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• Contract Execution Lifecycle - Speed to Deal Cycle Time Reduction Mega- Project
Contracts were being lost to competition because of very long approval times. Lengthy approval
times were a result of corporate mergers and different processes. Goal was to reduce cycle times
in 4 channels of trade – wholesale branded/retail branded/specialty/unbranded to benchmarks &
entitlements while maintaining financial controls. Process steps in scope include
- Post Pre-Negotiation (post prospect mining or contract renewal), Proposal formulation
- Finance Review, Proposal Approval
- Contract Preparation, Finance Review
- Contract Execution, IT/IS Systems Updating
- Billing Activated
- Compliance Monitoring
- Billing Validation
o B2B Wholesale (Branded) Distributor Contract Formulation Process Cycle Time (CT) Reduction – create Ship-To’s
• 50% time reduction in contracts & customer service group process.
• $55MM/year sales increase @ 1.5% gross margin.
o B2B Retail (Branded) Distributor Contract Formulation Process CT Reduction
Create Sold-To’s & Ship-To’s
• 65% time reduction.
• $113MM/year sales increase @ 1.5% gross margin
o B2B Specialty Distributor Contract Formulation Process Create Sold-To’s
• Formulated a standardized best practice process from the best process steps of 3 pre-merger processes.
• Preliminary results indicate a 50% +/- cycle time reduction
o Multi-Channel of Trade Non-Standard Contract Formulation Process CT Reduction
• Best practices identified, documented & shared.
• Results under evaluation
o Electronic Signature Platform
• Implementation of existing system capability to meet legal needs.
o Sales Authorization Clearance Improvement
• Many new or re-authorized customers were rejected by semi-automated system.
• Measurement system invented and implemented.
• Best practices identified, documented & shared.
• Valid customers’ new authorization clearance increased from 68% to 95%.
o Self-Amortized Loan Approval Process CT Reduction
• Guided/coached Texas A&M graduate student team,
• current state mapped,
• ideal future state implemented with measurement system formulated & implemented,
• preliminary results indicate a 30% +/- reduction in cycle time.
• Perfect (Customer) Order (Fulfillment) Mega-Project
Reduce short ships, late ships, incorrect invoicing, increase accurate ships in 3000 SKU division.
Fulfillment % = (late ship %) X (incomplete shipment %) X (inaccurate shipment %) X (wrong
invoice %)
Kaizen Events to reduce cycle time on order fulfillment process and on warehouse product
inventory accounting process.
o Implemented the Perfect Warehouse for Package Goods.
• Long picking times were causing a need for relatively large batches to be produced.
• Literature searched identified rough benchmark.
• Products’ pick frequency warehouse setup along with inventory optimization & 5S.
• Material accounting processes updated & bar coding implemented.
• Truck loading cycle time reduction of 20% attained.
• 3 manufacturing plants’ warehouses inventory optimized.
• $370 M inventory reduction.
o Package and Drum Line Batch Change-Over Time Reduction
• Several plants had relatively long change-over times from product to product.
• Baseline data obtained and process mapping completed.
• Dynamic model built to test proposals.
• Simulations run with simple process changes as inputs.
• Low cost, easy & quick changes made.
• Preliminary results indicated a 25 – 50% cycle time reduction attained.
o Vendor Products Lead-Time Reduction
• Baseline data obtained, customer to self to vendor communications processes mapped.
• Self to vendor communications process changed & improved.
• 2 vendor warehouse inventory levels reset, re-visit action plans implemented.
• Lead time decreased from 19 days +/- 10 days to 15 +/- 6
• $120 M inventory reduction at company warehouses.
o Implemented Bulk Goods Loading Cycle Time Reduction
• Kaizen Event.
• Redundant & unnecessary paperwork eliminated.
• Excessive truck travel reduced by cycle time analysis, improved scheduling and loading dispatch, value stream mapping of flow.
• Set up Total Productive Maintenance program for gov’t validated flowmeters thus eliminating re-weighing of truck with each compartment fill.
• $1 MM capital investment avoidance for budgeted secondary weigh station.
• Perfect (Customer) Order (Fulfillment) Mega-Project continued……….
o Customer “Order to Fill” Cycle Time Reduction
• Time to fill orders was taking close to double the time identified from both benchmarking & entitlement. This sometimes resulted in missed orders or partial shipments with additional LTL costs.
• Transactional process value stream mapped & documented,
• Improvements identified with major sources of wasted time and motion eliminated.
• New process implemented, time stamps being collected with analysis underway.
