The challenge of integrating their field sales teams with their factories to more quickly and accurately fulfill custom orders led the teams at Greenheck Fan to consider creating their own product configurator.  From whiteboard discussions they had a framework of where they wanted to go with the design, and despite having to integrate directly into their SAP ERP system, the team charged ahead.

As part of their project plan they chose evaluate several product configuration providers and as part of this effort met with Cincom’s Manufacturing Business Solutions teams.  As the following video shows, the Greenheck IT teams saw in the Cincom product configurator nearly exactly what they had defined as ideal for their needs during whiteboard discussions.

Key take-aways:

• SAP integration was completed using ABAP-based commands mapped to the product model level by Cincom Professional Services and Engineering. This approach assured the highest level of performance possible and also the greatest accuracy as inbound orders were translated into Bill of Materials in 2 hours instead of 2 days which had been the case before.

• Having an automated field-to-factory vision that linked their sales teams to the SAP R/3 ERP system running their manufacturing centers is instrumental in the company gaining market share in the Fan and Vent markets and the Damper/Louver market segments. Order accuracy and speed on orders increased Greenheck’s ability to compete for new business profitably.

• Accelerated product development due to the quickness Greenheck could respond to new market opportunities. The integration of quoting and ordering directly into the SAP R/3 ERP system led to significant reductions in order rework and higher levels of customer satisfaction.  Upselling and cross-selling was more efficient as a result.

Bottom line: Making SAP integration pay starts when inbound orders are automatically converted to BOMs and then scheduled for production – all electronically and all with completely transparency to the channel selling, direct selling and sales management teams.  That combination of speed and accuracy of orders – and everyone knowing order status – is making every company choosing to integrate Cincom product configuration with SAP R/3 systems all the stronger competitively for it.

One of the best sites on the Web for staying connected with industry thought leaders and their latest projects is the Stanford University Entrepreneurship Corner. It’s a constant source of insights and learning, and has some great content for presentations and conversation-starters in meetings and courses.

The following clip is taken from a more expanded discussion by David Heinemeier Hansson, founder of 37Signals and creator of Ruby on Rails development environment. Ruby on Rails is consistently regarded by developers as one of the best development environments and was used for the development of Apple Mac OS X and also is used extensively in Twitter in addition to many other software development companies. What makes this clip great is David’s passion for what he is doing and the lack of fear he has for calling B.S. on people who can’t find passion for what they are doing – that is a great point. Teaching with passion makes all the difference in making relationships with clients instead of just seeing them as transactions.

Bottom line: Using all the lessons learned from a product configuration strategy to better serve channel partners and make them stronger is what out-teaching the competition is all about. When pursued with insight and intensity, out-teaching the competition is by far more powerful.

From the companies who rely on quoting systems for just 30% of their total sales to those that rely on them for 100%, all share a common challenge: to retain and recover as much revenue and margin as possible.

Using quoting systems as a means to gain channel sales requires that there is a strong support system in place to make catalog, pricing and service exception management as automated as the mainstream quoting process.  It also requires that there be a single system of record for pricing, product catalog, and services as well.  Companies who have taken the time to create systems of record can scale to support multiple channels much faster, with greater profits, and with much higher order accuracy than others who just focus on selective products or channels.  Recovering lost revenue happens when quoting systems reflect the real pricing, availability and manufacturing delivery times of your company.

Best Practices in Quoting: Key Take-Aways

Best practices in quoting is all about continually improving, continually seeking new approaches to taking outlier processes and automating them as part of an enterprise-wide strategy.  Companies on the fast track to best practices in quoting are doing the following:

• Continually working to improve quoting accuracy, quote-to-close rates, quote velocity and quote-based price exceptions to measure how productive their existing quoting systems and strategies are. Those companies who are moving the majority of their sales to quoting systems report increases in quoting accuracy and greater profitability as well.

• Measuring and quickly taking action on customer satisfaction with the quoting process and seeking to improve constantly. Quoting systems in some companies are like Tylenol – they only take them when there is too much pain to withstand in their selling processes.  When the pain is gone, the focus on quoting is too.  Yet a best practice in quoting is all about focusing on turning this selling strategy into a strength – and a competitive weapon as well.

• Concentrating on usability for the channel and for dealer, reseller and distributor sales forces. This is why advisory councils are so critically important for any company that relies on channel partners.  Advisory councils are used for getting the channel sales teams to own the quoting system by giving them a voice in how its interface is designed, how it functions, and how it moves from one screen to the next.  For Dell the advisory councils have been invaluable in getting outlier quoting processes under control and part o their mainstream quoting system.  
  

