A day after meeting with Jennifer, Jim decides to visit with Belt Line Automotive, one of RKD's most important customers, and an account managed by Jennifer.

Jennifer sets up a meeting with the CFO of Belt Line Automotive, a $750 Million manufacturer of hydraulic braking systems for the automotive industries. RKD implemented a B2B solution for Belt Line to integrate their supply chain and their customer network to their internal back-office systems.

Jennifer offers to drive Jim to the meeting and on the way provides Jim with some important background on the account. She starts with some important details about Belt Line Automotive. "Belt Line is an interesting success story. While most of the automotive industry has been hurting, Belt Line has held their own and even grown over the last couple of years. The project we recently completed for them was a key plank in their strategy of collaborating more closely with both their suppliers and customers. They had always worked very closely with both, but our web-based B2B implementations allowed them to achieve an even greater level of performance in both managing their supply costs and providing much better service and order fulfillment to their customers."

Jim was aware of this through the company success story that had been published by the marketing department. He wanted to understand a bit more about the current situation before meeting with the CFO and asked, "That's what I understand Jennifer, but was the implementation a good one? You know, on time and on budget. Is the CFO happy. What's his name by the way?"

Jennifer paused to take an exit off the freeway and began her response, "Not much further now. Less than five minutes. The CFO's name is Bradley Horn. He is a very direct person. All of Finance, Accounting, IT and HR are his responsibility. He has VPs responsible for each area, but is a hands-on guy. He has been with Belt Line for over 10 years and is very close to the President. In terms of the project, we had cost over-runs and delays, and we have not received our final payment. We are working against a list of outstanding issues and once they are resolved, Bradley has promised to pay. But overall the project is viewed by the company as a success and of course, Belt Line is currently acting as a reference."

Jim wished they had more than five minutes to discuss the account now that he knew he might be walking into some open issues. He made a mental note to think about formalizing the account review process. He would have to make due with one last question, "Will we be talking about the project issues today then?"

"I don't think so. I have prepared Bradley for our visit by informing him that you are looking for his advice on how we can improve our sales and delivery approach. He promised to stay at a fairly high level. I think you will find him to be quite insightful. He played a very important role in keeping their team and our people on track. He focuses on the important things and does not allow minor issues to get in the way. OK, here we are."

They are led from the reception area to a floor that looks like it was furnished sometime in the late 80's. In the center of the floor are cubicles that actually look like the trim is rusting, while computer and power cables unceremoniously hang randomly from the ceiling tiles or run along-side banged up silver power posts that are randomly distributed in the cubicle pool. Jim is surprised to see a majority of the cubicle occupants are quite young and are intently sitting in front of very large computer monitors either studying them purposefully or chatting on headsets. The CFO's office is large, but was clearly furnished about the same time as the cubicle pit, with the only concession being a stand-up table that looked like it might have been recently stolen from a local pub, and four stools that might have been lifted from the same bar.  Directly in front of the table is an electronic whiteboard. Other than the bar stools and the CFO's desk chair, there is no other seating in the office.

Jennifer starts with introductions, "Bradley, this is Jim Baldwin, the new Sales Director at RKD. Jim, meet Bradley Horn, CFO of Belt Line Automotive."

Jim started by demonstrating his new found knowledge of Belt Line, "Pleased to meet you Brad. I understand we have a mutual success to celebrate. We still have some work to do, but Jennifer assures me we are on track for completion." Jennifer's head turned quickly towards Jim, while the CFO looked mildly surprised. Jennifer cleared up the issue quickly, "Bradley, not Brad." But Bradley added, "That's okay Jennifer. I hadn't heard it in a while. I really don't mind." Jim knew that he would not forget Bradley anytime soon.

Bradley interrupted Jim's thoughts, "Would you like a coffee or water? I can offer you a stool. I don't believe in long meetings and I have never seen anyone sit in one of these stools for more than 15 minutes without starting to jump around. As Jennifer can tell you though, we have spent many hours in front of the SMART Board working through issues with some of our remote locations. Collaboration is a key component of our culture and we have invested in the technology to prove it. After we got the SMART Boards we banned Microsoft PowerPoint presentations in our meetings for all my responsible areas. But while that might be interesting, I don't think that is what you are here to talk about."