• Preliminary results indicate cycle time reduced by around 25%.
Customer “right the first time” (Perfect Order) order fulfillment increased from
• 2 plants increased from 80%+/- to 95%+/-
• Additional special freight & demurrage savings not quantified.
• Division overall increased from 65% +/- to 90%+.
• Price Change Management Process Cycle Time Reduction
o Focused on the Sales organization and Operations interface.
o Competitions’ pricing & costs were changing about twice as fast as list price updating speed.
o Antiquated pricing update process with lots of batching & queing.
o Value stream mapped for both domestic & international changes
o Waste identified and much eliminated.
o 80 people-weeks down to 15 people-weeks to formulate, issue list prices & pricing letters.
o Prices more closely reflecting cost & competitors’ pricing changes
o Neither AR nor revenue value quantified, no O&O reduction taken.
• Consigned Product Inventory Optimization
o Focused on Sales
o Company owned product at major oil customer site.
o Inventory desired by customer too high for consumption & replenishment time variation.
o $450M contract bargaining value identified, used to show customer how they are valued by company.
• Product Commercialization Process Implementation
o Focused on R&D, Marketing, Operations
o Designed a “LEANed” stage-gate Speed-to-Market type process.
o LEAN principles applied to generate “must-deliverables” and “deliver-as-appropriate” based in innovation risk level.
o Quicker “kills” in place to stop funding on poor business case products.
o Implementation underway, first products show quicker commercialization with higher probability of success.
• Sales Services Value Improvement
o Focused on Sales
o 200 +/- services offered with products
o Adds cost & complexity
o Paid by pricing or market share?
o Kano survey formulation, competitive pricing and cost analysis completed
o Some features & benefits were self-perceived, but not wanted and added costs to customers
o Weighted rank ordered value to customer & company
o Lower value services being eliminated.
• Customer Inventory Management & Replenishment Short Load Optimization
o Provide cost basis for a win-win incentive system with customers.
o Fast inventory turns, full loads.
o Slow turns, partial loads with 1 truck to several clustered sites.
o $700 M/year O&O savings underway.
• Contract Compliance Auditing & Oversight
o Logistics constraints, inability to respond timely to changing market conditions and the limited number of sites able to be tested severely limited the efficiency and accuracy of a compliance auditing program.
o Defect was # of sites not monitored for potential contact violations.
o $700 M annual O&O savings attained by use of an existing proxy data collection system.
• Document Records Management & Retention Compliance
o Policy separated into 2 parts; contracts & general business
o Records management and retention systems out of compliance, Legal risk heightened.
o Improvements noticed with training implemented but measurement system analysis of auditors underway to insure detection capability.
o Contract image scanning process implemented with retrieval and search capability
o $2.1MM/year O&O reduction in searching for records plus improved compliance
o Non-contract records retention compliance process formulated, implemented and measurements being obtained.
• MSDS Formulation Cycle Time Reduction
o Current state value stream mapped.
o Team identified & eliminated wasted time by future state mapping with parallel pathing.
o 0.8% value-add time increased to 8% with 4 day Kaizen event.
o Cycle time decreased from 4 months to10 business days plus a very short queue time.
o Planned FTE hire avoided.
• Joint Venture Pricing Strategy Implementation at Internal Product Distribution Centers
o Defect was volume/margin lost at centers where joint venture pulls significant volume and they get a spot price compared to contract price.
o Joint venture would pull lower cost product from competitor.
o Root cause identified as an incorrect pricing input in software for invoicing
o $526M/year increased revenue for parent company.
• IT Value Measurement System
o Defect was any value claimed for an IT project reached outside a new standardized business case build.
o Solution provided IT credibility.
• Market Responsiveness Forecasting with Product Pricing Changes
o Defect was a daily pricing move that caused the competition to over-react as defined by a goal price reaction. The incorrect response affected sales volume vs. target.
o Regression analysis provided a higher prediction correlation resulting in a $425M/year revenue increase.
o Leveraged to include a secondary product line, $100M additional revenue.
• Order Fulfillment Process Cycle Time Reduction
o Pre-event process was competitive with other companies however improvement was desirable.
o Cycle time reduced by 10 days average, 5-day Kaizen event.
o Market share increase by faster customer response, revenue increase estimated to be several $10MM’s per year as spread across several plants.
• Process for Setting Daily Allocations when Product Supply Disrupted
o Stock-outs occurred too often as a function of external unplanned or unforeseen events. This project was executed until those front end issues could be solved or minimized.
o Decision basis and rationale for setting allocations by channels of trade and by customers in such determined by project team.
o Guidelines set in place & process implemented.
