Sales Management and Reporting at Chemgrow
The reporting and financial systems at Chemgrow are typical of many process-based manufacturers who are more centered on production efficiencies than on sales reporting and analysis. Inward focused and difficult to change, the reporting systems are crippling the company's ability to grow profitably. Only through intensive manual analysis can the teams mentioned in the case study get useful information. This lack of reporting capability is crippling the company's ability to align sales, marketing and service. The integration of sales and marketing strategies is highly dependent on the rapid accessibility of profitability data by customer and sales programs (Goldman, 2005). Not having sales and profit performance data leads many companies to eventually compete on price, sacrificing profitability to gain sales (Vaccaro, 1991).
For Chemgrow, the intensive manual process relied on for producing reports is a competitive disadvantage and one that costs the company profits, valuable selling time, and the ability to react to changes in market conditions quickly. Studies of sales reporting strategies that attain the best results have a sufficient quantity and accuracy of information, have a high level of relevancy and lack bias, yet are above all, are very timely in their reporting and analysis (Wotruba, Mangone, 1979). Chemgrow does not have these attributes associated with their systems and as a result will need significant re-engineer their sales reporting processes first, selectively adding in automation second.
As a first step to redefining the sales reporting process and its associated analytics each sales region is analyzed from a gross margin standpoint and by tonnage shipped. Analysis of individual sales performance is also completed at the gross margin level with the outstanding sales person defined in addition to the top 15 most valuable customers from a gross margin standpoint. This analysis concludes with recommendations for reports that will need to be run periodically for Chemgrow to become more efficient at managing their sales channels to profitability-based goals and objectives. These reports will significantly reduce the firefighting that is occurring throughout the company today and the exceptionally high levels of manual analysis needed to get valuable profitability data to manage sales regions. From a sales planning and control perspective the company has to completely re-orient their approach to creating a sales reporting system. Recommendations for this strategy are also provided.
Three Year Sales Analysis
The Southwestern Region was the most productive by gross margin for the three years of the analysis, generating a revenue average gross margin per sales person of $630. This was computed by taking the average percentage of total sales by salesperson within region and multiplying it by average gross margin. The following table summarizes that data provided in the case.
Average Gross Margin Per Ton (1998-2000)
Table 1, Average Percentage of Total Sales for Each Salesperson summarized percentage of total sales by salesperson, by product within region. When the average gross margin per ton is applied to these figures, the Southwest region has the highest productivity on average for gross margin. Holden is the most outstanding salesperson on gross margin earned.
Table 1: Average Percentage of Total Sales for Each Salesperson (%)