• Integrating price exception management including special pricing requests and quoting is critical. Getting price exceptions done immediately on quotes can make or break a high tech components manufacturer.  It can also have an immediate impact on the win rate of quotes at the end of a quarter.  Get price exception management and quoting integrated now, especially if you are in a high tech manufacturing company where quote response times are measured in hours not days.

Bottom line: Attaining best practices in quoting begins with a support system and processes that give channel partners the flexibility and response times they need.  Capturing lost revenues using quoting and product configuration starts with an integrated and real-time quoting strategy.

Flickr: http://www.flickr.com/photos/29051800@N03/2728252274/in/set-72157607098375737/

In the following video made available by McKinsey & Company, Prith Banerjee, director of HP Labs, discusses how the company has been successful in segmenting their innovation strategies in a portfolio-based approach.  He also discusses how HP continually re-assesses the value of investment in primary research and the internal challenges of keeping funding for entirely new initiatives.

Also discussed are HP’s views of how to globalize innovation effectively from lessons learned.  He also shares insights into how to best manage innovation to benchmarking and a results orientation.

Bottom line: Consider multichannel selling strategies as an innovation lab too – and seek to discover new approaches that work for your company in attaining its margin and profit goals.  Streamlining product configuration, pricing, and quoting – all essential aspects of operational efficiency, when combined with multichannel selling, can drastically improve a company’s performance, per McKinsey’s insights on this topic.

Dr.  Andrew McAfee, principal research scientist at the Center for Digital Business at the MIT Sloan School of Management, is interviewed on how Web 2.0 technologies are impacting daily work.

His latest book Enterprise 2.0: New Collaborative Tools for your Organization’s Toughest Challenges analyzes how Web 2.0 can be applied to the enterprise.  The Web 2.0 Meme Map, originally authored by Tim O’Reilly in 2005, is shown to the right.

There are excellent take-aways for quoting, pricing and product configuration strategies as well, specifically in how to make these strategies more collaborative and successful. His concept of “pockets of energy” could be likened to those groups who stay focused and strongly committed to getting a company’s product configuration strategies adopted and moving forward.

Source: O’Reilly, 2005.  What is Web 2.0.  Design Patterns and Business Models of the next generation of Software.  Tim O’Reilly.  September 30, 2005. http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html

High technology manufacturers of components live and die by how quickly the respond to quoting requests. Typical reaction times need to be less than an hour to win the business, and if a quote goes for 48 hours the deal is long gone and there is a discussion often with the CEO of what went wrong.

Quoting times in high tech are that intense.  Perhaps there is no other industry where time is so incredibly valuable.  Time translates to rapid sales and profit growth in high tech purely by automating the quoting process too.

Save Your Margins, Beat the Deadline – Best Practices in High Tech Quoting

What is immediately apparent about the intensity in the high tech industry surrounding managing the quoting process is the global nature of it. The typical chip manufacturer will rely on quote responses often from as far away as Singapore or Malaysia where the chip foundries are. These foundries’ pricing and accounting staffs often must approve large special pricing requests manually.  And get it done within an hour.

Automating the quoting process is just the first step however.

The best practice comes from managing sales teams to gross margin – not paying them on margin because then the gross margins would have to be disclosed – but managing their judgment on pricing large deals.  One analysis showed that a pricing manager had a variation of nearly 28% in their quotes – clearly a sign more training was needed for this manager and their team.

With the speed of how quickly quotes must be replied to and acted on in high tech, and the need sales teams have for real-time response to win business, it becomes clear that automating the quoting and margin process is critical.

In fact the only path to profitability and margin retention in high tech is to automate the quoting process.

Bottom line: Look to automating your quoting and pricing strategies to retain and grow gross margins over time – and manage sales to gross margin improvements through the use of analytics of quoting accuracy too.

Flickr: http://www.flickr.com/photos/45958245@N00/2944584436/

Guided selling strategies are the Rodney Dangerfield of online strategies.

Relegated to navigating catalogs, serving up price and availability for commoditized products, or cobbling together endless combinations of bundles, guided selling strategies don’t get the respect they deserve.

By not taking advantage of all that guided selling strategies can do, companies leave piles of money on the table they could earn from selling more.