Jim wasn't so sure, "Well actually Bradley, I think it might be related. I understand the primary goals of our project were to help you achieve greater levels of collaboration with your suppliers and customers. I am here today to understand how you selected us as your partner for the project. I would like to also gain some insight into what we are doing well, and where you think we need to improve."

Bradley waved an open palm in Jennifer's direction and stated, "You need look no further than Jennifer. And I mean it. Jennifer took the time to understand our business problems and objectives, and just as importantly, how we wanted to buy. Can you think of the last time you had a favorable buying experience?"

Jim had just heard this story from Jeniffer and shot her a quick look. She smiled back. But he had to answer Bradley's question, "I am not sure I understand what you mean Bradley."

Bradley was unfazed, "Think of the last time your cell phone provider called you to try and push an upgrade you don't need. To me, that's where our discussion begins. How do customers want to buy? How do companies like ours decide to venture out in search of solutions we know nothing about? Let's start by looking at the issue in a very basic way. Let me start with a picture, but warn you in advance that I will not be telling you anything you don't already know. I will show you why it is important in a moment." Bradley jumped off his stool and walked over to the SMART Board. He drew this picture.

Traditional Buying Model

"Most customers you sell to, or for that matter, the customers we sell to at Belt Line, are facing any number of problems at a point in time. I will draw these as circles on the left. Over time the impact of these problems can grow. I am indicating that by showing the problem 'circles' growing in size over time. Some problems become more severe rather quickly while the third problem shown here does not grow in impact at all over time. What kind of problems are these? They could be anything, but I like to classify them as two types, those that I call business problems and those I call market forces. Business problems are typically under  management control and can range in severity from a process performance issue, for example, an under-performing inventory management process, while a more severe business problem might a key supplier not being able to deliver materials we need of the right quality. Market forces can be general economic issues that are affecting our customer's orders and hence our sales or a problem our industry is facing, such as higher costs for our castings."

"We sometimes address these problems individually, but often we will group them together and if possible, solve a number of them at the same time, aggregating our needs as the diagram shows. Once we are motivated, we usually issue a Request for Quotation. Based on a selection process we will pick a vendor, negotiate a contract and implement the vendor's solution. For smaller purchases we might not issue an RFQ, but we will definitely ask for multiple bids. OK. So far I haven't told you anything you haven't heard before."

"Now let's erase this bottom part and using a red pen I will show you how most vendors sell to us."

Traditional Selling Model

"I would say that 90% of vendors, like the cell phone vendor I mentioned earlier, lead any sales situation with product and service capabilities. Usually the product feature selling starts with their marketing efforts, where they make bold statements at a high level about how their solution will provide significant benefits. I will try to draw the vendor marketing efforts with these shooting stars that are flying in our direction. Often these marketing claims are so high level it is difficult, if not impossible, for us to relate them directly to our problems. They frankly just miss the mark as I have shown here."

"It gets worse when the sales and telesales people, who have been trained on the marketing messages, call us up and try to get appointments with the same product pitches they received from their marketing department. I will give you an example. One of your competitors positions itself as the 'leader in secure, low-cost, B2B implementations.' This marketing tag line means that every one of their well-trained sales people push this on us relentlessly. The conversations are generally very short as a result. In their RFQ response they wrote pages and pages about how no competitor could implement a more secure, low-cost solution. They also had the references to back the claim and invited us to meet with them. When they did ask us about what we were trying to accomplish, they inevitably would come back to their differentiation in security and low-cost as a solution to every problem we discussed with them. I almost felt like I was dealing with a group of politicians who knew how to stay on story."

"Ironically, while these vendor claims are important to any customer, they are not the driving force behind why we implemented B2B at Belt Line. We had some very definite goals for our project which had arisen from our inability to achieve the level of collaboration we required with our customers and suppliers. Going back to my picture, we solidified those goals in the form of an RFQ that we sent to a number of companies we knew were in the business, including RKD, and put all of the vendors through a bake-off where they had to provide proof of their capabilities. Jennifer managed to create the most value for us through this process and demonstrated that your company was the best choice."

"But going back to our central issue - the misalignment of the marketing messages to our problems. I am sure Jennifer can likely tell you at least three of the primary project objectives for our supplier project."

