Effective Administration Increases Sales
This company, a manufacturer of electronic equipment, had been operating in Japan for five years with disappointing sales revenues and no profit.
Annual revenues had topped out at $5 million and were having severe problems getting beyond that level. Very skillful and highly trained sales people were spending large amounts of time making quotations, entering orders, following up the order status, and scheduling installations. All these efforts were taking away from developing new business.
Additional staff were hired, but were not able to meet the demands of the work. A new accounting and order processing system was purchased, but proved unable to handle the complexity of the products and Japanese order processing requirements. The system was abandoned after two years of effort. Customers were not being kept informed about their order status. Inspection and installation staff were not able to make and keep schedules. Frustration levels were high and business was being lost to competitors.
In addition to those problems there were the standard complexities of doing business in Japan. Each customer has their own payment terms, invoices to the customer must be printed on the customer's forms, many customers would not include the bank transfer charge when making payment and many would deduct several percentage points when paying by cash rather than promissory note. All these issues had to be managed or they would quickly get out of control, which would both tie up valuable staff and cut into profits.
Once HTM was brought in, we traced the root problems to manual systems that could only be handled by staff with years of experience. Everything was in the heads of just three people and they were at their limit. Another problem: the price list that was believed to be directly derived from the home office price list was not. It was kept on many pieces of paper, none of which agreed. The same situation existed for the customer information. The products were complex to configure, and the company was averaging over 200 quotations per month with each quotation taking over 2.5 hours.
Over an eight-month period HTM made a series of changes. A system was put in place to keep the price list and lead time information up-to-date, and in a form that could be integrated with a quotation and order processing system. A customer database was developed that included the customer's payment terms. A quotation system was developed that included the complex product ordering rules. An order tracking system was developed. All of these systems provided both English and Japanese reports to facilitate information flow between the home office and the Japanese customer. Three years after the start of this project the company had doubled sales revenue to over $10 million dollars, customer service was greatly improved, and new employees were successfully handling their jobs.
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