Management Functions Mini-Cases: Business Intelligence

Factory Workers: Best Practices

A group of manufacturing companies in a tight labor market were concerned about attracting and retaining production workers for processes that were categorized as the 3 Ds: Dark, Dirty, and Dangerous. They were aware of some of the well-publicized auto factories in Europe, but considered some of these practices to be both impractical and expensive to implement.

This group commissioned us to conduct a survey of companies in America and Europe which enjoy high levels of production worker loyalty and productivity compared to industry or location averages. We arranged to visit, with our client, well-regarded manufacturers across about a dozen industries. We then compiled information on ranking management, benefits and working environment practices by cost and apparent positive effects. The not-so-surprising results: personal presence with frequent, friendly, greetings from “the boss” and the absence of reserved parking spaces and executive dining rooms count for as much as ergonomically-correct workstations, day-care facilities, or high wages. Knowledge Branches:

  • Management. Function: Business Intelligence
  • Management. Sector: Manufacturing
  • Management. Soft Skills: People

Customer Needs Assessment

A manufacturer with a large number of small commercial customers began experiencing sales results that were inconsistent with management’s understanding of the market potential in certain markets: fairly higher than expected among some types of buyers across widely-dispersed geographic territories, and much lower than “normal” among all buyers in specific territories. Was it product? sales approach? neglect by the local representative?

We were asked to explore customer needs and expectations, ranging from the usual “Price, Quality, Delivery” parameters to product performance, sales support and other issues, and then, based on our findings, to draw up a set of recommendations for improvement. After finely segmenting their market, we designed and tested a survey that covered all the identified issues and allowed plenty of opportunity for “wish list” (qualitative) observations. Throughout the course of the survey phase, we reported to management serious complaints and requests for immediate attention as soon as we received them.

NOTE: We combine both numerical (ranking) and qualitative (the “why” and open-ended) questions. It’s more complex to conduct and to analyze surveys this way, but results in deeper insights and more meaningful information.

Among our discoveries was that many of the sales representatives were spending an inordinate amount of time with the “easy sell” customers, where there was both little competition and little need for “hand-holding.” Meanwhile, competitors leveraged this neglect of more-challenging prospects to make inroads into these other, very profitable markets. Pricing strategy and adjustment of sales incentives were two recommendations we made in this area. More than 50 recommendations were made, ranked by potential impact on their bottom line.

We provided management with all qualitative and quantitative data in a database format for their own additional internal analysis. Knowledge Branches:

  • Management. Function: Business Intelligence
  • Management. Sector: Manufacturing
  • Management. Soft Skills: Communication; People

Profitable New Applications for Existing Products

A specialty chemical manufacturer wanted us to make recommendations on how to increase the utilization of its products in two high-volume industries in America and in Europe. The business it was in was experiencing pricing pressure due to increased competition and product substitution worldwide. Remaining in this downward-spiraling environment would threaten its viability as a company.

We researched and discussed global trends in the company’s industry, including channel relationships throughout the value chain (from raw material through service supplies, distributors, end users and recycling and/or disposal) and identified several profitable new applications in the two specified industries based on direct customer observations and requests. Knowledge Branches:

  • Management. Function: Business Intelligence
  • Management. Sector: Manufacturing

Under-utilized Capacity Solution

A significant bulk commodity manufacturer had under-utilized capacity for an environmental process that could be used outside its own industry. In view of the commodity status of its core products and regulatory trends in the other industry on state and national levels that favored its environmental process, the company realized that it had to shift its business focus to this process in order to reverse the downward trend of its profitability.

