OM Assignment II Baria Planning Solutions, Inc: Fixing the Sales Process

Submitted to: Prof. Sachin Jayaswal By Group B12 Kavita Bakrewala Shwetank Dave Priyesh Ranjan Sabir Kumar Samad Prithvi kumar A

Situation Analysis: Baria Planning Solutions (BPS) is a consulting firm serving manufacturers with $95 million in annual sales. BPS analyses its customer spending categories and identifies various sources of potential savings. It carries out various change management, supplier consolidation and purchase standardization initiatives to attain its objective. It specialises in Spend Analysis. In order to expand, BPS acquired various niche service providers. BPS practised a solution selling process which was essentially a cumulative sales process. In 2010, BPS had 18% of the market. Now, BPS was on a cross road. According to the latest forecasts, BPS had put up a dismal performance. Its win rate stood at 15.5%. Its renewal rate had dropped from 91% to 84%. The problem was attributed to the sales support group who couldnt timely assist the sales group. The members of this group complained of high workload and lack of time to finish off the work. The challenge was to either hire new workers or stream line the solution selling process. Analysis

Sales Opportunities 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Standard Deviation Mean

New Sale 61 72 66 72 4.602998 67.75

Renewal Expansion Pilot 27 11 28 24 12 26 32 14 22 34 16 27 3.960475 1.920286 2.277608 29.25 13.25 25.75

Processing time in hrs New Sale Renewal Expansion Pilot Standard Deviation

Data engineering

Data Analysis

Proposal Support

Pricing

24 24 8 12 22 16 20 10 6.224949799 5.361902647

44 8 22 4 29 6 12 6 11.64849776 1.414213562

New sales and Proposal support has the highest standard deviation. This suggests that there is high amount of variability in proposal support department.
Retail & Order 39 23 16 16 9.394147 23.5

Sectors 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Standard Deviation Mean

Energy 35 37 31 32 2.384848 33.75

Government Manufacturing 15 38 29 45 42 45 18 83 10.6066 17.6971 26 52.75

The variability in the manufacturing sector is the highest. Hence, the bottleneck is due to high variability in order arrival rate and order processing time. Hence, we need to analyse the quarterly utilization level. We define the risk levels as follows; Low risk: <70 Medium risk: >70 & <80 High risk: >80 & <100 Infeasible: >100

Utilization level Data engineering Data Analysis Proposal Support Energy Government Manufacturing Retail and Others Pricing

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 72.16% 76.14% 76.14% 84.66% 74.22% 78.31% 78.31% 87.08% 84.85% 36.36% 55.27% 141.82% 67.35% 89.70% 70.30% 65.45% 83.64% 71.06% 75.15% 101.82% 65.45% 58.18% 71.06% 77.58% 43.64% 120.73% 58.18% 79.02%

Due to scheduling issues, there is an over shoot of utilization levels above 100% in government, manufacturing, retail and other sectors. On scrutinizing carefully, we find that high variability is caused due to variable seasonal characteristics of the various sectors. Hence, the solution lies in changing the organisational set up. OPTIONS: Options are as follows:

a) Discontinue the industry focus approach of the process support group: The industry focus approach could be done away with as it would reduce the variability in the system. As Dee rightly pointed out Since some of the sales support teams are shared across sales divisions they dont feel the urgency or the ownership that is necessary to push proposals across the goal line. b) Addition of a new team member and cross training of two members:

1st 2nd 3rd 4th Utilization level Quarter Quarter Quarter Quarter Energy 84.85% 67.27% 75.15% 77.58% Government 54.55% 70.30% 76.36% 65.45% Manufacturing 55.27% 65.45% 65.45% 86.23% Retail 70.91% 83.64% 58.18% 58.18%

Here, we can see that the utilization levels have dropped below the infeasible region. Now, we can consider the cost impact of this particular option.

Cost Calculation:

Cost of adding 1 member = Annual salary of 1 member in the Proposal support department = $ 105,000 Cost of cross-training 2 members = 3 week salary and benefits = 2*(105000/12)*(3/4) = $13,125 Total Expenditure: $118,125

If we evaluate the new revenues, then we would consider the original win rates. Since the new win rates have been contributed by the delay of sales support group.
Latest Win Original Win Annual rate rate Duration Revenue 15.50% 17.50% 3 1,06,70,625 83.80% 90.00% 3 2,63,25,000 90.00% 90.00% 3 33,39,000 22.00% 25.00% 1 12,87,500 4,16,22,125

New Sale Renewal Expansion Pilot Total

Opportunities 250 117 60 80

Previously the Total annual revenue was $ 38,434,625, and implementing the proposal gives expected Total annual revenue of $ 41,622,125. Since, the total expected benefit is $ 3,187,500. It exceeds the cost involved. This solution is feasible.

Conclusion: Thus, it is possible that utilization levels do not lie in the infeasible region i.e. cross 100% during any quarter by adding one member and cross-training two members. As the new revenues exceed the cost involved in adding an extra resource, the second option can be executed. It is imperative that the decrease in the win rates were possibly caused by the variability in order arrival rate and the delay caused by the sales support group. Hence, if the sales support department would have followed an industry focus approach they could have handled the arrival rates better. In the case of Baria Planning Solutions, we have seen that even though overall utilization levels may indicate that resources are sufficient, due to variability in the arrival rate, it is necessary to maintain additional resources to sustain satisfactory utilization levels. Though in certain system specialized focus may be necessary, but then the system would different set of conditions to determine the bottleneck.