales Representatives
  • Sales Management
  • Sales Support
  • Parts Department
  • Service Department
  • Accounting

We created this very detailed process flow map to identify all the tasks that are wasting Sales Representatives’ time and do not add value to the customer. The actual map is shown below.

Current State Sales Process Flow Map

The different colors represent the different departments that touch the Sales Process.

What the Current State Process Flow Map Showed Us

Once the Current State Process Flow Map was complete we looked at every step and asked two questions:

  • Does the customer value us doing this step?
  • Is it preventing Sales Representatives from spending more time with customers?

If the task does not add value to the customer, or is preventing Sales Representatives from selling, we considered it a task that should be eliminated or streamlined.

We removed these non-value added tasks from the Process Flow Map and created action items to either eliminate them or reduce the time they require. Then we quantified each step to determine how much time we were saving the Sales Representatives and the Sales Manager. These action items are show below.

The Task Duration is shown in Minutes. Total Time Saved is shown in Hours.

We eliminated 17.9 hours per year of work done by the Sales Manager.

We eliminated 219.8 hours or work per year done by each Sales Representative.

Results

  • Eliminated Sales Representatives doing administrative work
    • Typing proposals
    • Filling out forms
    • Ordering miscellaneous supplies for customer-order
  • Eliminated tasks using existing company information systems
  • Moved task to sales support admin
  • Each Sales Representative was given 5.5 weeks of extra selling time per year
  • Over the following 2 years gross profit margins increased 40%

This project entailed identifying the non value added tasks that Sales Representatives do, and eliminating them or moving them to lower paid sales support personnel. There were 12 tasks a Sales Representative had to do for each customer inquiry that were eliminated from their workload. While this doesn’t sound like a significant reduction in steps, we created 5.5 weeks of additional selling time for every Sales Representative.

Sales Representatives should be selling, not doing paperwork. This Lean project freed up time for this company’s Sales Representatives to spend more time with customers, understanding their needs, adding more value. The result was that they closed deals at much higher profit margins.

The 40% increase in gross profit margin, happened as sales continued to grow. This equated to a multi-million dollar increase in profit.

Learn more about our Lean Consulting Services.

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