There is so much more guided selling can contribute than it is given a chance to.

Here are the top ten ways guided selling can make a greater contribution to your online selling, service and pricing strategies.

• Brand Consistency across Channels. Having worked at a start-up that quickly moved into a franchised model, I’ve seen from personal experience how challenging brand consistency is across online, offline, regional and global channels.  It is extremely difficult to enforce and make consistent.  Guided selling can provide the basis for brand consistency by replicating catalogs throughout an entire distribution network.

• Guided Selling As A Listening Platform. There is much to learn from why specific combinations of product bundles fail – and succeed – than many companies give guided selling credit for.  Using the analytics applications that can quickly parse through terabytes of data looking for trends and patterns, there is an answer to that nagging question of what’s next when it comes to a product line extension or new product or service direction.

• Kick-start customer loyalty by integrating reputation systems and guided selling. It’s rare to find any company doing this, but imagine how powerful it is to have a guided selling system that has real-time updates from recommendation systems ranking the available alternatives.  Nearly every guided selling system can be configured to support ranking by advertisers who buy premium positions, but what about ranking by reputation?  Think of how powerful Kayak and TripAdvisor would be together for example.

• Reduce product churn and return rates. Using guided selling beyond just a catalog navigation application requires more effective use of the constraint- and rules-based configuration options to better match customers’ needs.  Think of this as taking guided selling to the next level of customer needs analysis.  Using guided selling like this can greatly reduce customer churn, reduce product returns increase satisfaction.

• Automating up-sell and cross-sell based on learned preferences. This is the most often neglected next step in any guided selling strategy.  Defining up-sell and cross-sell strategies based on customer’s histories and their preferences is becoming more affordable given the price drops for hosted analytics apps.  What used to cost over $250,000 in analytics apps can be done for less than $50,000 today.

• Guided selling for order status and managing orders. IBM is using guided selling for providing order status and order management queries as part of their WebSphere platform, and other platform providers will follow.  The use of XML for enabling integration across order management systems is making this possible.

• Best Practices in Channel Training. This is where the major productivity improvements are happening in the best and least-known companies.  Cisco, HP, IBM and Microsoft all use guided selling as part of their training program platforms as do many manufacturers with a high degree of complexity in their product lines.

• Manage product introductions with greater coordination and synchronization across channels and product groups. Many CRM thought leaders talk about the moment of truth being crucial for the long-term success of any customer relationship.  The fact that product introductions are the single most transparent event any company has – think of this event as the single most telling how well coordinated your company is or not – and the use of guided selling to make this as powerful and focused as possible is key.

• Manage one-off pricing requests more effectively. Automating the area of Special Pricing Requests (SPRs) can yield over a 160% increase in revenues over time based on research completed at AMR Research and Gartner Group.  Instead of having channel partners have to call in and wait to get approval on pricing requests, the use of guided selling to navigate pricing tables can make this immediate – and result in more closed sales as well.

• Handle Service process routing including Return Material Authorization (RMA), Stock Balancing, and Warranty Claims. For those channels that tend to have a high employee churn rate of employees including retail, this is an excellent approach to making the more manual service functions automated.  Home Depot is using guided selling to teach their sales associates on the floor how to handle Stock balancing and also teaching their store managers how to handle warranty claims.  Extending guided selling into the service lifecycle management areas of your company is full of potential.

Bottom line: It’s time to realize that guided selling is a stealth weapon that could deliver so much more value in selling and service, coordination of product introductions, and managing the time-consuming areas of pricing as well.

Flickr: http://www.flickr.com/photos/57922963@N00/8350683/

Rodney Dangerfield picture: http://scienceblogs.com/digitalbio/2009/01/another_reason_why_science_edu.php

International Data Corporation (IDC) does a consistently excellent job summarizing their IT predictions and then regularly critiquing them throughout the year.

In the following five minute video you can get an overview of what IDC sees as the 10 predictions impacting the market this year.  If you are interested in downloading them, IDC has created a microsite dedicated to this topic.

Product Configuration Take-Aways:

• The proliferation of mobile devices is going to make untethered sales and product configuration a critical requirement for more companies than ever before.

• AJAX and optimized XML on private networks are going to be the foundation of distributed order management systems that can manage varying levels of product order complexity.  Think scalability of production process, from assemble-to-order through engineer-to-order.

• The pervasiveness of cloud computing and virtualization is going to be a catalyst for product configuration strategies being used for standard products too.

