Collateral Sales Materials Cost Control

Challenge: Control cost of collateral sales materials, which had been rising by an average of 10% annually for five years, at the same time that the size of the sales force had been decreasing 10% annually.

Actions: Removed quantity and timing controls that were ineffective in controlling spending. Created a catalogue of available materials, with photos, prices, and inventory availability so that the sales force could make more informed ordering decisions. Created and implemented a shadow accounting system which gave each sales office a "checkbook" for purchasing materials. Checkbook was funded by a formula that multiplied the number of sales reps in the office by 80% of the average spending per sales rep from the year before. The remaining 20% was held back as a contingency reserve. When the checkbook was empty, offices could pay cash for materials or managers could ask the Sales VP for additional money from the reserve.

Results: Held spending 10-20% below flat budget for the five years subsequent to implementation of the process.