Company purchasing managers have taken the lead in negotiating sales. For some years now, buyers have known much more about sales than before. Their information systems tell them much more than the monthly reports used by salespeople contain.
Now they can measure the cost of owning the supplier's products with low inventory turnover and have a square meter of warehouse space available again. Buyer evaluation standards are quite refined, and coordination with your internal customers is so well developed that buyers have multi-dimensional statistics to quantify supplier performance. Gone are the days when sellers knew more than buyers.
Buyers have changed the rules of the game. Day by day they reduce their sources of supplies based on the philosophy of "Just in Time"; entering into agreements with a single supplier.
Buyers came to have a respectable place on the board of directors because they are considered vital stakeholders to the overall success of the business, especially since they handle that large part of the costs of a company.
Gone are the days when it was the customers who approached the company, now it is the company who must go to the customer. This has led to the urgent need to address process reengineering based on the customer.
The results achieved by the reengineering of the first generation did not satisfy all the companies that implemented it, having registered a large number of more than unsatisfactory, disappointing results. James Champy himself declares in his work Reengineering Management (1995), that a study carried out found that the goals of both cost reduction and growth in market share were not achieved in at least 30% of the cases surveyed.
The main causes that motivated these disappointing results should be sought in:
- The sales sector / area was not duly considered. Overestimating what has come to be called "the valley of despair." The application of "cookbook" type solutions. Resistance to radical change.
Second-generation reengineering comes to overcome these drawbacks or anomalies, in addition to adapting the company's processes to the new business trend. Reengineering is a particular way of using our minds (of thinking about the company). It constitutes a path of experiments, inventions and reinventions, constantly contrasted with the reality of the income statement.
What happened to Sales?
Although various causes can be listed for the problems experienced in the implementation of first generation reengineering, one of the most significant causes for many companies is the marginalization of sales from such a process. This was the result of privileging and giving preponderance to all the productive sectors of the company, over the areas of contact with the client.
Reality shows that leaving sales out of initiatives aimed at driving improved customer satisfaction or profitability doesn't work. Reengineering that tries to improve company performance without giving due consideration to sales and other positions related to direct customer service is losing a large part of its vision. Marketing and sales have too great an impact on customer relationships to be ignored or neglected during process redesign efforts.
The very special characteristics of the sales and marketing area, in terms of the profile of its members, as well as the very particular characteristics of their contacts with customers, led them to be put aside during reengineering. It is clear from the results obtained that beyond the complexities that are inherent to it, they must be taken into account especially when trying to achieve a competitive advantage through reengineering.
Having overestimated the "valley of despair"
The "valley of despair" is called the drop in performance caused in many cases by the radical changes generated in the organization. The problem is in believing that this valley is wider and deeper than it really is, which leads to setting goals and objectives below the organization's possibilities.
Use "cookbook" type solutions
This problem occurs when following to the letter certain formulas prescribed by certain management gurus. Either these gurus apply it in all companies and cases in the same way, or that executives convinced of certain concepts proceed to its application without paying attention to adaptations and differentiations.
It is necessary to underline that reengineering is not in itself a strategy to achieve competitive advantages, but rather an administrative tool used as part of a broader business strategy and designed to achieve competitive advantages.
Resistance to radical change
Although radical change generates the possibilities of enormously increasing competitive advantages, on the other hand it collides with the resistance of the vast majority of people, who also lack the ability to change radically, since they evolve over time.
So if leaders believe they can implement radical change through reengineering, employees are sure they can prove otherwise. It is unrealistic to expect people to make a significant change in the way they perform in a short time.
The new beginnings
A new generation of consultants, who having lived and taken due note of the failures, shortcomings, failures and problems of the first generation of reengineering, propose new principles and concepts to take into consideration when applying reengineering, this being the second generation.
- Principle 1 how obvious gives special importance to the relationship with customers, for which it gives a special place to marketing and sales. This thus becomes an "outside in" reengineering, thus harmonizing the sales, marketing and service processes with the customer's supply processes. A significant impact of reengineering from the outside in is examining all the process flows between the supplier and the customer.
It is essential when redesigning processes, to have a complete and complete understanding of the customer purchase process. Current and future improvements must take particular account of present and future changes in the purchasing and supply activities and processes by customers.
- Principle 2 is to formulate a radical or revolutionary vision, but implement it in an evolutionary way through continuous improvement. In this way, company managers must establish more realistic expectations about how much can be changed in a certain period of time. In addition, a greater participation of the personnel in the redesign work must be given and generated.
- As Principle 3 we have the need to combine art and science. These terms are used to illustrate the enormous differences between first and second generation reengineering, as understanding and understanding customers is much more an art than a science. It takes a sense of art to understand the client's need for comfort, security, relationship, and commitment. Meanwhile, science is used to analyze and assess the company's production processes. So combining art and science is necessary to generate this new approach to customer-centric reengineering.
The reengineering process
The reengineering of the second generation should not be understood as a movement but as a tool designed to be adjusted to the specific situation of each company.
Changes must be rapid and profound if your main customers choose to reduce their number of suppliers, leaving evolutionary or continuous change for the opposite case. Companies can accept the challenge of skillfully forming a radical vision of their future, but then develop intermediate designs that allow the company to move forward under a model of continuous improvement towards a revolutionary vision of the future.
An important change in relation to first-generation reengineering is the inclusion of top-level sales and marketing personnel among the members of the redesign teams. In this new vision of the redesign of the processes, it is advisable to limit the number of participants in the teams to a maximum of 15 and a minimum of 7 members, this is because it is considered that the larger the redesign team, the more time it will take to learn to work harmoniously. In addition, in second generation efforts, it is becoming more and more important for financial personnel to participate in the team, as they have a clear understanding of the contribution that sales, marketing and service functions make to the organization. its real impact on costs and profitability from customers.
Regarding the participation of consultants, they are essential to help start the process and present aspects from a totally different perspective, the one that has to do with their experience as an observer of best practices and the errors in which other companies have made. incurred.
Conclusions
From the errors and failed acts of the first generation of reengineering, it is clear the need to take into very high consideration the importance of sales and marketing in the redesign of processes, which implies paying special attention to customer requirements. In addition, reengineering must be implemented, adapting them to the particular circumstances of each company in terms of its culture, organizational behaviors and economic - social - cultural and political environments.
The objectives to be achieved have not been reduced in terms of radical changes to be achieved, but instead of attempting these changes in an almost sudden manner, an evolutionary process is developed and planned from the current situation to the new processes.
Under these new circumstances, the need for an integration between the art and science of change is generated.
On the foundations of the first two generations of reengineering stands the Recreation of the Company's Processes as reengineering for the 21st century (Third Wave Reengineering or Third Generation Reengineering), reengineering based on the most important advances in The subject of creativity and knowledge management will allow a qualitative leap of transcendental importance in the future of companies.
Bibliography
Sales Reengineering from the Outside In - Blessington and O'Connell - Sibson & Company - 1995
Business in the digital age - Bill Gates - Editorial Sudamericana - 1999
Management Reengineering - James Champy - Díaz de Santos - 1995
