“With Inact Now, we can now see how strategic our products, customers and suppliers really are.”
– Business Development Manager at JP Group Anne E. K. Kristensen
How do you work with Inact Now at JP Group?
We use Inact Now actively throughout the company, even at management level when we talk about the business. For example, when we talk about inventory ties:
Where have we tied up our stock the most?
How much of our dead stock, how much of our A-items and how much of our C-items?
What values are we tying up that aren’t moving?
At the same time, we focus on new additions – items, customers and suppliers, so we don’t create more unnecessary complexity.
Why Inact Now?
We’ve started to require everyone in the company at different levels to look critically at certain ABC codes. When we combine multiple ABC analyses and have a CC customer and a CC product, it’s interesting to look at how many resources we’re actually spending on them. In the past, a salesperson would say that it was a strategic product or customer. With Inact Now, we can now see how strategic they really are. It’s not that we shouldn’t have CC items or turnaround customers, we will always have them. Because every time we remove one, another one comes along. Our projects are never finished, you can always raise the bar and optimize from the bottom up.
Inact Now, in my opinion, is to become more proactive instead of reactive. If we can spot pitfalls in time, we’ll have a more profitable business. But it requires that we dare to say kill your darlings and sometimes be tough and cut where it hurts.
Policies on the agenda
How do you work with policies?
When you start working with Inact, it triggers a lot of thoughts. We started back in 2016 by looking at the products and, in a small way, looking at the suppliers and customers. We’ve found it easier to work with policies on our products, whereas working with our customers is a different process as there are more emotions at stake when it comes to relationships.
When we start getting insights from our data, we also need to start working with a reaction pattern. It’s a process and we are constantly evolving. This is also reflected in our policies, which are dynamic and constantly changing as we raise the bar. We can have a set of policies that, over time, become part of our operations that we don’t have to think about anymore. This is when we come up with a new strategy, with a new set of rules that will apply for the next period.
We’re fortunate that much of what you do at Inact aligns with our slogan “more focus on less” and our strategy that focuses on profitability. At the same time, JP Group is built on a culture of looking for optimizations and focusing on how we secure the bottom line so that what we do is profitable and creates value.
Insight: What are policies?
Based on the ABC categorization, a set of policies are created that determine how each item, customer and supplier in each ABC category should be handled according to their type. The policies structure and systematize the approach to goods, customers and suppliers, making it clear for the organization to have a differentiated approach to elements and stakeholders in the supply chain, and thus achieve a more profitable business.
Why does JP Group work with policies on their customers?
At JP Group, we want to create a language and an awareness of our customers: where are they on the profitability scale? This helps us to raise the bar and get more sensible agreements in place.
In general, it’s important for us to be able to answer: What is x as a customer?
The salesperson will often think it’s a good customer, just like most other customers. While the sales manager may need to translate the good customers into something more concrete and data-oriented.
We use Inact Now as an argument to say: Dear salesperson, you need to do something.
We’ve come so far that our sales department has started to develop these ABC thoughts about how to handle customers.
This common language means, for example, that when our sales department receives many inquiries, they have a roadmap for exactly what service should be provided to each customer category. It may be that a turnaround customer keeps calling – the ones we don’t earn enough money from to provide a personalized service, and we then refer them to place orders via the webshop in the future. It’s not an easy conversation to have with the customer, but we need to create the language so that everyone understands what level of service we offer each customer.
We want to give the sales department an understanding and awareness that it is more profitable to spend our resources on the right customers. If you know that a turnaround customer should not take more than two minutes on the phone, then you have a reaction pattern that can be passed on to the sales assistants, and if they are not followed, then the salesperson has a job to do.
How do you work more specifically with segmentation and policies on your customers?
Our work with customers is about putting them in boxes and reacting within those boxes. We have made some plans and rules for how we will work with these different customer groups. For our group of New Handles, we have decided that for the first 12 months, just like with our products, we will look at how their shopping patterns are and how they behave. If we don’t have the awareness of the customers and the products, how would we know what we’re putting into our business? Do they even need to enter our business, or do we need to stop them before they do? This applies to both products and customers.
Basically, it requires the courage to talk to the customer along the way
In the same way that we work with our products, where we have decided that for the first three months they have carte blanche and we have to put some work into them to make them perform. If it happens that after 3-6 months we start to reach a point where we look at whether the orders are being placed and whether they are being placed in the size we had agreed. We know that doesn’t happen overnight. After 6-9 months, we start working together for a year, and then the orders have to be there. After 9-12 months, we assess whether the collaboration should continue. Basically, it requires the courage to have this conversation with the customer along the way. Obviously, it’s easier to do this with a new customer with whom you have no expectations or relationship.
When we consider all these factors, what kind of policies can we have on the customer, the supplier and the product, so that we are the best possible for everything new we add to our supply chain. Did we succeed? and what is our success rate? If we don’t deal with the new additions, we end up throwing away a lot of stuff – and we don’t want to do that.
Strengthened their core business
With the segmentation in Inact, they have been able to prioritize their daily work and see how strategic their products, customers and suppliers really are.
Inact Now is used to identify the most value-adding item numbers (AA). This helps them prioritize in their day-to-day work and has helped them increase revenue by 7%.
A common language
JP Group uses Inact Now actively throughout the company, even when making strategic business decisions. With the implementation of policies, they have a common language that creates a shared understanding of direction.
Increased business awareness
JP Group has gained greater insight and a common language that has increased business awareness. With Inact, they have achieved more transparency that helps create a more profitable business.
JP Group is one of the Nordic region’s leading companies in the aftermarket industry, producing and selling high-quality spare parts and accessories for European and Asian cars. They serve around 1,200 B2B customers in more than 90 countries and have around 450 suppliers. www.jpgroup.dk