Channel Information Systems 495. Case 14.1 Indian Engineering Ltd (IEL)* It was late on a Tuesday evening in March. Ramesh, the CEO of IEL was sitting with his bright young executive assistant Amit in his office for a final review of the presentation he and Amit had put together to he put before the Board of IEL where the heads of sales and marketing (S&M) and the four regional manag- ers would also be present. Ieall started three months back when Ramesh joined IEL as its CEO. The chairman had briefed him and told him clearly that in six months time he had to put back the sagging sales and market share of IEL back lon track. In the last three months Ramesh had studied the entire company in great detail and spent a lot of| time with the S&M people. Ramesh had understood the issues and come to conclusions on the way forward. He was to present his recommendations tomorrow. BRIEF NOTE ON IEL IEL is an over 40 years old company in the engineering industry in India. It has been a market leader for Imany years in the products it offers. Its turnover last year was in excess of Rs. 700 crore. In the last six to seven years, with intense competition from domestic and MNC players, it has been los- ing market shares and dropping margins drastically. This was the situation when Ramesh knowingly joined IEL. He had a background of having turned around the eatlier electrical goods manufacturer he had worked ith for seven years. * IEL has four business divisions (SBUs) with different product groups serving separate end-user| segments. * Channels of distribution in each division is based on product characteristics (decided on 16 parameters by IEL) and the service support required (on 8 parameters). It is obvious that the channel system for each division is customised to the requirements of the SBU. * Sales of products and spare parts and service are done either directly by IEL or through the channel partners. Institutional business is a major component of IEL sales and revenue. * A similar strategy is followed by competition. + The S&M organisation has a support group in HO with four regional managers and 20 branch managers (one in each state). Under the BMs are sales managers, ASMs, sales engineers, service engineers, dealers and authorised service centres all over India. + Each SBU has a marketing wing in HO. * There is commercial support at each branch/region. * The field people feel that the roles of the players in the S&M function are clearly defined. Not] everyone in IEL supports this view. + IEL pays its people reasonably well in relation to the industry. Recent entrants to the industry are weaning away some good people with highly lucrative offers. + S&M people are not exposed to any training and development except on the product and its servicing. * The S&M function needs to interact closely with Purchase, Production and Finance to ensure support for its efforts. * Reproduced with permission from: Network 7 Management Consultants.496 Sales and Distribution Management Key Business Drivers In the intense study, which Ramesh has done of the business, he has clearly defined the factors which drive the business in the industry. These are: © Consistency in product quality * Customer satisfaction * Cost effectiveness + Brand image development + Long-term strategic thinking + Development of new product applications * Clearly defined marketing policy Ina quick informal survey done with the S&M people and some dealers, customers etc., Ramesh realis that IEL figured 3rd or 4th in ranking against its major competitors on all these parameters. IEL under the leadership of Ramesh wanted to ‘perform’ far better in the industry. Very clearly there was a lot of strate change in direction he had to recommend to the Board tomorrow. More than the strategic recommendations, Ramesh was more concerned with the suggestions he for the S&M function the next day. He was sure that these would not be taken kindly by most of the} members. Customer-Driven S&M To get back its rightful share in the industry, Ramesh has got a five point mantra for the S&M function start all over again: + Knowing their markets + Knowing their customers Knowing their competition + Be pro-active to meet customer needs + Develop a strong commercial outlook—do not believe in selling cheap Ramesh has observed the following areas where he feels that the S&M function has to radically cl the way they work if they have to gain their market dominance—he is going to ask the head of $ tomorrow to give him a time—bound plan to tackle these issues: Sales operations + Salespeople hardly make regular visits to the market. + They spend a lot of time in the office making calls and following up with production for dispatch goods. * Salespeople visit dealers for collecting orders or payments—never for visiting end customers * No formal/regular beat plans have been laid for the sales-people. * Sales people do not submit formal reports on their daily activity. Channel support * Dealers in IEL are hardly under any pressure—it does not matter if their targets are not beaten * Service engineers are fire-fighting all the time attending to customer complaints as quality TEL products is not consistent. They do not find enough time to meet all customer compli satisfactorily.Channel Information Systems 497 TEL products are not contemporary—for example they still have mechanical controls whereas others have already moved on to digital/electronic controls. Frequently the salespeople get the approvals of the HO for discounts on products giving the explanation of the importance of the order/customer and the threat of losing to competition. They seem to have lost the ability to sell under pressure. Se™M Viewpoint Selling IEL products in the face of better technology/consistent quality of competition is not easy. Discounts are the only means IEL sales team has of getting sales. Production does not support the efforts of sales—hence the need to follow-up over phone and spend time in the office. Otherwise orders will not get executed. IEL is not able to support the sales/service people by being top class on the seven key business drivers. Getting orders and payments from dealers takes away most of the time—there is hardly any time for customer visits. There isa lot of paper work and reports to be done—there in no computer support—hence the need to spend a lot of time in the office. |Questions 1. 2 You know what the CEO Ramesh thinks of the S&M function. You have also heard from the ‘S&M people their side of the story. What do you think? What should be the action plan for IEL| to start gaining lost ground? Do you believe there is role for improving the logistics and distribution system in IEL? What} would be expected of the system? Please discuss and make out your recommendations.