One session was disappointing. The expectation of the group was to develop new strategies during the meeting that could make a significant difference in the bottom and top lines. Everybody sitting around the table was pretty smart, so there was little chance that they had not figured out the right bunch of things to do. We spent most of our time frustrated, trying to figure out what had already been figured out. Frankly, I walked away from that session bruised and feeling quite stupid. After all those decades of being immersed in aftersales strategy, I felt as if I drowned at that meeting.
The second session made me feel better. Different OEM with a different mindset. Frankly, I was skeptical walking into the session. The big difference, which I could only discern on reflection, was the increased focus on communication and coordination. Rather than judge our success solely based on whether we walked away from the meeting with the “answer”, we took a more holistic approach to make sure we all understood each other and what we were working toward.
It is important to take a step back and think about the impact that significant strategic change can have on five business success drivers that we hold most dear: assets, structural cost, staff “headcount”, policy, and partner coordination. By just focusing on the top five staff groups in an aftersales organization we can see the impacts of “big” change in these five business success drivers. While business strategy setting is often spearheaded by sales and marketing, the ripples of internal impact are most heavily felt by IT and supply chain – notice the number of red dots in the graph.
It took IT decades to elbow their way to inclusion at strategy tables. They are now seen as key internal partners, because of their now familiar “incrementality” (“so, you really want to do this? well, it will cost X, I can’t start until Y, and it is Z on my list of priorities.”). The supply chain organization is often left out in the dark – not only does its “cost center” designation sometimes relegate it to an afterthought, but it also does not typically possess the clear dependencies of the IT organization nor the air-cover from an all-powerful CIO.
Let’s take a look at our current business environment. The dark days of 2009 are behind us, yet we are suspicious of our “recovery.” At worst, we question if it is a bubble that might burst and, at best, we think that sales growth might settle down to something much more modest. We all like what happened when we leaned-up last year: less inventory assets, lower structural cost, leaner staffing, and higher profits. Organizationally we still like to “peanut-butter” workforce staff allocations and cost reduction targets.
Our industry is pretty smart and has settled on a fairly tight set of key strategies. Many OEMs are convinced that some version of Saturn’s RIM (Retailer Inventory Management) makes the most sense for managing enormous enterprise inventory deployment … but they still struggle with how to accommodate/manage system and facing fill rates, sales and marketing push programs, broader retailer RIM parts coverage, uniform retailer acceptance, and total network supply chain optimization. All OEMs are embarking on aggressive digital strategies to increase market share and/or protect current turfs. These encompass owner centers, rewards programs, extended service plans, B2C, and B2B capabilities. Similarly, all OEMs are focusing on service retention to increase service, parts, and whole goods market share. Some OEMs maintain a “can’t get there from here” perspective, while others have a “can’t get there soon enough” attitude. Finally, finally, we see some movement on mechanical wholesale strategies, which really are critical parts of “retention” strategies. This year’s North American Parts Manager Survey will provide us all with plenty of food for thought in mechanical wholesale retailer perspectives. Accessories are taking off with increased vehicle sales and there’s lots of opportunity to grow faster, better, more-er, and cheaper here. And, the industry seems to be migrating more towards performance-based terms and conditions that act as enablers for the other five strategies. My guess is that this set of six strategies encompasses 90% of the “change” that is taking place at the 30 or so OEMs we closely follow.
So, when we map out the potential impacts of these more specific key strategies on the five business success drivers, we see that all of them have some impact; three have wholloping impacts. This reflects common sense that we now take for granted. Ford rolled out their integrated Daily Parts Advantage (DPA) strategy nearly a decade ago and we are, now, all used to highly integrated strategies. Yet, our strategy formulation processes largely remain non-integrated. We need to fix this.
Bottom Line of What I Learned From My Second Sales and Operations Planning Session:
- Involve all major parties that need to be integrated in your strategic rollouts.
- Let sales & marketing lead the charge in strategy formulation.
- Do not over-prepare or you will never meet.
- Do not meet with the expectation of developing new strategies. Rather, meet with the objectives to discuss pre-formulated strategies or to refine integration of these strategies.
- Let the conversation flow – do not bring out a stop watch.
- Do not be defensive – admit to past disappointments. The best strategies are the result of incremental improvements birthed from program disappointments.
- Don’t expect this to be a “one and done” meeting – your primary objective should be ongoing communication and alignment, not necessarily “joint decision making.” Like our RIM systems, if we and our dealers agree on parameters, it does not matter who “places” the order—either way we’ll achieve the same results.
- Leave your turf scars and attitudes at the door. Focus on implementing the right strategies at the lowest cost in the quickest timeframe.
- Don’t feel compelled to do somebody else’s job. Sales takes care of customers and is responsible for understanding their requirements. Marketing is all about share growth, awareness, and messaging in an increasingly digital world. Supply chain, service operations, and IT are independent enablers.
- Have some fun and talk a lot. Continue to do so.