I am studying Sales and Operations more than twenty years ago while adjusting the production process of a cosmetics company. Sales and Operations is a powerful way to maintain balance and alignment with desired company goals over time, increase productivity, and reduce waste when non-specific problems arise. Today, in the wake of the global supply chain crisis, sales and operations has become a necessity for businesses that rely on multiple delivery methods.
Currently, the impact of the COVID-19 pandemic on the global supply chain has taken its toll, including the Russia-Ukraine conflict, increased freight costs and less cargo. But there are always unknowns on the horizon. A report by McKinsey Global found that companies should "expect a product outage of a month or more to occur every 3.7 years" and that declines from these outages could account for 42% of annual profits, or more than 10 years of profits . - throughout the year.
Today's long and complex products are highly vulnerable to disruptions, including extreme weather, violence or conflict. This is why sales and operations is so important. In fact, according to a 2020 study by The Hackett Group, improving sales and operations is one of the top priorities for supply chain managers and is also critical for optimization. This concern is simply a misunderstanding that creates an inadequate process. Poor sales and operations performance can impact an organization's ability to find other companies, suppliers, and suppliers; identify other customers; or he can completely control his work and demand.
Manufacturers are concerned that unplanned events could make it difficult for them to get the information they need, produce enough products to meet demand, or deliver to customers. But for today's highly profitable businesses, which often rely on weak international currencies, the risks are higher than ever.
How the sales and operations process works
First, let's take a look at how the sales and operations process audit works. This is a highly collaborative process with input from all departments at all levels. The first practice is to start with the creation of an sales and operations team that works to coordinate and execute the plan for each phase. While the exact structure of your team will vary depending on the size and composition of your company, the IBP approach typically includes people from the following departments:< br>
Marketing: Product, Sales and Customer Service Manager, Requirements Manager and Project Planning
Occupation: Design Owner Product, Product Sales, Purchasing, Quality Specialist and Sales Manager
Finance: Controller, Cost Manager and Finance Manager Finance or Finance Manager
No matter who is on the sales and operations team and the basic steps in the process should be the same.
Important steps in the sales and operations process
1. To use sales and operations correctly, you must complete and repeat all these steps, but you can make changes specific to your company. For example, if a meeting is too long or difficult, you can split it into two more meetings. On the other hand, if several meetings seem short, you can combine them into a single meeting.
2. Product Portfolio and Forecast Review: This step is designed to ensure product integration across the company's products by analyzing the lifecycle of each project. All departments involved in the S&OP process provide information such as sales and sales forecast, inventory, production, demand, etc. to help the S&OP team make a good analysis of any product or service that will be produced and offered to customers. and External conditions that may affect demand. This step also includes production costs, prices, profits, holding costs, shipping costs, etc. It is also used in new financial information such as Because sales and operations is an iterative process, plans from the last sales and operations demonstration are also incorporated into this product review after the first one is completed.
3. Demand Planning: The purpose of this step is to ensure that your company's resources and sales goals are met so that your products and products can produce products on time to meet customers' needs. This process uses historical demand models and forecasts to forecast demand for goods and services across supply chains. Analyze historical sales data, business models and other relevant data from different departments to predict how much demand the product or service will be in. Feedback and feedback from the team are particularly important here; so you can define the actual demand level based on the available product. The sales and operations team also reviews and adjusts the final demand plan to align it with the company's goals, such as product growth, discount percentages, and margins.
4. Supply/Operations Planning: The demand strategy is then translated into supply planning to have inventory and equipment to support demand. Some of the tasks here include estimating the need for raw materials, parts and other supplies; identifying and evaluating potential customers; monitor product performance; Identify and evaluate potential impacts to supply (such as shipping restrictions, product disruptions or changes in market conditions) and develop plans to mitigate these risks; and ensure the supply plan meets the company's key points such as stock level, capital usage, collection cost and perfect order percentage.
5. Financial Planning: Based on demand and delivery/operations plans, the financial planning team factors in product or service demand and costs to predict the company's financial performance over a specific period. The main outputs here are profit and loss statements, income statements and financial statements. Price is treated as a secondary issue. The S&OP team reviews and discusses these plans, needs, and plans to ensure that the company's financial goals are aligned with its performance goals, operations, and that the company has the resources it needs to meet needs and achieve its financial goals.
In my 25 years in this field, I have seen five implementation problems that impact S&OP success. To reap the full benefits of S&OP, your business must follow these best practices:
1. Constant collaboration
Many companies view S&OP as a process: The marketing team solicits demand and the operations team produces enough inventory to support it. This approach does not improve business response. Instead, you should ensure that all stakeholders in the various S&OP teams work together (rather than sequentially) from the start. The marketing team must communicate with operations while creating a demand plan so operations can begin producing inventory. Similarly, operations need to communicate with finance to determine how much inventory the company can produce.