Jennifer smiled at the invitation and did not hesitate, "Sure. Put me on the spot. Let's see what I can come up with:

1. Provide Belt Line vendors that participate in your vendor managed inventory program access to online inventories and demand forecasts so they can optimize inventories for your mutual benefit.
2. Implement Electronic Data Interchange to speed up vendor payments after consumption of materials in manufacturing. Again, I believe this was focused at your vendor managed inventory suppliers.
3. Standardize document flow for all of your suppliers through your B2B solution."

Bradley beamed, "Well done Jennifer. Let's start by taking a look at how the objectives Jennifer listed became objectives in the first place. Firstly, let me say that over a year ago, none of us at Belt Line would have clearly articulated these objectives. At that time we were living in a world of hurt. We had just implemented our approach to vendor managed inventory (VMI) and we were waiting to reap the promised benefits of VMI."

Bradley was always pacing and had never bothered to return to his vacant stool. He was enjoying himself. He grabbed another pen on the SMART Board and started to draw another picture.

Belt Line 18 Months Ago

"If you go back 18 months we had just switched over to vendor managed inventory for some of our inventories. We were like many manufacturers in that we always maintained safety stock to guard against running out of key inventories and decided we could shift the financial burden of our inventories to our suppliers and improve our working capital situation in the process. Once we had completed the VMI contracts with our vendors, we immediately noticed they were somewhat hesitant to maintain safety stock levels where we previously maintained them when we owned the inventory ourselves. And sure enough, a few rush orders that were not in the forecast put us in a stock out situation where we ran out of critical materials for manufacturing that were supposed to be supplied by our VMI suppliers. Unfortunately, this happened on more than occasion. This meant some missed delivery commitments to our customers, and in a few cases it cost us the orders."

"Secondly, we were also a bit naive about how much we could demand from our suppliers. They did not tolerate our late payments now that they also had to incur the cost of our inventories and the additional time they needed to manage them. They became quite frustrated, and rightly so, and in the end we lost a great deal of time managing vendor relationships and manually tracking shipments and payments to improve our commitments to them. We simply didn't have the systems and processes to track our inventory consumption from them in an acceptable time frame. As a result, we could not achieve the payment commitments we had outlined in our supplier agreements."

"Finally, there were still many vendors that we did not move to VMI for good reasons and our processes for the VMI vendors and the non-VMI vendors were very different and in some cases clashed. I would say this resulted in some short term chaos where a ton of manual effort needed to be invested by our procurement team to keep things running. It was not sustainable and we knew we would have to rethink our approach."

"So there you have it. Some very nasty problems with a significant impact on the business. From my perspective it looks something like this."

Belt Line Problems Impact Need Solution

"It all starts with the identification of a problem. In our case, the stock outs. Determining the impact of the problem is critical. We used the mitigation of these impacts as the basis for our business case, but we can talk about that another time. In our case the impact was missed deliveries, which ultimately resulted in lost orders, which of course reduced our revenue. Determining the need is not always easy, but it should be a relatively straightforward presentation of what is required to solve the problem. In my example, it is relatively clear. We needed more safety stock from our suppliers to make sure we had inventory during peak order times or when we received rush orders. But keep in mind this is our view of the need. Some of our VMI vendors may not have seen the need in exactly the same way. To them it was not a safety stock issue, but in our minds it was, given our historical approach to managing safety stocks."

"Now we move to solution. This is the point where we listened to the various vendors present approaches about how they would solve this problem. This is where Jennifer educated us on a collaborative approach to including our VMI suppliers directly in our demand planning process. By sharing our forecast and manufacturing plan online, suppliers were able to rely on more accurate forecasts for their products. Over the last four months as suppliers have used the system  they are getting even better at understanding our production approach and better optimizing our inventories. We aren't demanding a certain safety stock from our vendors like we contemplated when we documented our need, but rather, are focused on making sure they have the best possible planning data so they can manage the safety stocks and overall inventories more effectively."

"And just in case I lost you with my long lecture, this takes us full circle back to one of the first project objectives Jennifer stated earlier - the one about 'providing our VMI vendors access to online inventories and demand forecasts to optimize Belt Line inventories'."

