Executive Summary
STANDARD BUSINESS PROCESSES FOR GLOBAL TRACKING OF DESIGNS
FROM INCEPTION TO FULFILLMENT
EXECUTIVE SUMMARY
This paper is the first documented set of step-by-step recommendations for global tracking of the design cycle from inception to fulfillment. The processes described provide a common platform which can be applied by component suppliers, their reps and distributors, and their customers, to improve communication, productivity and profitability.
These recommendations are based on analysis of the tracking problem highlighted by two trade associations, NEDA and ERA, and take into consideration the limitations of RosettaNet (focused on other issues) and of proprietary database solutions (expensive and impossible to leverage across the supply chain).
The need for tracking is critical because of the geographic diversity of the component sales cycle, where the point of design, the point of purchase, and the point of manufacture are likely to be in different sales territories, and thus require support from different rep firms or different subsidiaries of a multinational organization. The ERA Split Commissions recommendations call for 70% of the commission dollar to be paid at the point of design-win, and 15% at both the point of purchase and the point of manufacture. Without tracking, the “wrong” rep may receive 100% of the commission.
Challenges to tracking designs include poor business policies, disparate sales/distribution patterns in various parts of the world (e.g., stocking resellers prevalent in much of Asia and Europe), regionalized corporate P/L structures, need to accommodate both outsourced and direct sales organizations, and the huge costs of developing effective proprietary systems coupled with the impossibility for reps and distributors to adequately support the multiple systems of multiple vendors. These issues are exacerbated by the prevalence and purchasing policies of EMS and international procurement offices in the global electronics economy.
Solving these problems with standard business processes benefits customers, reps, distributors and component suppliers. The solution outlined in this paper has three main components. It starts with a critical mass of suppliers defining their global split commission policies. The paper then outlines the standard business processes recommended for global tracking of the sales cycle through the design, procurement and manufacturing phases. Finally, adopting a web-based database and software application that tracks the progress along these standard business processes and alerts or follows-up with the right individual(s) is a critical component of the solution. The paper recognizes and responds to the diverse needs of the functionaries at all stages of the process, on both the sell-side and the buy-side.
The fundamental premise of these standard business processes, and the system that Beganto has developed to address the core issue, is that the profitability of all parties – including the customer -- improves when the sales and design support function is properly motivated by being properly compensated.
