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Reengineering The Sales Process

es6.mike@gmail.com
I?m going to assume for simplicity?s sake (and because it is often the reality) that your system constraint is your sales process . In other words, I?m assuming that your production process can handle all the sales that your sales process produces (at least for the duration of this discussion) . Because we?re now shifting our focus from the system (which is a collection of processes), to one particular Constraint Opportunity Bufferprocess within that system, we?re now going to have to think at a more granular level
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 536-540 | Added on Wednesday, 15 May 13 00:42:56
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The goal of the production process is to maximise the yield it earns on every Constraint Unit it consumes . The goal of the sales process is to: > Maintain a buffer (or inventory) of unstarted work in progress (or orders) of an optimal size . If this production buffer is too small, there is a risk that the production process may sit idle from time to time . If it is too large, this indicates that the sales process is wasting resources that would be better deployed at the constraint . > Maximise the value of the production buffer . The value of the buffer is the total Throughput that the buffer represents, divided by the number of Constraint Units that will be consumed to realise this Throughput . The inference here is that not all Throughput dollars are equal in this scenario . The sales process must focus on winning the sales that produce the greatest yield on the scarce Constraint Units .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 529-535 | Added on Wednesday, 15 May 13 00:41:54
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Sales Process Goal: maintain a production buffer of optimal size (x days? worth of unstarted work in progress) . Maximise the value of the production buffer (T/CU) . To translate this into plain English: The goal of our simple organisation is to maximise the yield (Throughput) it gets on its Available Constraint Units . (Because the output of a system is determined by the system?s constraint, this is equivalent to saying that the goal of the organisation is to make money .)
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 526-529 | Added on Wednesday, 15 May 13 00:41:33
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If the production process is constrained, the sales process Constraintshould also produce the kind of sales that are going to deliver the greatest return on the Constraint Units consumed .Opportunity Buffer Here?s the solution: Sales ProcessOpportunity Buffer Constraint Production Process Sales Process Production Process System Goal: maximise T/ACU (measured at point of sale) . Production Process Goal: maximise T/CU (measured at point of sale) .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 523-526 | Added on Wednesday, 15 May 13 00:41:15
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If we assume that the constraint in the organisation above is in the production process, what is the goal of the sales process? Is it to produce as many sales as possible? Obviously not! The sales process should produce enough sales to ensure that the production process operates at peak capacity, Sales Process Production Processall the time
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 518-521 | Added on Wednesday, 15 May 13 00:40:58
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the goal of every process within our organisational system should reference the organisational goal: maximising the flow of money at the system?s constraint (or T/ACU) .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 516-517 | Added on Wednesday, 15 May 13 00:40:25
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TOC practitioners use a simple formula to express this concept: Flow of Money = Throughput / Available Constraint Units Throughput (T) refers to revenue minus totally variable costs (true gross profit) . Available Constraint Units (ACU) refers to the number of units of constraint that are available over the period of consideration . (If the constraint is a machine, the Constraint Unit is likely to be time-based . If the constraint is a salesperson, the Constraint Unit will be an appointment slot .)
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 512-516 | Added on Wednesday, 15 May 13 00:39:54
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because the goal of the organisation is to make money, when we?re discussing system output, what we?re really talking about is money . And when we?re discussing the system?s constraint, our consideration is the flow of money at the constraint
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 511-512 | Added on Wednesday, 15 May 13 00:39:45
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Because the constraint is the sole determinate of system output, every management decision should reference the constraint . > The investment of resources in any non-constrained process or activity will produce absolutely no return (contrary to the assumptions that underpin cost accounting) .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 507-509 | Added on Wednesday, 15 May 13 00:39:27
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A stable system is one where the constraint remains in one location
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 503-504 | Added on Wednesday, 15 May 13 00:38:56
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TOC recognises that the output of any system is determined by the system?s constraint (or bottleneck) . It also points out that: > Every system has a constraint (if it didn?t, output would be infinite) . > At any one point in time, every system has only one constraint .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 501-503 | Added on Wednesday, 15 May 13 00:38:44
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Some managers claim that their organisations exist to manufacture widgets . > Others explain that their organisational goal is produce happy customers . > Others try and cover all bases with statements that reference the organisation?s relationship with all stakeholders (shareholders, staff, the community, the goldfish in the corporate pond etc .) In each instance, managers are confusing the goal of their organisations with necessary conditions . The goal of any commercial organisation is, by definition, to make money .** Necessary conditions are the conditions that must be present to enable this goal to be achieved .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 491-495 | Added on Wednesday, 15 May 13 00:38:09
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Why does this organisation exist?
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 490-490 | Added on Wednesday, 15 May 13 00:37:58
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If your goal must be subordinated to the goal of the system, it?s essential for us to identify your organisation?s goal .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 489-490 | Added on Wednesday, 15 May 13 00:37:36
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the most critical step in designing an objective management structure is defining your goal . I?ve had many managers assure me that this is also selfevident: Marketing managers tell me that it?s their goal to generate sales opportunities . Sales managers advise me that their goal is to generate sales . In each instance, managers forget that the processes they manage are part of a larger system . As a result, they fail to recognise that their goal must be subordinated to the goal of the system .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 475-478 | Added on Wednesday, 15 May 13 00:36:25
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How to build an objective management structure for your sales process
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 457-457 | Added on Tuesday, 14 May 13 03:07:21
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Your optimal sales volume will be determined by either your production (or fulfilment) capacity or by the capacity of your opportunity management process, which ever is the lesser
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 435-436 | Added on Tuesday, 14 May 13 03:06:01
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We suggest you manage your opportunity management process using what we call an open opportunity report, similar to the one pictured right . An open opportunity is an opportunity under management, as opposed to an opportunity that has been won, lost, abandoned or suspended . manage your opportunity management process for consistent output ? and not for month-to-month stretch targets .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 428-431 | Added on Tuesday, 14 May 13 03:05:33
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Managing the opportunity management process
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 427-427 | Added on Tuesday, 14 May 13 03:05:16
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Increase opportunity flow (compress time between expression of interest and sale) . > Eliminate dropped opportunities . > Enable forecasting (monthly sales projections) . > Continual improvement (identify and elevate constraints) . > Provide potential clients with a structured decisionmaking process .
Reengineering The Sales Process - es6.mike@gmail.com - Your Highlight Location 424-426 | Added on Tuesday, 14 May 13 03:04:18
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