A collaboration like this is inevitable. When I started working in the local office of a large food and beverage manufacturing company in 2005, the company did not have a dedicated S&OP team or good processes. Although the company comes with a monthly demand plan, the office always revises it before creating its own plan before joining the company. So two different plans coexist.
While optimizing S&OP at this company, the team I created began doing a targeted historical data analysis and using the insights we gained to revise old plans. dead? An integrated, effective plan that increases efficiency, reduces expenses and minimizes losses. Finally, the office pays for the level of production that suits the group's advertising strategy, while the financial institution has the cash to support them. When they see these results, departments are willing to collaborate with each other, making forward planning faster and easier.
2. Assume leadership from the board
Failure of the CEO or executive to adhere to the plan created by the S&OP team can render the process ineffective. S&OP strives to make all areas work. If the CEO doesn't understand the process or doesn't fully understand it and sets different directions, employees need to follow him. At best, the company's efforts will implode; At worst, these departments may have conflicting goals. However, senior managers often make decisions inconsistent with S&OP because they view S&OP as an add-on rather than a system integrated into daily meetings and work.
When I was at a large cosmetics company in Latin America, my first step was to sit down with a manager at one of the businesses to discuss the steps involved. The manager already has monthly meetings with his senior staff, so he doesn't like the idea of "extra" appointments. I recommend holding meetings and reviewing key business KPIs and issues along with the S&OP plan. Our first lesson lasted approximately 10 hours. But he saw the results of the approach to the manager who approved its use in the company. Assists in the development of the plan, approves the management of the plan and gives unconditional support to the team. In the past, S&OP leaders' meetings were shortened to less than three hours.
3. Insist on Accountability
In every company, the S&OP process should be implemented daily, with deadlines and a transparent chain of responsibility. All participants must be accountable for the roles they accept. It needs to be thanked, but I see many companies ignoring it. The worst-case scenario an S&OP team can face is realizing the plan failed because someone didn't do the work.
The senior leader must hold the entire S&OP team accountable rather than letting it fail. For it to work, roles need to be clearly defined. Individual tasks should be defined and tracked, with penalties for failure and incentives for success. One way to achieve this is to tie revenue to performance.
4. Stay in style
Focus is essential for S&OP to work well. In many practices I've participated in, team members spend a lot of time reviewing past results as they argue and try to justify their decisions, such as putting pressure or blame for past failures. Past results can only serve as a reference point for continuous improvement of the S&OP process. My general rule of thumb: Your team should spend one-third of its time reviewing the past and two-thirds deciding and reviewing future plans.
Another type of noise is bad information or management. Examples of this include inconsistent information across departments and unclear information definitions and regulations. In this initial meeting, your S&OP team should define, agree on, and implement methods for collecting, aggregating, and distributing data. In this way, you can make quick decisions based on information that all departments trust and help your company adapt to changing business conditions.
5. Keep information flowing
Companies can only respond as quickly as their communications and practices allow. From what I've seen, companies leveraging the COVID-19 supply chain are quickly gathering information and moving it across their organization while making collaborative decisions. . Businesses, workforce and finance also need reliable communication systems to remain active in crisis response. This means meeting at least once a week and sharing updates and information every day.
Optimizing S&OP implementation helps your company anticipate and solve problems quickly and efficiently. Long-term planning can improve your ability to mitigate supply chain or other network disruptions, while regular inspections and maintenance can be done as usual. While the initial setup may take time, thought, and effort, this process will allow your company to adapt no matter what. You can't prevent change, but you can prepare for it.
The second leg of the startup's evaluation strategy is to use the most effective and efficient tools to increase revenue from sales. However, I have noticed that very few investors explore the various investment options available to them.
Pricing seems like a dark art. If you pay too much, you will lose customers. Pay too little and you're leaving money on the table and undermining your fundraising goals. Balance is difficult but you can achieve it.
First you need to know the concepts of value:
1. Added value: Calculate the value of the product or service and then add the appropriate profit
Price competition: Your competitors or potential competitors to determine your bearable price
Use this framework to determine the right price for your product or service. (Each step is followed by an example of how the process works.)
1. Measure the dollar value your product or service provides to your customers. Will time, energy or both save them? Or how much money do they make from it?
Example: Using Sample Corp.'s widget, Buyers Unlimited has a X% chance of selling an item worth $A.
2. Determining your success by the percentage of customers who use your product and those who do not.
Example: Without Sample Corp.'s widget, Buyers Unlimited has a Y% chance of making a sale worth $A. Therefore, Sample Corp.'s widget is worth $B = $A x (%X - %Y) for Buyers Unlimited.
