Mickey Granot, Managing Partner Next-Era Consulting
A week ago, I had the privilege to chat with a commercial director of a large food producer. The company experienced a continuous growth both organic and through M&A’s. As a result, there is a constant growth in their product portfolio, and categories managed by the commercial team. The complexity of the situation increases when taking into account the multitude of tasks, a food producer, that is selling to retailer, needs to execute; introduction of new products, promotion campaigns, product portfolio enhancement, shop spread enhancement, accelerating growth through alternative channels (distributors/ wholesalers) and many more.
No wonder that the commercial team feels stressed, overloaded, under staffed, and losing control. And worse, feeling that meeting the goals is a challenge that is highly likely to be growing substantially in light of the aggressive growth strategy of the company.
As we started, I asked Mark, the commercial director, “Can you please define the goal of the commercial organization within the company?”
Mark answered “Place products in the market increasing their availability to the consumers”. “When you talk about availability, it is my understanding that you are heading the commercial organization, not the supply chain one. So, what do you mean by availability?”
“You are correct, I do not mean the on-shelf availability, but rather the variety that is offered to the end consumer, out of our total variety of products. Maybe a better way to verbalize the goal would be to increase the variety of our products and product categories within retail outlets. But, when I say this it is clearly partial, as we also want to increase our share of existing categories out of the retailer’s sales of that category. Well, at the end I think we can
Define our goal as:
Increasing sales of our products through increasing our presence in the market in terms of number of retail outlets, categories and products, and share. And, we need to be able to do it as efficiently as we possibly can.”
“Now that we have some clarity about the goal of your system, I am curious. Why were you interested in speaking with me? Why do you think you need help?”
“Because we want to develop our organization, understand what we can achieve with our existing capacity and existing categories and with the expected additional categories. We are not clear at how efficient is our organizational structure. And lastly, we feel we can grow faster, but are not clear at how to achieve that.”
“I understand that what you are actually saying is that you believe that something in the current mode you’re working blocks you from getting more of your goal, and challenges your ability to support the anticipated increase in product portfolio. Is this correct?”
“Yes, exactly.” “And, why do you think that?” I asked. “Because we have an incredibly high complexity in our operations. Complexity that is a result of the huge number of processes we execute, each one made of multitude of tasks. This is multiplied by the number of categories we manage and then again by the number of sales channels.
It is very difficult to keep control with this complexity, and our people are buried under mountains of tasks. And these mountains keep growing. As a result, people here work endlessly, tons of extra hours, weekends and holidays trying to keep up and complete the tasks.
Not always successfully, I must admit.”
“I understand.” I said. “So, what you are saying is that if there is a way to improve the work of the people in the commercial organization, in light of this three-dimensional complexity (processes, categories and channels) you will be able to achieve more of your goal? More sales, more stores, greater variety per store and higher shares. Correct?”
“No doubt about it.”
“With this confidence that you state, can I ask you to estimate, what would be the effect on your goal if the team finds a better way to become more productive?”
“That is difficult to respond. But I am certain that the effects are meaningfully disproportional. What I mean is that for every one percent of additional productivity the effect on each and every measure of our goal is by far greater than one percent.”
“In that case,” I said, “What if you could increase their productivity by more than 30%?”
“I do not believe this is possible without adding resources to the team”. Mark responded. “Do you believe that the resources work so effectively that the additional productivity opportunity is much smaller than that? I mean, we started our discussion by you indicating the overwhelming sensation of everyone, that the work is very inefficient. In that case, let’s try to understand how inefficient it is. For that we need a few more questions, if you don’t’ mind?”
“Go ahead, even 5% improvement is worthwhile the investment.”
“You mentioned that there are many processes, made out of many different tasks executed by your team. It is interesting to understand how is the work structured; is it that all (most) of the tasks in a process executed by the same resource, or is it that tasks in a process are executed by different resources and the process progresses from one resource type to the next?”
“The latter” Mark said, “All of our processes involve different types of resources and the work does progress from one type of skill to another until it gets to the field sales representatives.”
“Good” I said. “considering this flow of work is there any one type of resource, or skill where the work tends to get stuck in higher volumes and for longer times in comparison to other types?”
