When the phrase “sales target” comes up at a company meeting, the entire room’s attention instinctively shifts toward the sales team. Theoretically, this makes sense, since the sales process focuses on the product-salesperson-customer triangle. In reality, however, this arrangement is entangled in dozens of invisible dependencies: from warehouse capacity, through supplier payment terms, all the way to the accounting department’s processing capacity. A bottleneck in just one of these areas is enough to prevent the target from being met and bring operational processes to a standstill.
10 million is not a strategy
The problem I’m referring to doesn’t begin when sales stall, but rather at the stage of setting the organization’s sales goals. Let’s say a company plans to sell 100,000 units of a product, or, even better, generate 10 million zlotys in revenue by the end of the year. These are nice, round numbers that are certainly worth striving for. At the same time, such vague goals, on their own, mean nothing and bring us no closer to anything.
The foundation of sound planning is breaking down major, highly ambitious goals into ones that become tangible for the responsible departments and individuals. If we have, say, four salespeople on board, it’s important to know what results each of them is expected to achieve. If the company operates in several sectors, it is necessary to determine which segment is responsible for what portion of revenue. If it has different types of offerings, it is good practice to specify how much revenue should be generated by core products, how much by additional products, and how much by consulting services. What portion of revenue should come from the domestic market, and what portion from exports? Who is personally responsible for a given sales segment?
Suddenly, it turns out that we don’t have to fill one giant bag worth 10 million, but rather many small bags worth several hundred thousand each. Without this breakdown, it’s impossible to plan sales activities effectively, execute anything sensibly, or determine where the real cause of failing to meet the target lies.
Sales get lost between departments
Shortfalls in this area aren’t due to bad faith. Most often, they’re the result of a very human mechanism: every department head focuses primarily on their own area. The production manager knows what to produce. The logistics manager oversees the warehouse. The CFO keeps an eye on the budget. Each of these people is professional, conscientious, and does their job, but only within the scope of their narrow responsibilities.
This is essentially a problem of communication and cascading. If the organization’s overarching goal hasn’t been broken down across all departments, if no one has asked the question – “who else needs to be involved so we can pull this off?” – then everyone will optimize their own little piece without noticing that the whole thing is falling apart.
Surprisingly, this problem doesn’t apply exclusively to massive corporations with bloated structures. Contrary to appearances, smaller companies struggle with this too, if only for the simple reason that in a small team, one person often shoulders several roles at once. We don’t have a clash between two departments, but we do have overworked people who physically can’t find the time for strategic thinking. The question of “whether we can afford to sell more” gets lost in a sea of day-to-day tasks.
Three Areas Where Operations Collide
In my experience, the lines of a company’s operations and sales goals particularly often intersect at three points. In fact, each of these areas can be a source of trouble on its own, though – as is usually the case with interconnected systems – they often occur together.
- Point one: the budget. This is probably the most classic scenario. Someone sets a more ambitious target, but the resources and funding remain exactly the same. There’s a new goal, but no new budget for marketing, channel development, or staff. The organization operates under the belief that its current efforts will miraculously start to bear fruit and, all on their own, suddenly yield greater results. If we don’t specify exactly how much money we need and when we can get it, the plan may turn out to be great on paper but physically impossible to execute.
There is another mechanism at play here, one that is only seemingly paradoxical. Namely, sometimes sales growth alone can financially strangle a company. This happens when a company wins more orders, so it must immediately increase raw material purchases, hire additional workers, and pay for more transportation. These expenses arise now, while revenue from new orders won’t come in for another 30, 60, or 90 days. In the meantime, a liquidity gap arises that can bring down even a company with a full order book. If no one in the organization has calculated when the money will go out and when it will come back, it may turn out that the company is growing on paper, but the cash register is empty. - Point two: production and product range. In theory, a manufacturing company knows how much of what it sells, because it analyzes data from previous years and uses that to estimate what it will need. Nothing could be simpler. The problem arises when a new target comes along that is 30% higher, and suddenly historical data starts to lead us astray. Especially since this growth won’t be spread out evenly over time. It will have its own dynamics, different phases. And above all – it will apply to specific products. Maybe salespeople will be tasked with clearing excess inventory, or maybe they’ll focus on products with the highest margins. If no one notifies production, there will be a significant problem.
