New Report Details Impact of Sales and Purchasing Processes on Corporate Performance and Profitability

Southfield, MI—June 7, 2011 –Management Development Corp. , a consulting firm specializing in business process improvement, released a research study that examined the communication processes used by Sales and Purchasing personnel and their impact on corporate performance and profitability.

More than 200 companies participated in the research, which included a series of interviews, focus groups, observations of more than 1,000 customer/supplier meetings and comprehensive survey data compiled by the University of Michigan-Dearborn, College of Business. The six-year study thoroughly examined the interaction of sales and purchasing practices. Results clearly indicate current Common Practices can in fact have a negative impact on product quality, organizational performance and the total cost of doing business.

"This MDC study assesses the true impact of the communication processes currently utilized between customers and suppliers," said Michael Derry, president of Management Development Corp. "Studying the specific details of the processes utilized in the purchasing and sales functions and how they interacted allowed us to view and understand them as part of a complete system. The findings ultimately identified where changes can and should be made to the current system to improve corporate profits and shareholder value for both customer and supplier."

The top 2 percent of sales representatives utilizing the Exceptional Practice processes, identified through the research, consistently outperformed their peers in both top-line sales and bottom-line profits. Tracking their results over the last six years, the study found that on average they were 15 percent to 32 percent higher than peers employing the Common Practice processes within the same industry.

The top 2 percent of purchasing personnel utilizing the Exceptional Practice processes were able to reduce their company’s total costs related to the products they purchased. Reducing costs such as those associated with lost production, scrap, maintenance, personnel time and warranty issues were common. Typical savings in these areas were three percent to 28 percent in comparison to competitors.

In addition, the study pin-pointed how traditional sales training programs are actually reducing supplier profits, while many purchasing practices are actually adding to the total cost of producing the customers' products.

Study findings also identified the key skills necessary to produce successful sales and purchasing systems for the future – skills that only the top two percent of sales and purchasing personnel are currently utilizing. Identifying these processes allows customers and suppliers to jointly manage, measure and continuously improve their respective processes.

The Sales and Purchasing Communication Processes and Their Impact on Corporate Performance and Profitability research study results are now available. For a copy of the study, visit Management Development Corporation’s web site at www.mgtdev.com.

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