The Traditional Bottleneck Location
A business can enhance its throughput and therefore its profitability by locating the bottleneck in its operations and taking whatever steps are necessary to mitigate the impact of that bottleneck. For example, a bottleneck operation can be provided with an inventory buffer, additional staffing, outsourced production, more production equipment, and so forth. These concepts are frequently implemented in the production area to improve the capacity of a business to produce goods. But what if the bottleneck is actually located in the sales department?
The Sales Department Bottleneck
A good way to view the sales department bottleneck concept is to first examine the typical sales process, which is:
- Locate prospects
- Meet with prospects in an initial sales call
- Conduct a product demonstration
- Issue a quote to the prospect
- Negotiate the terms of the contract
If the sales manager is tasked with increasing sales, his first reaction will likely be to increase the number of sales staff, so that they can locate more prospects. However, adding more prospects may not be the problem. Instead, there may be a bottleneck further down in the sales process that is preventing additional sales.
To locate this bottleneck, match the capacity level of each step in the process to the amount of actual sales activity being handled. For example, it is entirely possible that the group providing product demonstrations is too small, and can only provide a fixed number of demonstrations per day, no matter how many new sales prospects have been located. A likely result is that new prospects cannot obtain a demonstration in a timely manner, and so purchase from a competitor instead.
Thus, an examination of actual to available capacity at each step in the sales process will reveal where there are bottlenecks. Another clue is that there should be a backlog of work in front of these bottlenecks. The problem can be dealt with by adding staff to these operations, rather than just piling more headcount into a search for more sales prospects.