We were asked to evaluate the emerging market for its environmental process, using several different scenarios with respect to the impact of future legislation. This market assessment covered current and new potential competitors (and substitute processes), geographic location and size of current and future customers, new technologies under development, pricing factors, and potential partners for specific marketing and distribution activities. Knowledge Branches:

  • Management. Function: Business Intelligence
  • Management. Sector: Manufacturing

Sales Territory Profiles Increase Sales Productivity

A financial services company wanted to increase the productivity of its salesforce beyond the improvements made by providing each of them with laptop computers and contact management software linked to the home office. The company agreed with our suggestion that we prepare individualized territory profiles for each of the salespeople. These customized reports included relevant demographic data and trends, identifying typical needs and purchasing patterns for different groups; business establishments (by segment) in their territory; appropriate membership organizations to join or speak before; dates of important trade shows and other events; and lists of media contacts. We presented much of this information in graphical format for quick, at-a- glance understanding of their territory’s income potential. Knowledge Branches:

  • Management. Function: Business Intelligence
  • Management. Sector: Finance

Multi-client Market Study Benefits

Appointing a sales representative or sales agency is the first step most companies take in entering new markets, especially overseas markets. This is an important first step, because (1) you’ll never get a second chance to make a good first impression on potential customers; and (2) you need sufficient information and control of your markets to take additional steps in the future for growing your business.

About 75 small custom design and fabrication firms from the same European country contacted us several years ago as a result of some marketing we did; they wanted to enter the U.S. market at an affordable cost. The managers did not know how big the overall market was or where the companies in their target industries were located, nor did they have a lot of money for extensive market research or for establishing their own branch offices. They understood that manufacturers’ representatives (agents) are often used by both domestic and overseas companies for access to customers in America.

We suggested that they share the costs of learning a little bit about their American markets and their competition before looking for and selecting one or more agents to represent them. Almost 20 companies accepted our offer to survey a major trade show on their behalf to identify the major buyers, competitors and sales agencies and map their geographic distribution. We also talked with all three groups at the show: buyers to get information on their requirements and which sales channels they purchase from and consider to be most appropriate; competitors to understand their capabilities and the kinds of sales channels they use; sales agencies to learn the types of product lines they represent and the kind of relationship they have with the manufacturers. We mapped the U.S. locations of their major prospective customers, listed their competitors and reputable sales agencies representing compatible products, and identified some marketing activities for their consideration.

Several of the companies requested that we develop a detailed sales representative management program for them, incorporating territory boundaries, tracking mechanisms to evaluate agency results against territory potential, and periodically communicating with the agencies and reporting to the overseas companies. Knowledge Branches:

  • Management. Functions: Business Intelligence; Globalization; Money Management
  • Management. Sector: Manufacturing

Competitive Disadvantages Uncovered

An overseas trade organization representing equipment manufacturers tracks market share of that equipment by country of origin in the top 10 countries of the world. Share in its home country was good, but lagged substantially behind other foreign competitors in the entire North American market. We were asked to investigate the reasons for their apparent competitive disadvantage in one major industry and make recommendations for improvement. We uncovered product design issues: customer specifications had changed over the years and the country’s current offerings were over-engineered. There were also market-approach issues, but these were secondary: we recommended that first, either the products should be adapted to the new market requirements, or new markets should be found which valued the particular strengths of the country’s manufacturers. Knowledge Branches:

  • Management. Functions: Business Intelligence; Globalization
  • Management. Sector: Manufacturing

Estimating Demand for Replacement Equipment

An American manufacturer of non-medical equipment for the health-care industry asked us to create an inventory of installed equipment, their own and competitors’ in a random sample of hospitals throughout the U.S. This inventory included number, type, age and physical location of the units, and favorable/unfavorable observations of buyers by type of hospital. This information allowed the client to estimate demand for replacement equipment by different target markets and to customize the sales approach used for each of the market segments. Knowledge Branches:

  • Management. Function: Business Intelligence
  • Management. Sector: Health Care

Licensing Target Analysis

A technology company with patent protection throughout the world, along with considerable design and manufacturing know-how, was well-established in certain industries in the United States but had little presence outside of North America. Management recognized the scope of these untapped markets but wanted to maintain the company’s strengths by directing its profits into developing new products, rather than diverting them into global expansion efforts. Licensing was acknowledged to be their best option for realizing substantial revenues from new markets in a fairly short timeframe.