Bottom line: IDC’s continual updates to predictions are worth paying attention to through your RSS Reader to capture the latest from their site and YouTube channels.

Passion is a word that gets of a lot of attention but not nearly enough focus in making it real.

To be passionate about serving your customers is to decide to blow up any process, procedure or program that gets in the way of delighting them to the point they are willing to tattoo your logo on their wrist.

It is that over-the-top experience delivered to customers where they are willing to wait in driving snow for hours to buy your next product.  It is the recognition that their needs and passions mean so much more than making life between 9am and 5pm easy, comfortable, and predictable for your company.  True passion for customer innovation never stops; it is not on the clock.  It is incessantly, never stopping, continually moving.  It is alive.  It refuses to compromise to just make life inside a company easy; it takes the hard road to make customers’ roads and lives so much easier.  It is passion for service personified.

Be Accountable for the Product Experiences You Deliver

So how does all this relate to a product configuration strategy?

Because too often when product configuration strategies are implemented, the pain inside the company comes first and the customer experiences comes last.  Hitting financial goals over time with product configuration strategies is a clear signal they are working.  Yet too many companies are hunkered down and have an analytics addiction – they need the next metric to get a fix.  When in fact the best “fix” of all is making the customer experiences delivered with product configuration so strong, so resonating with a passion that people are inclined to get your logo tattooed on their arms.

You own the customer experience you deliver.

Does your product configuration strategy show a passion that never stops considering how to make your customers’ lives better?  Or their customers?  Or making channels more competitively strong in a brutal economy?  Start looking at product configuration strategies not through an analytics addiction supported by an ever-growing list of metrics, but by the plain and simple truth that you own the experiences you deliver everyday.

Take-Aways

• Audit customer satisfaction with all your product configurators now. Face it; your competitors already know the answer to this question.  They know where you excel and where you don’t, because in the latter case they are winning your customers as a result.  Get focused on the most critical analytics of all, the satisfaction you are delivering with your product configuration strategies.  This needs to include resellers and your end customers too.

• Product configuration strategies must be an integral part of any multichannel selling and service, never standalone. Over the years of working with product configurations strategies as a user and analyst, I can tell you that the quickest path to an epic fail is to keep your product configurators isolated.  Having pricing, product catalogs and product models synchronized across all channels also says to your resellers and customers you’ve decided that this is critical enough to make them a core part of your selling and service strategies.

• How many product configuration system and strategy changes are customer driven? Ask yourself, are your product configuration strategies and their supporting systems being changed to reflect your changing customers’ needs or are they being modified to make life in your company comfortable? On this point it’s critically important to be honest.  Because over time only product configuration strategies that reflect your customers’ changing needs will matter.

• Earn the right to have your customers tattoo your logos on their arms by obsessing how your product configurations strategies can delight customers. It takes an altogether different mindset to get away from purely seeing product configuration as a means to internal efficiency and realize all those metrics pale in comparison to driving your customers’ loyalty and passion for your brand.  Making the experience exceptional, and so strong that it shows your product configuration strategies are truly world class – then you will have earned the right to have customers tattoo themselves with your logo.  A lofty goal and one that takes total, absolute intensity – but so worth it.

Bottom line: Today go get started on a customer satisfaction audit of your product configuration strategies and see what you find out.  How far are you from delivering a kick ass experience for your customers?  Be real -  because they are -  and so are your competitors. Your future depends on the passion for service your customers see.

Flickr: http://www.flickr.com/photos/powerbooktrance/64059445/in/set-1383493/

His book, Seizing the White Space, is discussed and lessons learned from research completed are shared.

Among the key take-aways are the need to define adjacent market areas by unmet needs of shared customers and look at your own product as a cannibalization agent of inefficiencies – a perfect example of this is the use of virtualization in server management for example.

Bottom line: Product configurations strategies are the catalyst for many companies moving into adjacent market segments – take for example Oracle’s decision to make Sun servers entirely build-to-order (BTO) while also bundling in virtualization software and enterprise management apps.  The BTO strategy Oracle is pursuing is an example of how product configuration can extend a business model profitably.

Flcikr link: http://www.flickr.com/photos/29638083@N00/3115367361/

It’s been a rough ride for every company.  According to surveys from AMR Research (now Gartner), Forrester, IDC and many others there continues to be a relentless cost cutting mentality – with the typical company cutting channel selling budgets by 40% or more, dropping print media spending by over 60% and flat-lining sales development spending.  All this to survive the worst recession anyone in this generation has seen.  Doing whatever it takes to survive, some companies have forgotten – or taken their eyes off the most critical relationships they have – and that is with their customers.

