Quality in Action: In Search of Root Cause

A common criticism of CEOs is, “My sales people don’t move enough product.” In one such encounter, the CEO wanted to charter a “sales force effectiveness” initiative. This is always a good start: an executive disposed to action and willing to invest personal capital in sponsorship. The Six Sigma methodology was utilized to tackle the issue. As data were gathered for analysis and the “Why?” question was employed to probe for perspective on perceived reasons for concluding that the sales force was insufficiently productive, the scope of the project was expanded to redefine the focus from the sales force to the entire sales process. A couple of the core reasons for this were “output” anomalies resulting in discarded perishable product for quality reasons by exceeding the deadline for sale, and the resulting hit to gross margin. The project yielded many interesting discoveries that both refuted conventional wisdom and changed leadership thinking. As it turned out, the core problem wasn’t really the sales force, although sales training certainly hones skills. Rather, the following discoveries were achieved thanks to an intrepid project team who gathered and analyzed a copious quantities of data: Overhauled cost accounting by SKU proved that one of the major varieties of product was only satisfactorily profitable utilizing one product method, whereas the company actually created product in three distinct ways. Marketing needed to develop new channels of distribution. The single largest customer was a break even relationship. This evolved by necessity to move “close-outs” and avoid a total write-off of excess product after existing channels were saturated. This condition was further aggravated by the atrophy of the traditional wholesaler distribution channel at the hands of mass merchants. There were times when it made more economic sense not to complete production of certain product, rather than incur additional overhead only to move the product at break-even as a close out—something that ran contrary to a proud corporate culture of highly efficient production technology. Spoilage from the staging cooler had nothing to do with the day of the week, but rather later stage production, handling, and excess inventory age. It had been believed that spoilage spiked each Monday in order to clean out leftovers from the weekend. The project process underscored the need to circumvent the information limitations of the underlying legacy system that supported the sales process. In short, the project absolved the sales force from a scarlet letter and called attention to the waning legacy wholesale channel, and the priority of developing new marketing channels to absorb production capacity at favorable margins.

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