3. Multiply these two numbers by 20% for the lowest value and 25% for the highest value.
Example: Sample Corp. By providing widgets to Buyers Unlimited, you should earn between $B x 20% and $B x 25%.
To show the real example, let's - Some say buying Sample Corp.'s widget means Buyer's Unlimited is off 15 percent in one year. This means the widgets are worth 15% x $100,000 or $15,000 to Buyers Unlimited. So 25% of $15,000 would give you a high of $3,750, and 20% would give you a low of $3,000.
As the math goes, the higher the return on investment your product or service provides, the higher the price you can charge.
Paying customers correctly is as important as paying the correct price.
For many startups, especially in the technology sector, there are already some designs suitable for your business model. If your company wants to compete with the company's discussion or search engine, the standard is to offer free service to customers and make money from advertising. If you're building a streaming service, you'll likely follow the lead of other streaming services and adopt a freemium model, offering the lite version for free and hoping to sell more to customers at the cost of paying. The same goes for business-to-business models, especially software as a service, where the pricing model is often built around subscription services and users are connected as a whole.
While it is possible to take a different approach from your competitors, the truth is that the more competitive the market, the more difficult it is to differentiate it from its standards. However, the impact pricing approach can be a key differentiator in a competitive environment; so don't ignore it completely.
If you choose to follow the business model, you still have the opportunity to increase the revenue required by using the asking price, the competitive price and especially the price required to comply with these standards. For example, I worked with a client who was building a business around healthcare management. We created a discount tariff that includes not only the maintenance and administrative fee of the job, but also the consultancy fee for opening a new hospital, the money sharing fee for financing, and the fees for other hospital services.
Coming to the third and final post, I recommend that entrepreneurs generate predictable income by creating and optimizing metrics around leads and sales. This means creating the best sales experience. The sales pipeline allows founders, managers, salespeople, and investors to find enough customers at various stages of the company's sales process. You can create a revenue forecast by estimating the probability of converting a lead into an actual customer based on its level.
Conversion data is particularly powerful from a business perspective. Using this information, you can estimate how many new leads you need to generate in a given period of time to reach your annual revenue.
You can build your sales pipeline using spreadsheets, but I recommend investing in customer relationship management or CRM. Simply put, CRM is a tool for managing a company's customer relationships and managing phone calls, presentations, etc. It is an application that includes various tools used to track interactions such as activities. CRM is one of the most accurate information about your customers; It is your one-stop shop for sales management and lead information. It's important because it allows your company to collect information about its relationships as it grows and organize that information internally. These features can give you a greater flow of information than a report can – I like to say that a CRM gives you a 3D view, whereas a spreadsheet is only 2D.
At one end of the price spectrum there are many vendors with many options, such as Salesforce, which serves large enterprise customers. On the other hand, there are many finance-focused platforms like HubSpot, and their entry fee makes them especially popular among growing companies.
When you implement CRM, you can transfer data about potential customers to your sales channel. While the larger goal is to generate important metrics for investors, such as referral rates and revenue forecasts, the app can also be used to provide operational information such as electricity sales and switching costs at all levels.
This information can also be used to estimate customer acquisition costs and customer lifetime value; this, with the help of your business group, can inform your overall conversations about finding and selecting your business customers.
My experience working with early stage startups is shared here. Although the creator is the best-selling product, the company's CRM is important, with the sale of a simple app and contact information for others. My first step was to upload all of this information into a single platform at HubSpot. We can then elevate this to a sales cycle builder and create a sales pipeline that clearly lays this out in the customer relationship funnel. This allows it to calculate its revenue forecast more efficiently and accurately.
To improve your sales process, remember that every stage must clearly reflect the sales process, from communication and direction to rigor, solidity, agreement, discussion and results. You can then assign different values to each stage or transition. Most CRMs can do this, but I usually adjust forecasts using historical data. I also try to make the best predictions possible. Your chances of conversion will increase as you move into the sales phase.
Using more than one CRM system and creating a process are two important steps to creating an annual revenue forecast that attracts investors. There are two reasons to invest time and effort into creating reliable sales metrics: The first is the good data it will produce, and the second is the search for returns. I tell my early adopters they should spend about 200 hours on the process, with the first 100 hours spent on generating more revenue than expected and creating other significant results, and the second 100 hours investing in communications and support. . This is a big investment of time and resources, but in my experience, it makes the difference in getting paid four times while increasing the amount of money received by five times.
Quantitative without guessing Strong financial track record is difficult but achievable. Ultimately, if you put in the effort, you'll not only improve your fundraising but also set your business up for growth in the years to come.
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