Time to Hit the Customer Reset Button

• But if you stop and think about it when was the last time anyone talked about making your company easier to buy from?

• Or streamlining how customers buy from you so they see the entire process for what it really is?

• Or stepping outside your company to look at the products sold through quoting, contracts and build-to-order to see how effective these selling strategies really are?

• Even auditing the customer experience that happens for make-to-stock versus build-to-order products sales?

Hunkered down in their cost reduction bunkers for so long many companies’ senior managers have forgot what their customers need.  It’s time to hit the customer reset button and get moving on getting companies re-centered not just on their needs, but on how they are researching, evaluating, buying or rejecting all products, especially those specifically designed and produced to their needs.

The Path Out of This Recession’s Sales Glut Is Trust

Make no mistake about it, the companies who are in business today owe their survival in part to how well they managed customer relationships during the depth of the recession last year.  How did they do it?  By being real and showing their customers every step of a product configuration being built, but concentrating on telling customers not just when a delay happened to a customized product or service purchased but why.  By using information systems, quoting, pricing and product configuration to deliver the truth and not hide it.

By using new platforms including SaaS to give their sales team the agility to be in front of customers not than their computer screens.  In short, they used technology as a liberator, not a leash.  They sought out customers’ problems and threw their own time at it – and this includes the really difficult ones around build-to-order products as well.  In short, they owned their customers problems like never before – and trust became king.

Bottom line: Time to hit the customer reset button and get out of the “cost coma” so many companies are stuck in right now.  Get more focused on the experience your systems are delivering and the trust you’re earning – and realize that above all else, owning a customers’ problem is the most important step in any recovery.  Trust is king, earning it by owning their problems are the path back to sales growth.

Flickr attribution: http://www.flickr.com/photos/15923063@N00/3438245123/

Businesses implementing lean manufacturing often bypass the front office and target their manufacturing processes. After all, front offices have paperwork not inventory, right? However, it is possible to implement lean strategies in the front office, and there are great reasons to do so. Order entry, quoting, scheduling, design, and engineering are front-office functions that can provide an opportunity to create improvement, eliminate waste, and increase profits in your business.

The first step in implementing lean manufacturing in the front office is to identify your areas of waste in the customer-fulfillment process. Just as Toyota’s Taaichi Ohno identified seven elements of back-office waste, I’ve identified five wastes in the front office.

Front-Office Waste #1: Information Defects

Information defects refer to any time an information item is either incorrect or missing. A general rule of thumb is that humans are only 80% effective in interpreting and processing information on a repetitive basis. Starting out with incorrect information only serves to have an exponential effect on the customer- fulfillment process.

The negative effects can be measured:

• Inaccurate depiction of customer needs
• Inaccurate application of products or services to meet customer needs
• Poor fitness of price to satisfy both customer and organizational needs
• Poor fitness of delivery conditions

There are three common sources for information defects in the customer-fulfillment process:

Obsolete Product-Feature Defects
An obsolete product-feature defect occurs when a product-feature selection is made knowingly or unknowingly that has changed or is discontinued, and therefore no longer meets the needs of the customer. The most common reasons are:

• Product modifications are made, but the changes have not been effectively communicated out to the sales channels.
• Product modifications have been communicated to the sales channels, however, the sales systems have not been updated.

Incorrect Pricing Defects
Pricing is a two-part activity. The first part of pricing involves creating a list price for the product. This is generally based on several factors:

• Product cost (material, labor, burden)
• Anticipated profit margin
• Prevailing market conditions (competition, local markets, product life cycle position)

Since the target profit margin for a product is the most stable factor in the list price, defects are typically a result of dynamics of cost and market. That is, with the increasing effects of a global economy, material costs of steel, petroleum, and other natural resources can change suddenly. List prices then fail to reflect the true cost structure of the product and could greatly reduce a product’s ability to perform in the market.

The second part of pricing is that of creating the appropriate selling price for an opportunity. Generally, there are three factors that determine the selling price:

• Sales-channel profitability
• Customer-preferred incentives
• Rebates or pass-throughs

The selling-price defects can have a significant impact on sales-channel performance. Priced wrong, sales-channel profitability can be negatively affected. If a channel cannot recoup the cost of sales and meet its own profit targets, it may ignore or limit selling a particular product in favor of a competitive product that is more profitable to the channel.

