The “Lead 2 Cash” Journey

In the previous article, I indicated that the "Lead2Cash journey" varied depending on the type of business. Let us assume for a moment that “Business_R_Us” provides both off-the shelf products, can design new products and services to meet customer’s requirements and also provides service support. Having undertaken a review of it’s “As Is” processes, a simple diagram (See below) is derived, showing how the business has decided to “Chunk” its “Lead 2 Cash” journey. This diagram then starts to allow us to ask all sorts of interesting questions about the process and how it might be improved.


This diagram shows how different parts of the journey are linked (NB: For simplicity, not all links are shown, just the key ones). Marketing Planning may drive the need for new products and services for existing or new markets, triggering the need for investment in developing those new products and services. Marketing Planning also drives Lead Generation, which might initiate putting together a Bid or responding to customer’s requests based on an Invitation To Tender (ITT) or a Request For Proposal (RFP). Lead Generation feeds into Order processing, which may require Procurement of parts or materials, which once received are put into stock, under the Stock Management processes. Each Sub-Process feeds one or more Sub-Processes as the journet continues. What is clear is that there is no one route from a Lead to getting paid. What the diagram doesn’t show, at this level of detail, is the outputs from the separate Sub-Processes or what work is undertaken within each Sub-Process, however, it does allow greater understanding of the overall journey, just as a roadmap doesn’t show you all the road signs.

Assuming Leads turn into orders (Lead Management will be the topic of another article), there is a process for receiving an order, checking it against specifications, Contract terms etc and aknowledging the order and confirming delivery dates etc. Order Processing may also check stock availability and where necessary trigger procurement of stock or 3rd party services (e.g. using an external delivery company).

Developing a new product or service can be a complex activity and will be discussed in greater detail in a series of articles covering this area. Assuming the business is delivering an existing product or service, this will be planned and provisioned based on availability of stock, resources (typically materials, equipment, people) and contractual requirements. Delivery/Despatch may be performed internally or by external resources. In many businesses, this is the point at which the invoice may be sent to the customer (However it may also be initiated at the point where the order is taken, in which case the journey shown above will be different).. Many small companies fail to track whether their customer’s make payments on time. This can have a critical impact on cash-flow, so it is essential that some form of Credit Control is put in place, together with a mechanism for processing payments.

So now we have a clear high-level view of the “Lead 2 Cash” journey. Does it work well? To know this we have to measure 4 critical indicators, namely Time, Cost, Quality and Quantity. The use of these will be covered in the next article which describes some of the key things to consider in mapping processes.

Martin Mellor
martin.mellor@tvba.co.uk
www.tvba.co.uk

Capturing the “Lead 2 Cash” Journey

Improving the “Lead 2 Cash” journey starts by capturing the “Warts & all” process, so how do we go about this? There are a number of approaches that can be taken, any of which can be useful and often depending on the availability of people, their locations, their attitudes to improvement and the availability of funding to start.

Typical approaches (Which will be described in more detail in future articles) are as follows:

• Brown paper mapping
• Process workshops
• DILO (Day in the Life Of)
• Forward or Reverse audit trails
• Documentation reviews

Having selected which approach(es) to use, the process is captured and documented using an appropriate mapping tool (Useful tools include the ARIS Toolset, CaseWise, iGrafx, Visio and Triaster’s Process Navigator). Note, the tool should be one which makes it easy to maintain the captured process. This author would not recommend using Powerpoint to capture processes, due to the difficulty in making changes to diagrams as more and more complexity is added).

No two businesses are the same when it comes down to defining their “Lead 2 Cash” journey. If we define “Lead 2 Cash” as a High Level process, then at some point we will need to break it down into smaller processes (Often called Sub-Processes). There is likely to be a selection of some or all of the following Sub-Processes involved in many companies (NB: This is not intended to be an exhaustive list, simply to give an idea of the complexity of the overall journey):

• Marketing Planning
• Lead Generation
• Responses to Invitations To Tender (ITT’s) (May also be Responses to Requests For Proposals (RFP’s))
• Bid Management
• Order Management/Processing (Including Order Acknowledgement/Contract Review)
• Procurement (Could be materials, stock, 3rd party services etc)
• Stock Management
• Product/Service/Solution Design
• Product/Service/Solution Provisioning (Could be a complex manufacturing activity, packaging of a solution from existing components, provision of a service or simply taking from stock)
• Despatch
• Invoicing
• Credit Control
• Payments Processing
• Management Reporting

Initially it is a good idea to avoid too much detail and focus on getting an agreed high level view of the journey, with an agreed diagram (sometimes called a Value Added Chain), which shows the inter-connectivity between each of the processes. Often it is not clear where one process should be differentiated from another, but it is essential to do so, because at some point there will be a need to establish who is the “Owner” of a part (Sub-Process) of the “Lead 2 Cash” journey. An Owner may be an individual or could be a group of people with a common interest in that process. In the next article I will look at some of the things that need to be considered for the overall “Lead 2 Cash” process and its Sub-Processes.

Martin Mellor

www.ukba.co.uk

The “Lead 2 Cash” Journey

Getting a Lead and turning it into Cash, the “Lead 2 Cash” Journey

In most SME’s (Small and Medium sized Enterprises), the journey from the point where the SME is identifying a lead, to the point where the customer has paid is littered with potholes for the unwary to fall into. The reasons are many, but this first article provides an overview of some of the issues. Further articles will identify a few of the key reasons and identify some approaches that can help to improve the “Lead 2 Cash” journey.

So what is this “Lead 2 Cash” journey? In short, it is all the steps that are taken from deciding where to start looking for leads, identifying potential leads, getting the order, processing the order, all the activities up to point of delivery (this could include developing the product or service, packaging it, testing it etc), the actual delivery (whether undertaken by the SME or by a delivery or distribution company), the after-sales support and most importantly, the invoicing and credit control activities to ensure that the customer pays within the agreed timescales. The key measures of the journey can be simplified into 4 key indicators, these being:

• Time
• Cost
• Quality
• Quantity

Time here means the end-to-end time, from initiating the search for a lead to the point where the customer has paid. The biggest consumers of time are those associated with getting the leads and those associated with getting paid. Either of these can place a great strain on cashflow in SME’s, particularly where customer’s take their time in paying.

The cost of the end-to-end process is usually unknown in SME’s, meaning that costing an order is often guesswork and not based on real data about the journey. It is not uncommon for SME’s to cry “we need more turnover!!”, when in fact they couldn’t cope with increased turnover, because their staff are already over-stretched with handling current orders (I call this not having enough bandwidth). One result of this is that SME’s may be making a loss on every order without knowing that they are doing so.

Quality (however you care to define it) is usually the first thing that suffers when SME’s are under time and cost constraints. Short-cuts are taken, checking is abandoned, mistakes are made and the SME usually ends up with service and product quality suffering.

Quantity is the measure of how many (could be leads generated, orders processed, sales by location etc) at various points in the journey.

So what must the SME do to minimise issues related to Time, Cost, Quality and Quantity?

The first step to take in improving the “Lead 2 Cash” journey is to understand the process from one end to the other (often called a Value Added Chain), including what happens at the interfaces to the SME (Here I mean suppliers, partners and customers). All of these play a part in whether the “Lead 2 Cash” journey is a successful, profitable one. A future article will address the various approaches to capturing the process, suffice to say, once the process is captured, warts and all, it then becomes possible to look at how Time, Cost, Quality and Quantity can be measured and targets set for improvement.

Further articles will look in more detail at the improvements that can be made as the journey from “Lead 2 Cash” progresses.

www.ukba.co.uk