• Customer & Sales Territory Value Analysis with Product Rationalization
o Sales & Marketing team invented process to systematically remove products from business.
o 350 products out of 1400 having < 15% gross margin examined.
o Cost accounting & allocation system reviewed.
o Pricing increase vs. potential lost revenue incentive calculations estimates made.
o Program implemented with cost savings and revenue losses being collected.
• Value Chain Continuous Improvement Leveraging
o Project setup with co-supplier to reduce services, equipment supply and startup cycle times
o Measurement system invented to identify cycle time impacts.
o Presentations made to Sales department to provide support to customers’ business & continuous improvement projects.
o Sales implementing ideal future state value stream map.
o Preliminary results indicate less rework, less coordination confusion and a 10 – 20% reduction in customer order to fulfillment cycle times.
• Inaccurate Invoicing by Vendors at 3rd Party Formulation & Distribution Sites
o High billing variation as normalized to other components.
o Measurement system formulated and implemented
• Several sources of errors identified including pricing entry and pricing assignment to product
o Solution implementation underway.
o Incentive not quantified.
• Take or Pay Contract Volume Improvement
o Supply contract set to take volume from other vendors to fulfill company’s sales contract
o Project established a monitor-to-action process to ensure there would not be a volume deficiency cost at the end of the contract. At the end of the first year, the company was in a negative position of $450 M. It was projected to be a $1.85 MM deficiency cost at the end of the 3 year contract if no action were taken.
o Control plan resulted in all of contracted material taken.
• Process for Obtaining and Communicating Product Outage and Allocation Changes
o Identified best internal practices with cross-functional team, 2 day Kaizen event.
o Documented by process map and SOP’s, implemented.
o Improved good will with stakeholder and customer base.
• Equipment Return Improvement
o Higher volume customers provided with free use of equipment at their sites.
o 65% of customers not returning equipment at end of contracts.
o Root causes were inadequate initial documentation & follow-up at end of contract.
o Rectification processes documented and attached to contracts.
o Preliminary improvement results indicate roughly 15% - 20% not returning equipment.
o Value not quantified.
• Customers’ Problem Quantification and Resolution
o Database of customer problems never examined, problems solved on a case-by-case basis.
o Several college interns working analysis by channel of trade, causes were summarized and Pareto analysis completed.
o Projects being formulated to address solutions and preventions to problems and standardized responses when not prevented.
• Retail Stores Contractor Service Charges Reduction
o Service truck utilization improvement, 5 day Kaizen event.
o Dispatch & scheduling process implemented.
o $300+ M/year O&O reduction at 1st plant site, implementation at additional sites underway.
• Effect of Special Event Advertising upon Sales Volume
o Identification of return by advertising type, medium, and amount during special events.
o Statistically designed experiments formulated and executed along with paired-T testing
o Results showed only 1 form of advertising had a statistically significant effect.
• Use of Services by Distributors at Unauthorized Sites
o Distributor owned sites were using services but not paying for them.
o Investigation showed no process present to check for authorization and no commonly known easy means for approvers to determine if site was authorized.
o Control & auditing process invented and implemented.
o Un-quantified reduction of risk, liability & cost
• Zero or Minimum Volume Customer Exposure/Risk Reduction
o Smaller customers could exceed pulling contracted volumes by significant amounts ahead of declaring bankruptcy
o Control system invented to both obtain key financials at regular intervals and a feedback loop to terminal manager when trucks pulled too much volume.
o Value not quantified.
• Margin Improvement at Retail Stores
o Defect was any product margin falling below a level set by product type & store location.
o Control plan set in place with IT warning system flagging low pricing or higher costs.
o Project implemented and on track to attain $1.3MM in additional gross margin.
• Measurement System Proxy as an Indicator for Total Sales
o It was desired to use a relatively simple measurement system to determine trends and relationships.
o Project designed to identify boundary range for correlating credit card receipts to total sales volumes.
o A relationship range was found for credit card sales to total sales which were then used in additional projects.
• Promotions Effectiveness on Credit Card Sales
o Goal was to identify return on spend as a function of geographical location during special events’ advertising.
o Paired T testing did not show that customer spending was a function of advertising spends during special events, no statistically based detection of improvement.
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Examples of Sales & Marketing Process Projects including both transactional and operational processes
Marketing & Sales Process Improvement Project Examples
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