Incorrect Product Feature Defects
Incorrect product features involve the selection of an otherwise valid choice by either the sales channel or the customer. It is important to recognize that incorrect selections are made for two reasons:

1. The correct customer need was fitted with an incorrect product feature. This is the most typical in that, while the need was authentic, an understanding for how to serve the need was not.
2. The correct product feature was fitted to an incorrect customer need. This defect can be rather elusive in that it is often not found until late in the customer-fulfillment process, sometime after the product has been produced.

Front-Office Waste #2: Information Over-Processing

Too much is, well, too much. Too much information is often viewed way too many times. Too much information is processed too many times. There are three main sources for information over-processing.

Excessive Reviews
It is not uncommon for the customer-fulfillment process to have several discrete review sessions prior to order entry. These review sessions typically precede a translation process:

• After the initial receipt from the sales-channel, a sales administrator will verify customer and sales-channel information prior to logging the opportunity.
• An application engineer will verify product-feature selections made by the sales channels.
• A pricing analyst will verify that the price is accurate.
• A material planner will verify that the deliver dates are supported by the production plan.

Excessive review sessions add unnecessary time delays to the customer-fulfillment process and don’t add any additional value from the customer’s perspective.

Obsolete Documents or Forms
Throughout the life cycle of the customer-fulfillment process, temporary process work-arounds, deviations, and customer-specific activities have produced process tasks that have become unnecessary. However, for one reason or another, the temporary process tasks and the supporting documentation were not removed from the official customer-fulfillment process. Many times the originator of the added process task is no longer with the organization or has assumed other responsibilities.

Redundant Data Processing (“The Excel Effect”)
Another source of information over-processing is better known as the “Excel Effect.”

Here is an example:

“Opportunities are entered into a tracking system. Because he cannot access the tracking system, or get the data out in a specific format, the sales manager creates a spreadsheet to track opportunities, pipeline planning, etc. The engineering manager needs to monitor the opportunities that he has assigned to his department. To do this, he uses the company’s PDM system to monitor the opportunities. Throughout the customer-fulfillment process, critical opportunity information is processed in several different systems …”

It quickly becomes evident from this example that changes to customer needs and product solutions must propagate through redundant processes that add considerable time and effort to the customer-fulfillment process.

Front-Office Waste #3: Information Idle Time (Wasted Time)

Because the customer-fulfillment process is usually a manually driven, asynchronous process, there is almost always a queue in front of each process task. These queues can stretch the customer-fulfillment process timeline as much as 600%. There are several process tasks where time delays from waiting are typical:

• Waiting for cost and price estimates
• Waiting for engineering approval on specials
• Waiting to generate a correct proposal
• Waiting for commitment from manufacturing or procurement

Front-Office Waste #4: Lost Scalability of the Sales Force

This is often a hidden waste. For each day that a sales channel is unaware of (or uncertified on) new products, product enhancements, and customer applications, revenue is lost. Rapid development and deployment of value streams that support and educate the sales channels is essential to a new product rollout. Sales effectiveness is increased with the knowledge of related products and their fit with customer needs – provided at the point of need. Traditional wastes measured in process delays, rework, and information defects equate to millions of dollars in lost revenues, market-share erosion, and customer retention.

Front-Office Waste #5: Adaptability of Getting New Products to Market Sooner

In today’s competitive business environment, wastes in information defects, redundant data processing, and information idle time can dramatically affect how new products are developed and brought to market. Having a comprehensive value stream that coordinates information flow between sales and marketing, product development, and production for new product introduction (NPI) is central to achieving these objectives. According to the 2004 AMR Research report “Benchmarking the Perfect Product Launch,” companies that do not effectively manage their NPI processes can be up to 56% later to market. Data compiled by consulting firm PRTM indicates that companies also experience up to 26% lower margins due to poor NPI processes.

Implementing lean manufacturing philosophies and processes in the front office is possible. Once you’ve identified the waste in your process, you can begin to map the value stream of your front office. Then you not only have an efficient, revenue-producing back office, but a front office too.

This article is an edited excerpt from the white paper “Value Stream Mapping for a Lean Front Office.” To download the complete white paper, go to www.cincom.com/lrc.

Image: 16th July 2008 by gregoryjameswalsh.