“Obviously, and easy to answer. Work tends to get stuck with our customer marketing teams and field sales representatives.”
“I already know that the sales representatives are at the end of the processes, and therefore it is reasonable that all delays accumulate into their work. I assume that customer marketing is somewhere in the middle of the process, is it correct?” I asked.
“Yes, mostly it is” Mark answered.
“Let us look at this resource, then. If you count the number of tasks, across all processes, what is the range of number of simultaneous tasks each resource has?”
“Twenty to thirty tasks. This would be my estimate.” Said Mark .
“When a new process is initiated, is the common practice to start working on it immediately?”
“Of course,” said Mark . “As it is, we tend to end processes at the last minute, and even later.”
“Have you ever heard any of your resources saying that in spite of working all of these long hours, they feel that at the end of the day, they have barely achieved anything?”
“Have I ever” Mark smiled “every day”.
“How common do you think that the resources in this department find themselves in a situation of jumping from one task they are working on, and still did not complete, to another, and then again?”
“All the time. Shifting between tasks is the work norm here. Priorities keep changing and we need to adjust.”
“When someone working on a task needs to stop it, move to another, and return after some time to the same task. It means they have worked for some time on the task, then took a break, then came back to continue. Can you see what happened to the task duration as a result?” A short silent minute after which Mark said
“I can see, the task duration is longer by the length of the break.”
“And if there is more than one break, it becomes longer by the sum of the times of all breaks, isn’t it?”
“indeed, it does” answered Mark , with some sadness in his voice.
“You mentioned that processes are made out of tasks, executed by different resources. What is the effect of the longer task durations on the resources that are supposed to be working immediately after?”
“Clearly, they cannot start. They experience a delay.”
“Absolutely,” I said “But this is not the whole story. If it was just the delay, you would see, many of the other resources, from time to time, sitting idle. Doing nothing. Is it common?”
“Not at all, our resources are very overloaded, all of them.” There was some hope in Mark ’s voice now.
“If the predecessor tasks are meaningfully delayed, how come the other resources are not waiting? I asked “What are they working on?” Mark took some time to think and then responded
“They pull work from other sources, as they know that there is so much to do. It is good no?”
“Well, let’s think” I said, “If they pull work, and start working on it, and then the delayed task arrives. What would they do then?” The sadness returned to Mark ’s voice
“They will stop the task and move to the delayed one. That means that their task durations elongate as well.”
“Very true.’ I said. “And still, this is not the whole story.”
“When a resource stops working on a task, and returns to it sometime after. Can he return immediately to the exact same productivity he had at the time he left it?”
“Oh my god,” said Mark
“of course not, it’ll take them some time to pick up again. So, not only the duration elongates, the productivity is reduced and the time elongation will be longer than the break.”
“You are very correct” I said, “This is by far worse as the amount of capacity being misused is enormous. What do you think now about a 30% productivity improvement?” I asked,
“Suddenly it seems quite reasonable.” Answered Martin.
“Can you guess where all of this starts?” I asked.
“No clue” Mark answered. “Let’s follow the track.” I said, “Let’s start at the end. Customer Marketing people each have a big pile of work to be executed at the same time. Where is this work coming from?”
“Is this a trick question?” Mark asked “It comes from the resources executing the predecessor tasks. Isn’t it obvious?”
“And where do these resources get their tasks from?”
“I see where you’re going with it” Mark said. It will lead us to the first step of each process.”
“You are correct” I said,
…and this specific step, follows a practice you mentioned earlier – start any new process as soon as possible. Can you see the effects of this practice?”
“Now I can” Mark responded, “It pushes work into the system and allow it to accumulate and to create these piles of work”.
“Absolutely” I said, “and the direction of the solution you need is to control this release so that it allows smooth flow of work, and prevents the accumulation.”
“But how do you do that?” asked Mark .
“Well, it is not too complicated.” I responded, “But the details are critical. The best way forward will be to assemble your team and together to validate our assumption, understand the details, design the solution and its implementation plan, and then implement.”
“This sounds very reasonable to me” Mark said, “Can we have another meeting to fully understand and agree on the process” “Of course” I responded.
Would like to explore such a discussion for your organization?