It may also be the case that the data isn’t inaccurate, but simply doesn’t exist. This happens every time a company enters a new market or launches a new product. There is no “last year” to refer to, nor any demand pattern. It’s a blank slate. In such a situation, production – if it operates on autopilot using historical data – will be flying completely blind. The only thing that can help is information from the front lines: from salespeople, from marketing, from the people who talk to customers in the new market. If there is no dialogue between departments, production will keep making what it always has, and the new market will be left with a great sales plan and empty shelves.
Point three: resources (in the broadest sense of the word). The sales team is just the front line. The question is: who will actually bear the brunt of the new sales target? Because if sales increase, so will the number of documents, shipments, orders, invoices, complaints, and phone calls about order status. Is accounting ready for this? Does the warehouse have sufficient capacity? Are suppliers of semi-finished goods prepared for increased orders? Do we have space in the office for new employees – and if not, do we have the infrastructure for remote work?
It’s a vast system of interconnected vessels. Some of these questions may seem trivial – after all, how many entrepreneurs seriously consider the number of desks when planning sales? However, sometimes all it takes is one bottleneck, one underestimated element, for the entire flow to come to a standstill.
Don't just fix the symptoms. Start with a diagnosis
How does this work in practice?
We don’t have to rely on generalizations. One manufacturing company I know decided to expand and made the perfectly rational decision to rent external warehouse space. Someone realized that higher sales meant greater processing capacity, so a contract was signed with a logistics provider. And that’s great – someone thought it through. The problem is that other elements of the plan didn’t pan out. Volume didn’t increase as expected. And the contract with the operator remained – signed for years, costing several million a year. It was a serious commitment that no longer reflected actual sales but continued to weigh on the budget for a long time.
The second case is all the more interesting because the company did a lot of things right. The manufacturer planned for sales growth and had a solid foundation for it: scaling was proceeding smoothly, specific markets were identified, target groups were defined, sales experts for the given market were hired, and marketing received a budget for activities. Nothing was overlooked – except for one thing. No one analyzed the relationship between the length of the production cycle and the specifics of the supply chain in the target market. And that chain turned out to be long. Goods went from the manufacturer to the distributor, from the distributor to the wholesaler, from the wholesaler to the store, and only then from the store to the end customer. However, the real problem was that some of the products were seasonal. The time window for moving through the entire chain and redistributing the goods turned out to be too narrow. Some customers dropped parts of the product range, while others reduced their orders. The manufacturer was left with seasonal inventory in the warehouse, and the sales potential – theoretically carefully calculated and solidly financed – simply went to waste. Due to strategic oversights, the company could not bear the burden of operations.
Processes, Systems, and People
The diagnostic process itself is relatively predictable. When a client comes with a problem like those described above, we start with the foundation: strategic and sales goals. We examine how they were established, how they cascade into tactical and operational goals, and which departments are directly and indirectly linked to sales. Only on this basis can we see if the entire organization is working toward the same goal. This is the process-oriented part – difficult, but doable.
The real resistance begins later. It is not systemic, but human. An employee who for years has had “their own” goals A, B, C, and D suddenly learns that they should also include sales-supporting activities. A natural defensive reaction arises: “But sales isn’t my job; that’s what other people are there for, and they get paid for it.”
The key is to involve people at various levels – not just in diagnosing the problem, but also in developing a solution. If we go to the CEO with a ready-made answer, the CEO might as well just file that document away in a drawer. Only when middle managers and rank-and-file employees understand why we’re making a specific change – and, moreover, feel that they have a real say in shaping it – does such a change have a chance of happening and yielding positive results.
A company is a living organism
Naturally, even if we manage to align goals and link operations with sales, that doesn’t mean the matter is settled once and for all. A company isn’t a clockwork mechanism that, once wound up, ticks steadily for the next decade. Every organization that employs people and operates in the free market is a living organism: subject to seasonality, turbulence, setbacks, and a certain degree of chance and luck.
We plan for half a million in revenue in February, seven hundred thousand in March, three hundred in April. And then, in each of those months, we make two hundred twenty thousand. What then? Do we keep pushing forward according to the old plan? Or – like a mature organization – do we review, modify our assumptions, postpone hiring, and adjust orders with suppliers?
A constant review of execution is not a sign of a lack of faith in the plan, but proof that the organization takes itself seriously. Serious enough to dynamically adapt to reality, which usually deviates from Excel spreadsheets. I think the most important thing that can be said about the relationship between sales and operations is painfully simple: they are never two separate worlds.
Each of the problems described can be diagnosed and fixed, provided that someone asks the right questions to the right people. If you feel that something is falling apart in your company but you don’t know what yet – write to us, and we’ll help you identify the issue and plan concrete solutions.
