“So, you all agree on a path forward,” Sam continued. “This is your problem to solve. We have everyone in the room. Marketing, sales, customer service, production and accounting.”
Marketing began. “We are very proud of our pay-per-click ad campaign. We are delivering more leads at a lower cost than last year and total marketing costs are under budget.”
Sales stepped up. “We have more leads, but our closing ratio is down, way down.”
Production was next. “We know that sales are sluggish. We had finished goods back up on the production floor, so we had to find room to store the excess inventory. Lucky, we found on old warehouse that the real estate group was trying, unsuccessfully, to sell. They were happy we took it off their hands, so that’s where we put the inventory.”
Accounting, always cheery, gave the next report. “Yes, putting that warehouse back in service helped our balance sheet, eliminated a non-performing asset. We saw our holding costs on the inventory were going up, but, that is to be expected if sales are sluggish.”
“There is still a problem,” Sam declared. “Individually, you all, each of you is doing a good job in your respective departments, and I am glad that I didn’t see any finger-pointing. And, we still have a problem. Sales are still sluggish.”
Customer service, Mary, who had been quiet the whole time, finally spoke up. “I was looking over our customer satisfaction surveys yesterday, in preparation for this meeting. We have been getting EXCELLENT responses, especially in our return department. The problem is, we have triple the responses, meaning we have triple the returns. So, in addition to sluggish sales, our product returns are up.”
Sam probed, “And? Why do people say they are returning?”
Mary nodded. “I know this sounds silly, but our customers are saying they found a substitute product with higher quality from another company. And, its a company I never heard of before. We have always had a problem with one of our catch levers, it’s been our biggest customer complaint. This new product doesn’t have any catch levers. It’s designed differently.”
It was Sam’s turn to nod. “So, our sluggish sales and inventory problem looks like it may be a design problem. Why isn’t anyone in here from engineering?”