"So let's call up the previous chart that I was using so I can show you why it is relevant to the question of how vendors sell to us. Let me see. OK. Here it is. I will bring this one back up on the SMART Board. It should be quite clear to you when you see the types of problems we were facing, their impact, and our needs, that the vendor who was selling us a 'secure, low-cost B2B implementation' wasn't really helping us understand why we should select them. If I take the picture and modify it slightly..."

Bradley then drew this picture.

Guided Buying Model

"First, I 'll be honest with you. Our executive team has spent a great deal of time discussing our sales approach and the picture you see now is our new model for collaborative selling. We sell component assemblies to truck and transit manufacturers. This requires a high degree of collaboration in the design of the final product and as a result we are accustomed to a selling process which is also very collaborative. But we also believe strongly this selling approach can work in any industry."

"We have looked at our braking solutions very closely and our product managers have mapped our solution strengths to the many issues we see our customers facing during design, manufacturing and assembly. Using this approach we are able to have conversations about the business problems our customers are facing and how our solutions can solve their problems. We have created sales ready messaging, training and tools for our sales people. Our customers love it."

"Our customers believe our approach is much more collaborative. And coming back to Jennifer's approach to selling us, she essentially follows this approach quite naturally. Although you probably have not armed Jennifer with sales ready messaging, she is able to execute this approach because of her consulting background. The big payoff for any seller using this approach is that you influence the buying agenda through the introduction of unanticipated problems that I have shown in my drawing. These are generally the result of prior experiences where you have uncovered and solved problems for other customers that might be blind spots for the customer you are selling to now."

"In our case Jennifer had a wealth of knowledge that we were able top draw upon and as a result we could discuss problems with her that she was aware of that we had not identified ourselves. These were not product features or potential benefits of your solutions, but the discussion of real life problems we were either facing or she could demonstrate would be our next hurdle to jump over. For example, using some benchmarking data that Jennifer brought to the table, she was able to help us identify that for some of our high volume non-VMI inventories we were performing below industry average on inventory turns. During our B2B implementation were able to improve our performance in that area as well. The technology did not identify the problem, nor was it a product feature that solved it. It was simply good work by Jennifer up-front to identify a problem we hadn't thought of solving yet."

"OK, I have talked non-stop for 15 minutes. Any thoughts?"

Jennifer looked over at Jim, who then responded, "Wow. Makes perfect sense. Is there anyway to get that drawing back that started with the Problem and finished with the Solution?"

Bradley walked over the SMART Board and called back Jim's requested drawing. Jim erased the example from the right side of the drawing and drew this as he spoke.

Problem Impact Need Solution Model

Jim started out slowly, "I took some notes while you were talking and I want to write some stuff down on this chart. I think this chart is the key focus area if I am going to get my sales team to move towards collaborative selling. Would you agree?"

Bradley couldn't see where Jim was going with his question, "I can't tell yet. Tell me more."

Jim responded, "If I were to help the sales team with 'sales-ready content' as you called it, I would be helping them to understand how to have conversations with customers about their problems. It all starts there. But I can see two big issues. One is that our sales people talk to many different people who have different roles at one customer site. They could be speaking with the CFO in one call, and a supply chain manager in the next call. Those two roles would likely have very different problems they are dealing with and it would never work to try to discuss the same problems with each of those two very different roles in the business."

"And the second problem is that unlike Belt Line, we sell to a large variety of industries. The list of problems would be huge. I could end up with a massive list of questions for the sales people to ask a single prospect. Have you thought about these two issues? Any ideas?"

Jim's questions brought back memories to Bradley of similar objections voiced by the VP of Marketing at Belt Line when the executive team was discussing their new go-to-market approach in meetings a few months earlier. Bradley countered, "I hear what you are saying. One way to solve the problem for now might be to create a prioritized list for each role that you sell to. You might also be surprised how many problems actually go across roles and show up again on another role's problem list."

"The same goes for industry. Having a prioritized list for an industry is also important. But also don't forget that when I was talking about problems I put them into two categories - business problems and industry problems. There are many problems, in fact, that go across industries. A good example is 'problems with managing cash flow'. Managing cash flow is a universal problem that is industry-agnostic."

