What are Sales Supervisors and Sales Top Managers supposed to do to do their job well? Help to sell key opportunities? Visit top customers? Analyze data of pages and pages of reports? (Some reporting systems have turned sales supervisors and managers into "slaves of reporting systems" forcing them to spend days working in spreadsheets. Is that what they must focus on to lead to sales growth?)

Viewing sales as the "factory of orders" clarifies responsibilities in sales management.

WHICH SALES PERFORMANCE INDICATORS MATTER? (see our answer here)

Which indicators are REALLY key for sales success? Number of business cards collected? Number and volume of opportunities reported in the CRM system? Number of calls made to customers? Face to face time with customers? Travel expenses charged? CRM database updated?

Sales people are measured (and often harassed) by a multitude of performance indicators, as can be seen in the various "sales dashboards" you will find on the web.

Viewing sales as the "order manufacturing factory helps you to select the key indicators that matter.

WHICH SALES METHOD FOR WHAT? (see our answer here)

"Pipeline Management", "Funnel Management", "Account Management", "Customer Relationship Management", "Opportunity Management" ... just a few of the terms being used for activities in the sales area. How do these terms relate to each other? Are they all the same with different faces? Which method works, and which does not? What is the purpose of implementing one of these methods? We are using one - should we keep it or use another one?

Viewing sales as the "factory of orders" clarifies helps to find answers to these questions.

SALES VIEWED AS THE FACTORY OF ORDERS <top>

Viewing sales as the "factory of orders" shows which performance indicators are key for sales, who must carry which responsibility and which sales method plays which role in the whole sales system.

(Click the picture for a full size downloadable version)

Like any factory, the "Factory of Orders" consists of three levels:

Level 1: shop floor,
Level 2: supervision,
Level 3: factory management

Level 1: THE SHOP FLOOR <top>

On this level various "engines" deliver the final output of this factory, "orders from customers". Let's go (as we should do, when studying a factory) "upstream" from this final output to understand the roles and methods of the "engines" in this factory. We find the ORDER FACTORY to consist of two main sections working closely interlinked: the Opportunity Section and the Product Section.

In the OPPORTUNITY SECTION<top>

The Opportunity Winning Engine: receives opportunities from the previous engine (where they have been selected to be addressed). The Winning Engine needs to run at a "success rate" of >50% for new orders to ensure that the cost model of the whole factory is acceptable. It's success rate is the prime cost driver of this factory. To ensure such performance by the winning machine this machine uses methodologies like "selling", "closing", "negotiating" to achieve its targeted success rate. Such methods are available abundantly and most sales organizations have already one in use.
The Opportunity Selection Engine: takes "raw" opportunities created in the previous engine and refines them to be "fit for winning". Its main task is to make the constraints visible which makes the "raw" opportunities "unfit for winning" and to resolve these constraints. It's main performance indicator is that every opportunity passed on to the Winning Engine must be "fit for winning". Methods from the toolbox of Theory of Constraints have proven to be most effective to run this engine.
The Opportunity Creation Engine: bases its work on deep understanding of the customer's business system and it's constraints and creatively designs opportunities which will contribute to the customer's efforts to resolve his constraints. Its performance indicator is the volume of opportunities it produces - when working as required it will continuously create more opportunities than is required to meet the sales factory's order goal. Classical sales focuses on the customer's share of wallet (his budgeted expenses). Focusing on sales as a business system the focus will be on creative design of new opportunities - which goes far beyond the customer's wallet. Some methods of "account management" point in that direction, however, TOC tools have proven their merit as the methodology to operate this engine most successfully.

The PRODUCT SECTION must work in the framework of a "Phase Review Process" with the goal to achieve each product's sales goal. (We use the term "product" here for all products, services or solutions offered to customers). <top>

The Product Test Engine: ensures that any new product is "fit for the Opportunity Section" at product introduction and throughout the whole product life cycle. This means the product will be fit to create new opportunities, fit to make opportunities "fit for winning" and "fit for easy win". As it is the last engine in the product section its main performance indicator is the achievement of product sales goals. To ensure that it can deliver this goal it "pulls" feedback from all later engines in the factory.
The Product Design Engine: builds products "fit for testing". Its charter is to design products "fit for all later engines" to ensure that there is no rework at all, when the product arrives there. Like the Product Test Engine it "pulls" feedback from all later stages in the factory to ensure that it will meet this requirement.
The Product Planning Engine: creates plans to design and test products, again with the goal of achieving product sales goals and by "pulling" feedback" from all later stages of the factory. (For example: if product planners are not participating in work in the Winning Engine they fail to do their job as required for smooth factory operation)

Level 2: SUPERVISION <top>

Each of these engines on the shop floor needs guidance by supervision - to ensure that the order factory runs as a smoothly integrated and well tuned entity. Its main role is to ensure that each engine achieves its goal. If an engine fails to deliver to its performance goal supervisors must intervene instantly and correct the situation. If that critical element of manufacturing supervision is missing or not done well any factory - even more so the dynamic and complex "factory of orders" will not deliver to its goal. <top>

Level 3: FACTORY MANAGEMENT <top>

On this level top management manages the "order factory" as a "business system". Its main performance indicator is healthy, steady sales growth. To do so top management must:

Develop a deep understanding of the "order factory's system", (as DEMING and many others have pointed out for manufacturing systems many years ago),
Set the goal for this system and continuously track, visible to everyone working in the factory, progress to this goal,
Find the constraints which block progress to the goal,
Plan the resolution of these constraints, in operational plans,
Personally lead the operational execution of these plans.

THREE ANSWERS FOR SALES LEADERS

With the "order factory view" in mind here are the answers we are offing to the questions raised at the beginning of this article: <top>

WHO MANAGES WHAT

Supervisors in the "order factory" lead engines in their responsibility deliver to the performance goals described. That is a tough job. The "order factory" is probably the most dynamic and complex business system in the enterprise and needs first class supervisory expertise to achieve these performance indicators,

PERFORMANCE INDICATORS THAT MATTER

The factory view of sales simplifies our lives as managers: we need to observe and manage just one key performance indicator for each engine in the order factory. If each engine delivers to that indicator the factory will deliver the sales goal.

THE RIGHT ROLE OF EACH SALES METHOD <top>

"Pipeline Management", "Funnel Management", "Account Management", "Customer Relationship Management", "Opportunity Management" ... these terms describe methodologies for some engines on the shop floor (in spite of the abundant use of the term "management"). Their value must be determined by one simple standard: Do they deliver the performance goals for each engine? Yes? - leave them in place. No? - replace them with a method that will deliver.