Sandwell Paper Case Study

Sandwell Paper Case

Introduction

Sandwell Paper Company is a large paper wholesaler, that offers a diversified product line including both industrial and printing grades of paper. However, they have been dealing with external competition, which has made George Murphy the owner a little skeptical their pricing, so he hired Phil Edwards to accompany the salespeople and analyze their efficiency and effectiveness.

Problem Statement

How can Sandwell allocate their salesforce more efficiently to improve their pricing strategy so they can compete better with their competition?

Issues

Within Sandwell Paper company, there are a number of issues that mostly stem from the internal managerial decision making. George Murphy is unaware of what his salespeople are actually doing, along with doing a poor job training them.

They are facing a big problem of keeping up with their competitions low pricing. They are not able to cut their prices down to gain new customer accounts, because they are struggling with their gross margin and their net profit falling below the industry average.

Finally, they are not allocating their salesforce as efficiently as they should be. 13% of their market is controlled by 3 of their sales people, while the other 62% is coming from only 2 of their salespeople. With this structure of their salesforce they are not able to do their jobs as thorough as they should be, to maximize their potential with customers.

Alternatives

One thing that could greatly improve their company is by changing the way that they train and compensate their employees. The employees do not have the methods and motivation to be selling as much as they could be which effects the company’s overall net profit problem

Another adjustment that should be made is to reallocate the sales force. It should be structured so that the accounts are proportionally split up, so that each salesperson can do their job without having to do too much or too little.

Finally, their needs to be a better pricing strategy in order to stay close with their competition. They need to lower their prices regardless, because customers are not being drawn in by their motto of “having quality service”.

Analysis

Right now, the employees of Sandwell Paper company are not being trained correctly. They have their trainees work separately in different warehouses. They should all be brought back together, in one place and collaborate with one another, to see what is going well and what can be improved. Although, I do not think that they should go back to presentations daily on product knowledge and different methods, I do think they should do this maybe once a week or once every two weeks to keep their employees up to date. The market is very large and always changing, especially with the extensive product mix that they offer. This will help them be more knowledgeable. Along with them being more knowledgeable, they need to have more intrinsic motivation. A way they can do this is by giving each salesperson a way to prove themselves with commission. They are currently being paid a base salary, so they get paid regardless of what they do. If they lower the base salary, and add incentives to get paid for each account they sell, this will make them work harder and be smarter about the decisions that are being made.

An obvious change that should be made is the way they allocated their salesforce among their product mix. There are three different sectors