Jim was still concerned with how much sales-ready content he would have to provide for his sales force, much less what it looked like, but his interest was definitely piqued. There was something quite powerful in what they were discussing. He would have to figure it out later. He went back to the picture on the SMART Board and continued thinking out loud, "OK. I understand. Let's just say that I agree that each role would likely have a prioritized list of common problems and that in some way industry might influence them. When it comes to the impact as you described it, this will definitely be very specific to each customer. Right?"

Bradley was encouraged that Jim was starting to 'get it', and responded, "Yes. That's the case. I would say the impact of the same problem would be different for different customers. The question is really whether the impact is great enough that the organization is willing to invest to solve the problem. What it comes down to is whether the person experiencing the problem has the willingness and authority to solve the problem. And in some cases even if the motivation to solve the problem exists, there might not be sufficient justification, or a single solution does not exist to address the need. That is why I drew the picture where the customer aggregated a number of problems before they invested in solving them."

"In our case we needed to solve all of our supply chain problems at one time to justify the investment in the system you implemented for us. In some cases one problem can be tackled cost effectively. For example, if we are paying too much for a single commodity the problem is remedied by switching to another one of our approved suppliers."

"So getting back to your specific question about impact, I think it is quite sufficient to understand the degree of impact of the problem. Often, our customers can describe the impact either in operational measures and in some cases even in terms of financial measures. I think that is a good place to start."

Jim liked what Bradley was saying and added financial and operational measures to his diagram under Impact. He also wrote down the word 'benchmarking'.

Jim then responded, "I suppose we could also provide benchmarking data to our customers to help them better understand the impact as well. We have purchased benchmarking data that we use in our consulting practice, but we have never figured out how to use it in our sales process."

Bradley responded, "Yes. I think benchmarking makes sense. But be careful, particularly with smaller customers. Just because a benchmark says they are performing OK, they should probably consider outperforming the benchmark. Our President, in particular, starts to role his eyes when we say we are doing 'good enough' relative to some of our key competitors.¹"

Jim then continued, "Fair enough Bradley, we can train our sales team on operational and financial measures that relate to the impact. I will also give some thought about the 'prudent' use of benchmarking data, if it makes sense. To finish off our drawing, the impact becomes a need when the customer is motivated and has the authority to pursue a solution. And finally, our job is to ensure we understand and can articulate the advantages of our approach to providing the solution. We also have many solution options that might have be available to solve certain problems in unique ways."

"There's only one thing that is still bothering me a bit. Everything we discussed today didn't seem to have much to do with solving problems for the CFO of Belt Line."

Bradley chuckled before replying, "Yes and no. Obviously our project had a significant positive impact on the operation of our supply chain. Improving the performance of our supply chain in turn resulted in significant financial gains, some of which were cost related and some, like improving inventory turns, improved working capital. The executive team at Belt Line is mature enough to jointly share in the success of our project. It was a company-wide effort and my team was involved on several fronts. Our Supply Chain VP sponsored the project and was highly visible in working with our suppliers and leading the change management effort with our internal teams, while the rest of the executive team, including myself, did our part."

Jim nodded his head and looked at his watch, "Bradley. We have really taken much more of your time than we asked for and we should let you get back to other pressing matters. I wonder if I might be able to ask for a favor?"

Bradley didn't hesitate, "Try me."

Jim pressed on, "Your presentation and the pictures were great. Actually, I think I have two favors. Can you send me the pictures?"

Bradley pressed a few buttons on the SMART Board, "Done."

"My other request might take a bit more effort. Would it be possible for you and Jennifer to spend a few minutes putting together a typical list of problems that a CFO might be up against. And also, perhaps document some sample impacts. I would like to use the list in a meeting I have scheduled with our marketing VP next week. I am not asking you to spend hours at it. Simply list some top of mind problems in a quick brainstorming session."

Bradley felt that Jim's request was a good one. "OK Jim. Jennifer, how about Friday morning right after the project status meeting?"

"Sounds fine."

After meeting broke up Jim was deep in thought in the car ride back to RKD. He would have some preparation to complete before his meeting with his marketing VP next week.

1. "Need Cash? Look Inside the Company", Kevin Kaiser and S. David Young, Harvard Business Review, May 2009 [If you have a subscription you can get this article here: http://hbr.harvardbusiness.org/2009/05/need-cash-look-inside-your-company/ar/1]