Aug 05, 2019
How Your Sales and Ops Teams Affect Your Inventory
The styles of the Sales Manager and the Inventory Planner are usually total opposites. And when you throw the Finance and Marketing people into the mix, well, things can get interesting when trying to reach consensus. It’s a balancing act with these personality styles to try and achieve a common goal and objective.
When it comes to your inventory, Finance usually wants to keep stock holding to a minimum. Sales, on the other hand, will want to ensure that they can always deliver on their promises to clients. Marketing is trying to push Sales to commit to what they will be selling so they can meet their KPIs, and the poor folks on the Operations team are stuck in the middle trying to make all stakeholders happy while ensuring that everything is aligned, captured, and quantified in the correct forecasts.
It is often more productive for Operations and Sales to collaborate in terms of forecasting. Marketing and Finance strategies are essential and need to be addressed, but these can be achieved separately.
There often appears to be a disconnect between Sales and Operations, which can be smoothed over if each department fully understands each other’s roles and they collaborate. Common comments one will hear from Sales: “why can’t our operations supply what we are selling?” Meanwhile, there’s often the reverse comment from Operations: “why are you selling what we can’t supply?” Both questions, of course, have validity.
When Sales and Operations meet to discuss forecasts, the center of this conversation needs to be around one person: the Customer. Both Operations and Sales need to understand that a sale is not a sale unless the Customer is happy. Sales tend to focus on their sales quota, and once a deal is made, they move on. But if a client’s order is not delivered, then Operations need to resolve this, but Sales need to keep in communication with their client to keep a strong relationship going forward.
Sales should understand that Operations doesn’t exist for the pure purpose to satisfy their demands. In addition to ensuring stock availability, Operations have other commitments such as workforce, recruitment, logistics, and budgets.
Operations, on the other hand, often think of the Sales staff as an annoyance as they want their orders expedited ASAP. Operations are usually busy focusing on Inventory management processes and procedures, and therefore will put a sale at the bottom of the pile to get to when they have the time.
Operations and Sales are co-dependent
Here’s the deal: Operations and Sales are co-dependent. Rather than pointing fingers and blaming each other for issues, they should be working as a close-knit unit. They should be focusing on the requirements of the Customer and how the company can operate efficiently around these requirements.
So, when Sales and Operations meet on forecasts, it should be straight forward. You both should have the statistical estimates based on existing data, so all you need to look at are any anomalies and market insights that Sales have on their radar.
Since Sales are on the front lines, so to speak, they will have data that Operations won’t be privy to. Be sure to forecast the products that are high in value and difficult to forecast. For example, a new product will be challenging to predict as there is no historical data, so this is where Operations will need insight from Sales. For the rest of the SKUs, you can pretty much use an expert system to select the best mode for forecasting automatically.
Here are some keys to creating a successful relationship between Sales and Operations:
- Understand and focus on your customers and their needs.
- Understand each other’s limitations in your department and find ways to solve these where possible.
- Build a culture of education and understanding of each other’s roles within the business.
- Work together and communicate as one team, creating a happy working environment where people want to work for each other and take responsibility.
- Be consistent but flexible.
- Create a culture for growth and excellence, to build the business as a market leader and give your company a competitive edge.
It's an age old problem in many organizations that staff in Sales and Operations bump heads and are in conflict on many issues. Besides the pointers provided in this post to help you overcome these issues, additional factors such as implementing sound business processes, better tools, and useful metrics will all aid in growing teamwork. With smart strategies and open communication between your teams, you are bound to see measurable results in your bottom line.
Written by Craig de Kock
Craig comes from an engineering background, receiving his degree from the University of Pretoria in the early ’90s. His experience in supply chain started in 1992, where he joined a team developing ERP and logistics solutions for local organizations in South Africa. Focusing in supply chain, Craig moved to a specialist supply chain business in the early 90's and moved through the ranks to eventually end up managing a team of consultants on various supply chain projects in SA. Craig joined Barloworld logistics as General Manager of product development and was responsible for the development, testing, and international rollout of their inventory optimization product. Craig later expanded his talents and joined a team to manage IT infrastructure, IT Projects, Warehousing, Operations and Supply chain in a cellular business as the COO and later CIO. In 2011 Craig went back to his supply chain roots and joined cloud-based Inventory Management company NETSTOCK. He began his journey at NETSTOCK, building the business from the ground up. Today Craig is President for NETSTOCK in the USA and CIO for the group. Craig focuses on NETSTOCK customers, empowering his team to make sure they have the right systems and processes in place to deliver a superior customer experience.