For many companies the length of their quoting cycles is directly proportional to the complexity of their products.  The greater the complexity, the longer the sales cycle.

As a result, quoting cycles can range from several days to weeks or more.  The greater the complexity of the product or service, the greater the need to chase down experts to make sure quotes are accurate and can be built or delivered.  Valuable selling time is lost searching out the best possible product information to make sure the quote is right the first time.

Just clicking together another Intranet site and hounding the already over-booked product experts to write down their best insights in a portal is not scalable either.  I’ve seen this in high tech manufacturers who product multimillion dollar storage systems.  They are running small portals for their three most knowledgeable product experts to share information on.  As these experts are traveling 50% or more their last entries are from 2008 or earlier in some cases.  What’s needed is a quoting system that taps into the knowledge of the entire company for each and every quote being produced.

Getting Past Selling Roadblocks to Close More Business

For the high tech manufacturer of disk subsystems they lived and died by long sales cycles.  Having a quoting process that took weeks was killing them; their competitors were able to respond in at least a week.  What was needed was a more efficient approach to taking the very best insight, intelligence and knowledge their presales experts had and applying all of it in each quote produced.

In watching this company transform themselves into being able to compete more effectively for business, here were the lessons learned:

• An automated quoting process quickly led to automated pricing policies and the ability to manage special pricing requests. Quotes were getting hung up in presales, product engineering and customer engineering – and as a result the company barely had enough time to price them.  With an automated quoting system they were able to also manage special pricing requests – and generate exceptionally higher margins as a result.  They sold more and at a higher profit as a result of taking special pricing deals away from competitors who had easily won them in the past based on this manufacturer’s inability to respond fast enough.

• Cross-sell and up-sell was now possible. Before with the manually-driven system and the massive amount of time lost the company rarely hand a chance to cross-sell or up-sell, or even get into these conversations with customers.  With an automated quoting system they were able to design in cross-sell and up-sell into the quoting system.  This would prompt sales representatives of products to offer in real-time.  The result was a 34% increase in sales of accessory and secondary storage systems.

• Link customer quotes to their sales history and existing contracts to determine optimal pricing for standard and customized configurations. This is the biggest roadblock buster there is for many manufacturers who have automated their quoting systems and integrated it to CRM and contract management systems.  This also gives the sales representative an opportunity to negotiate up on price based on contractual commitments – a powerful negotiating tool that generates higher margins overall.

Bottom line: Getting past selling roadblocks begins with the automating of the quoting process and capturing experts’ insights and intelligence so it cab be applied 24/7 to any sales opportunity at any time.  Integrating quoting systems to CRM and contract management can deliver higher margins than if all this work is just done manually.

Flickr: http://www.flickr.com/photos/mookies/2066070381/in/set-72157603306063579/

As Cisco’s execution of product configuration strategies continues to lead the market, no doubt one of the areas of excellence Mr. Orr is speaking of is qoute-to-cash and build-to-order process areas as well.

There are several excellent insights provided and at 3 minutes, 47 seconds it’s worth the time to watch it.  Excelling at the tasks within an ecosystem can spell the difference between beating a giant at their own game.

Bottom line: The same holds true for product configuration strategies of smaller competitors in large markets – excelling in the ecosystem of choice – from manufacturing to services – all starts with product configuration strategies aimed at excelling at the user experience.

Flcikr attribution: http://www.flickr.com/photos/30252426@N06/3579132008/

The points he makes are well applied to product configuration strategies as well.  Among the take-aways for product configuration strategies include the following:

• Stay current with how customers prefer to purchase from you including mass customized products. The point is made how out of touch Best Buy was with how women purchased products versus men.  Only through the re-defining of their stores to be more customer-centric to women’s preferences were they able to increase sales.

• Selling experiences of products is even more important than selling the product itself. The book itself discusses how the customization of experiences to ensure they meet or exceed customers’ expectations is critically important – more important than the product price.

• The buying process needs to convey service not arrogance. This translates into having quoting systems that can set accurate delivery dates and also deliver the right product at the right time for the right price.  The use of product configuration strategies to make this happen is clearly a major priority in making any organization customer-centric.

Bottom line: If you have a product configuration strategy in place in your company, pick up this book.  It will change your ideas of how you can better own the problems of customers and solve them through product configuration – it’s a great read.  As soon as I finish it I will do a complete book review of it from the standpoint of mass customization and product configuration.

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