The Year End Inventory You’re Not Conducting Is Costing You Millions

Look around any company this time of year and you will find executives and managers preparing for year end inventory counts.  It’s imperative to know exactly how much capital your business has tied up in inventory and if this is a good investment. If the business has too much inventory or too much of the wrong inventory, it can negatively impact cash flow and put future business opportunities at risk.

But what about the other inventory?  The one that doesn’t get counted.  The one you’re sinking cash into regularly but without any analytics on whether or not it’s a good investment.  I’m talking about taking stock of your sales organization.

This is the inventory of inventories because this is the collective asset responsible for turning the physical inventory you have invested in.  You know it’s true yet you spend exponentially more time and money analyzing what’s in your warehouses than you do analyzing the organization that runs it.

When was the last time you took an objective analysis of your people, your systems, your strategies, and your processes?  Is everything in alignment or are your carrying costs preventing you from real growth?  Is what you’re carrying putting future business at risk? 

What is your inventory costing you?

The cost to carry physical inventory can include:

Storage and Insurance Costs

This can be translated to the cost to house an underachieving salesperson or an underperforming sales manager.  Calculate the cost of salaries, insurance, office space, communication, travel and entertainment, etc. for an underperforming salesperson or team and you can see how it adds up.

Of course you already know by the numbers who is underperforming - but do you know why? 

Do you know if they can turn around their performance?  

Do you know precisely how you will get them to do that?  

You must know who in your sales organization is capable of growth and exactly how much that growth will mean to the business in real dollars and cents.  You must know exactly where the skills gaps are so you can map development to the individual and get them up to speed faster.

Because if you don't,  you will simply continue to waste development dollars on one-size-fits-all training that doesn’t get the job done.  And because if you don't, you will hold onto unproductive and underproducing assets, instead of letting them go or putting them to better use. 

You must know if there are issues that will cause your people to fail, even if they had excellent skills training specifically mapped to their skills gaps. In other words, what’s preventing the people who have the skills and the training from achieving breakthrough performance?  Is it the training?  Is it their ability to learn?  Is it a lack of desire or motivation?  Or is it a deep-seated fear or weakness that’s holding them back?  What you don’t know is costing you.

In other words, what’s preventing the people who have the skills and the training from achieving breakthrough performance?

Damage

The risk of damage in this case is to your culture and to your hard won reputation.  Damage to your culture is greatest when your people can’t or won’t perform the jobs they were hired to do.  Strategic misalignment is also damaging to culture because people are working at cross purposes on initiatives that continuously fail.

What happens if the salespeople or sales management team can’t execute your growth strategies?  What happens if you have the right people and the  wrong strategies?
What happens if the salespeople or sales management team can’t execute your growth strategies?  What happens if you have the right people and the wrong strategies?  Most companies have a mixture of all of issues.  Growth happens when you match the right strategies to the right people in the right roles creating relationships with the right prospects and customers.  You need to take stock.

Growth happens when you match the right strategies to the right people in the right roles creating relationships with the right prospects and customers.

Risk of Obsolescence

This can best be summed up by your bloated and inaccurate pipeline reports, which point to the fact that deals aren't closing when they should.  Delayed closings are an indicator of sales value obsolescence.  The value of your solution decreases in direct proportion to the time that goes by in your sales process.  Simply put, as time goes by, so do the chances you had with a prospect.  Some will find other ways to solve their problems; usually with one of your competitors.  Some will learn to live with the problem, instead of solving it.  Either way, you’re obsolete.

Inventory taxes

There is an ideal window of opportunity in every sale and, when that window closes, you are going to pay for it.  Now you have paid for the inventory, you’ve paid for the underachieving sales team who isn’t turning the inventory, and you’re stuck holding onto both of them.  Consider yourself taxed. 

Opportunity costs

The biggest cost we see in companies we work with is opportunity costs.  Your inventory should be working for you, not costing you money.  The same is true for your sales team.  The average cost of a bad hire is 3X the average salary.  The cost to carry underachieving salespeople and sales managers is a tremendous burden and, when you add in lost opportunities, that burden becomes exponential.

When a salesperson fails to create the kind of urgency that wins business by uncovering the financial impact of the problem the prospect is having, you have lost that opportunity.  Whatever the specific reason for the delayed closings, stalled sales, or all out sales failure, the end result is that prospects become less interested in your salespeople and your solutions.  

Do you know why the opportunities listed on your forecast week after week fail to close?  Is it your salespeople or your sales process?  Do you even have a formal, step-by-step, milestone-centric, optimized sales process that each individual on your team uses without fail to duplicate profitable, timely, predictable sales results?

Do you even have a formal, step-by-step, milestone-centric, optimized sales process that each individual on your team uses without fail to duplicate profitable, timely, predictable sales results?

The Bottom Line

Your sales force is the economic engine that drives your physical inventory turns.  If you want more inventory turns, you must take stock of your sales organization by evaluating it and analyzing the business intelligence you will receive from that evaluation.  Imagine the possibilities for growth when you act on that intelligence.  Act now and reap the rewards in 2016.  

I guarantee you’ll never look at inventory the same way again. I welcome your thoughts and comments below.  Let's start a conversation.

If you'd like to learn more about evaluating your sales force, click here. If you'd like to schedule a time to talk with me about your business, click here. Or feel free to email me at [email protected].

Cheryl Powers is the President and CEO of Align Strategic and is a recognized salesforce development specialist, sales and marketing leader, professional coach, and author. With more than 25 years experience as a business owner, sales and marketing executive, sales development leader, speaker and professional coach, Cheryl has helped many CEOs and business leaders achieve their growth goals in less time and more profitably. By creating alignment at every level of the business, CEOs and business leaders can move performance from good to great to breakthrough levels.

If you'd like to work with us to create a Revenue Growth Roadmap for your organization, click here. If you'd like to schedule a time to talk with Cheryl about your business, click here. Or feel free to email Cheryl at [email protected].