In 2012 NEC’s management hired a new VP of sales for its display solutions division to address a number of challenges that had a cumulative negative impact on the company’s working capital. The division had to continually keep a large inventory to meet ongoing demand from its many different customers and also had a lot of outstanding cash with its wide network of partners.
However, when the new VP started analyzing the sales organization in depth, he identified several additional challenges that made things difficult for NEC’s display solutions division.
- Poor precision of the sales prognosis due in part to the many different sales organizations operating in different ways in different markets.
- Lack of focus. With more than 400 direct partners, the sales organization was spreading itself too thin.
- Unprecise pipeline. Because the sellers were not close enough to the customers, they were heavily dependent on their partners to report pipeline figures.
- Inconsistent sales contracts. The sales contracts were different from market to market and even customer to customer, and many contracts needed a commercial update.
- Inconsistent pricing. Because NEC offered different prices for their products in different markets, some customers started purchasing from foreign sales offices. Consequently, every sales meeting with the customers ended up being a discussion about price.
- Lack of knowledge. NEC lacked tools to measure and analyze the effect of sales and identify which sales reps were profitable, which ones weren’t and why.
- Organizational complexity. The different sales organizations (9 regions in 82 countries) were structured very differently, which resulted in high complexity and time-consuming management.