We reviewed their product’s physical properties and current industries served as the first step in identifying new industries and in making rough estimates of market size for the most promising product applications (high volume/high margin). The estimate of market size is particularly important in attracting potential licensees. We then related the various countries’ patent expiration dates with our estimates of market size. From the perspective of time, only large companies with already-established distribution channels into the appropriate markets were viable licensing candidates for soon-to-expire patents.

To identify companies to target as potential licensees, we designed a table listing industry segments coupled with product applications across three market characteristics. We then identified the major companies serving these markets, highlighting those with the greatest market scope, in North America, Asia, and Europe. The company was then well-equipped to focus their marketing and sales efforts on the most likely licensee candidates. Knowledge Branches:

  • Management. Functions: Business Intelligence; Legal, other Admin; Technology
  • Management. Sector: Manufacturing

Business Intelligence Services: Make or Buy?

Are you struggling to keep up with information on your competition, or on he latest developments in a given technology, or on specific industries, or…? Are you a fellow consultant or other colleague who needs background information in a hurry on prospects or clients?

An understanding of your cost structure will help you gain and sustain a strategic advantage, whether in terms of your product/service mix or for “make or buy” decisions. Unless information gathering is one of your core strengths, smart sourcing of business intelligence will be less expensive and less disruptive of your operations than doing it yourself. Let me give you a couple of examples.

Several trade commissioners ask us to gather information and prepare white papers on trends in technology or the potential impact of pending legislation on American markets for certain products. Yes, of course they all have access to the Internet, including fiber and G5 networks; they all can check through directories and send emails or pick up the phone to call the appropriate government departments or lawmakers for their opinions; they can research and contact executives of American companies that might be good strategic partners for their own domestic organizations.

Why do they call on us? Fast turn-around, for one. In North America, we sometimes are able to provide a turn-around of less than an hour. For our European and Asian clients, we communicate mostly by e-mail, often appending scanned or text attachments that are waiting when they arrive the next day.

Of course not all of our work with global organizations requires rapid response. Sometimes it’s the sheer volume of material available that is so daunting, even intimidating. Our long history of research enables us to separate the wheat from the chaff and then tie the wheat into user-friendly bundles that can be easily digested. Oops, got carried away. Sorry 😉

Our manufacturing clients rely on us as an unbiased “second opinion” to keep them up-to-date on the latest thinking in all sorts of areas, from automation to “best practices” in facility management to family succession and other HR (human resource) issues. Since we don’t get involved in the “hands-on” implementation in these areas, they trust us to provide reliable, third-party information. Knowledge Branches:

  • Management. Functions: Business Intelligence, Globalization
  • Management. Sector: Manufacturing

Membership Organization Reverses Years of Decline

A not-for-profit organization had lost its vitality over a number of years as its relevance to its members faded. Membership dropped to less than half of what it was during the organization’s heyday. New leadership was brought in and aggressive growth targets were set.

Problem was, many of the substantial advantages of membership were well-kept secrets. In fact, no one in the organization knew how much “bang for the buck” any given member realized over the course of the year. Some records and database information were maintained, but these were not always in useful form or easily retrievable.

Membership renewal times occur throughout the year, providing an excellent opportunity to get immediate information and feedback. Since the organization’s salesforce telephoned or visited each member several months prior to membership expiration, we helped develop a checklist of benefits which the salespeople could quickly go through with each member, tallying the member’s return on investment (usually an impressive ratio!).

We also designed a query-able database system for daily or weekly entry, allowing the organization to slice and dice member use and financial impact of the many services offered. This information was then used to identify — and successfully communicate with — those member segments and individual members less likely to renew because of low utilization. Winning results for the organization: membership growth well beyond targets; greater member retention; substantial improvement in cash flow. Winning results for the members: expanded service offerings; increased use and financial impact of services; larger networking/ business prospect base. Knowledge Branches:

  • Management. Functions: Business Intelligence; Money Management
  • Management. Sector: Services, Except Public Administration
  • Management. Soft Skills: Communication