A key element of digitalising the order-to-delivery process is creating a user-friendly customer interface through which customers can place orders and gain real-time visibility on their order status.
With the Indian economy seemingly in a protracted slowdown, cement companies need to urgently identify new avenues to accelerate revenue growth. One of the most under-exploited areas of growth potential for cement companies today lies in their sales and channel operations.
Drawing on Kanvic's extensive experience with leading manufacturing companies, we have identified four of the highest potential areas in sales and channel that can help cement companies rapidly boost revenues. These four areas are:
Our experience has shown that each of these areas offers substantial scope to realise immediate improvements in sales performance. As a result, cement companies that move fast to design and implement changes in these areas will gain an advantage.
The order-to-delivery process at many Indian cement companies remains highly manual with company sales executives typically consumed more in order taking and status updates than developing new business. At the same time, these analogue processes negatively impact customer experience as channel partners and institutional clients must dedicate time and resources to handle the administration of ordering.
By digitalising the order-to-delivery process cement companies can streamline the selling process, free up their sales force to generate new business and create a frictionless buying experience for their customers.
However, before embarking on the digitalisation journey companies should first conduct a detailed diagnostic of their current order-to-delivery process. By mapping the key processes at the outset, companies can identify the current breakpoints and then redesign them to create digitally integrated processes that are lean, efficient, and customer friendly.
A key element of digitalising the order-to-delivery process is creating a user-friendly customer interface through which customers can place orders and gain real-time visibility on their order status. One leading manufacturing company was able to transition its customers to 100 per cent online ordering through a new web portal. At the same time, it eliminated the need for telephonic order status updates by providing online tracking through the portal as well as real-time SMS alerts. Further, through the introduction of GPS tracking of the company's trucks it could provide visibility of the order's progress from dispatch to delivery.
Thanks to the new digitalised process on-time delivery and customer experience dramatically improved and the company saw a 7 per cent uptick in sales.
Implementing effective channel management
The second high potential area for accelerating sales at Indian cement companies lies in more effective channel management. In particular, our research has uncovered two common gaps in channel management: weak credit control systems and persistent conflict between channel partners. As a result, companies' cash flows are negatively impacted and channel partners end up expending more energy fighting each other rather than the competition. All of which diverts attention and resources from pursuing sales growth.
Cement companies can overcome the first challenge of weak credit control by implementing standardised processes that clearly define credit terms based on a customers' value to the firm - rather than the whims of the account manager. These processes should also stipulate clear actions to be taken toward credit recovery. In the case of one company, a further step was taken to fully automate the process of determining credit terms and enforcing their compliance. The combination of these changes resulted in a 30 per cent decrease in the companies' accounts receivables. Secondly, to address the problem of channel conflict companies can leverage emerging technologies to effectively allocate and enforce territory management. A leading manufacturer based in North India was struggling to enforce territory discipline as it couldn't spot orders placed through dealers for customers who fell outside their designated territory. However, by geocoding its dealers and related parties into the companies system it could transition to automated territory management.This prevented dealers from entering orders that fell outside their allocated areas.
When implementing new channel management practices, companies should always bear in mind that the buy-in of channel partners is a pre-requisite for their success. It is critical to take on board their concerns as early as possible and clearly communicate the commercial benefits that will accrue to their business.
Applying best practices in key account management
As cement companies' customers become larger and more organised, having the right customer segmentation and key account management strategy in place is vital to maximising the share of their total cement spends.
In our work with manufacturing companies, we typically find that existing customer segmentations are either outdated or overly simplistic - relying on simple demographic segmentation like size and industry. By contrast, through using advanced segmentation tools that assess customer needs and buying behaviours, it is possible to uncover highly valuable segments with the potential to boost sales and profit if they are appropriately served.
Once the most attractive customer segments have been identified and profiled, these customers can then be transferred to a Key Account Management (KAM) programme with clearly defined processes for handling them.
However, cement companies must be aware that effective Key Account Management requires deep cross-functional collaboration between sales and marketing and areas like production, planning and credit control. To bring about such collaboration one company re-organised its sales and marketing structure to create a dedicated KAM team with a clear mandate to liaise across departments to serve the needs of key accounts. Thanks to the successful implementation the company saw its share of spend from existing customers increase more than 20 per cent after transitioning to key accounts.
Shifting to data-driven demand forecasting
The fourth and final area where cement companies can increase sales is through tapping into the emerging potential of data-driven demand forecasting. Through greater accuracy in demand forecasting based on new machine learning techniques, companies can improve the accuracy of their production planning, reduce inventory costs, and stimulate sales by having their product at the right location at the right time.
The first step in moving to data-driven demand forecasting is collecting and analysing trends in historical demand based on time-series sales data. This enables measurement of trends in seasonality and the identification of irregularities. After the trend factors are identified, an appropriate machine learning model can be selected to build the demand forecasting tool. The model is then trained on the historical data to test its predictive accuracy. Once the model is trained, the new forecasting tool can be run alongside existing methods for a trial period to benchmark its performance. Then when its superior accuracy is established, the company can be confident to completely switch to the new approach.
One leading Indian manufacturer that recently implemented such a data-driven demand forecasting tool was able to increase sales by 10 per cent by more accurately syncing production and distribution with market demand.
By taking action on these four high potential areas, Indian cement companies can accelerate sales in the current slowdown and set themselves up for faster growth in the next upturn.
ABOUT THE AUTHOR: Shiv Sharma is an associate principal at Kanvic Consulting based in Delhi.
By digitalising the order-to-delivery process, cement companies can streamline the selling process, free up their sales force to generate new business and create a buying experience for their customers.