Alf's Articles

It's Time For Sales, Marketing To Get Lean

by Alf Nucifora

In these tough economic times, any discussion of philosophy, strategy or process aimed at thinning the organization and reducing cost always gets this writer's attention. A concept that seems to be capturing the notice of smarter and larger manufacturers is "lean manufacturing." Its most recognized incarnation is the now famous Toyota Production System (TPS) which as Fortune Magazine (3/19/01) notes "evolved during the transition from mass production to mass customization. Unlike the old "push" systems designed to build inventory, TPS aims to build to custom demand in the shortest possible time and with minimum resources. Its Westernized version is now known as lean manufacturing."

But the plot thickens. TPS is, in turn, built on the concept of Kaizen (Japanese for "continuous improvement"). The Kaizen process is initiated with the formation of study teams made up of production-line workers, managers, supervisors and administrative, sales and marketing functionaries who analyze existing workflow and identify weaknesses and barriers to quality and productivity. The teams then design, and set up prototype lines/systems and practice the changes before they are introduced onto the floor. Prominent US companies such as Maytag and Pella Windows are committed Kaizen disciples.

My Introduction to Kaizen

I recently had the good fortune to view Kaizen in operation when I visited the US division of the world-wide WIKA Company, a leader in the manufacturing of pressure and temperature measurement devices for process control. The company makes a variety of machine and hand-assembled, finely-calibrated gauges, thermometers, pressure sensors, transducers, and transmitters. Manufacturing quality is obviously of exceptional importance to both company and customer. The US division, based in Atlanta, employs 460+ and generates annual sales of $61 million dollars. The company handles 6,000 SKU's and has traditionally worked on a "batch-and-queue" manufacturing system that demands a heavy inventory of finished goods in case of short lead time requests from customers.

According to Michael Gerster, Executive VP and General Manager, WIKA was forced to consider Kaizen techniques because of inefficiencies that were accumulating in spite of its adoption of accepted manufacturing processes. WIKA suffered from a number of ailments…the increasing space requirements to store inventory, an increasingly erratic buying pattern from its customers, WIP and/or inventories maintained at high levels to keep the machines running and the fact that managing several operations in a batch-and-queue manufacturing system required a complex and costly information ERP/MRP system. There was also increasing pressure on employees with concomitant friction and fatigue to perform and excel.

WIKA ran its first Kaizen event in June of 2001 and year-to-date they have conducted 14 team events around manufacturing, business processes and quality improvement. The results have been impressive…productivity up 15-30% depending upon the cell; WIP (work-in-process) reduction of up to 95%; compression in lead time to minutes rather than days or weeks; floor space savings of 30-50%; improved quality, safety and ergonomics; development of standard work practices in the business/administrative functions; and, most importantly, a noticeable lift in employee motivation and morale.

But WIKA management has had to address potential pitfalls to the process. According to Gerster, Kaizen can only succeed long term if it's driven down from the top. The operating environment must also possess a culture that accepts change, runs with a sense of urgency, maintains a strong desire to sustain after the initial success and is driven by constant hunger.

Where will WIKA go from here? Gerster wants to turn the whole operation into a lean manufacturing showcase. "This is not a one-time shot," he avers. The game plan is to harvest build-to-order capabilities to reduce the inventory of finished goods while simultaneously shortening lead times. At that point, the company can then begin involving customers and suppliers in the supply chain to establish a true "pull" system. Assuming all this can be pulled off, Gerster will use "lean" as a competitive advantage to outperform the competition, deliver better than average financial returns to the parent company and use the transition period to enhance employee involvement and motivation. Notes Gerster, with an infectious passion uncharacteristic of most German management, "We were batch victims. Now we're lean disciples and waste eliminators. The Kaizen approach has had the effect of sweeping away all the dust accumulated over the years.

Applying Kaizen to Sales and Marketing

When 173 CEO's were polled and asked the question, "Are your sales people calling on the right customers, at the right time, with the right offer?" 99.3% responded, "I don't know." Which shouldn't surprise. Sales and Marketing are still the last bastions of protected turf, limited management scrutiny and lack of accountability. Unfortunately, the important lessons learned and the gains in effectiveness and efficiency derived from lean manufacturing have not been successfully translated to the Sales and Marketing environments. And, it's understandable. Leading sales trainer Chuck Reaves, of XXI Associates, makes the valid point that, "Sales involves people doing business with people, not people doing activities with machines and processes. Sales is perceived to be more of an art form than a science. Yet, ironically, Sales is virtually a pure science and, as such, is both measurable and predictable." If Reaves is correct, the disciplines of Kaizen can easily be applied to the Sales and Marketing functions resulting in significant increases in effectiveness and bottom line results.

Why should we apply lean practices to Sales and Marketing? The litany of reasons is familiar to anyone who operates in those environments. Existing response times are woeful. Customer service practice continues to decline. The concept of "zero-defect" performance, which has been successfully incorporated into the manufacturing cycle, seems to have escaped the notice of many sales and marketing types. Quality in delivery and performance varies significantly from sector to sector and company to company. But worst of all, sales and marketing productivity has never been known for its improvement gains. In truth, we are a sloppy profession that has been able to evade accountability for too long.

How might we apply Kaizen techniques? According to Reaves, companies interested in applying "lean" techniques to the Sales and Marketing functions can begin the journey by:

• Asking whether or not a certain step is necessary, thereby reducing habitual behavior.
  
  
• Determining how necessary steps can be done better, thereby demanding continuous quality improvement.
  
  
• Asking who else could perform the step if necessary, thereby building team performance while improving results.
  
  
• Determining how each step can be done better, faster and cheaper, thereby forcing sales and marketing personnel to start focusing on cost of sales. (COS)

Concludes Reaves, "Like the folks in manufacturing who examine each individual element associated with building the product, professional sales and marketing people are going to have to sit down and apply the same rigorous scrutiny to their own processes."