Case Study: Grantpac Ltd
Grantpac Ltd is a medium sized privately owned company based in Coventry and was formed in October 2012 by the merger of two companies: Grant Packaging Ltd based in Coventry specializing in plastic packaging and Cardpac Ltd based in Halifax who specialised in cardboard packaging. It is owned by the directors who acquired the original companies through a series of buy-ins. Paul Green is the Managing Director and owns a 40% share. The Marketing Director, Finance Director, Technical Director and Production Director each own 15% of the Company. The Marketing Director, Ian Slater (aged 63), was previously Managing Director of the cardboard packaging company, the other directors all came from Grant Packaging. Due to ill health Ian is about to retire and sell his stake in the company to the other existing directors. His role will be replaced by a new postion, the National Sales and Marketing Manager.
From its’ factory in Coventry Grantpac supplies a wide range of plastic packaging products used in fmcg industries such as food and drink and consumer cleaning products.
Products include:
- ‘PacTray’ a range of plastic trays for the food industry
And
- ‘PacBot’ – a range of plastic bottles for still and carbonated drinks and other liquids
All products meet international performance, health, safety and other legal requirements. In addition to a standardised range of products, special products to customers’ specific requirements can also be supplied. The company has its own technical experts, designers and manufacturing facilities based in Coventry. Sales of plastic products for 2012 were £36 million a 6% growth on the previous year.
From its’ factory in Halifax the company supplies a wide range of cardboard packaging products.
Main products include:
- ‘PacAge’ – a range of cartons for liquids such as milk and fruit juice
And
‘PacWrap’ a range of cardboard sleeves and boxes for food packaging.
All products can be printed or labelled to customer requirements and all meet international performance, health, safety and other legal requirements. Sales of cardboard products fell by 4% in 2012 to £20million.
The rationale behind the merger was that many of Grants’ customers also required a cardboard element to their packaging and that by providing both elements the company would be able to supply a complete packaging solution and consequently become a more valued supplier.
Following the merger, Grantpac faced a range of challenges. Morale had slipped amongst the former CardPac staff following the merger. Several production and a number of sales staff left the company to join competitors, whilst the closure of the Halifax sales office, in order to rationalise the sales administration process had also seen 5 staff made redundant. There was also disquiet amongst the former Grants’ sales people who felt that the former Cardpac sales people received better salaries and benefits than them. 2013 had also seen Grantpac fail to capitalise on its’ new ‘complete solution’ with a failure to capture a number of important new contracts with some major end users.
Paul Green has become increasingly concerned that, due to his ill health, Ian Slater, had paid insufficient attention to the sales function over the past year or more. Paul has expressed his concern about the company's position and longer term prospects. In particular, he is worried that in recent months he has seen a loss of focus and leadership in the sales team. The loss of two well respected and long serving Area Sales Managers [ASMs] had not helped. This left their sales teams without satisfactory leadership, as well as losing the company considerable market knowledge and close relationships with important members of the DMUs of some larger accounts. The ASMs were replaced, one by promotion and one by recruitment. Slater undertook the selection process by himself, as he does for all sales posts. He has no formal system for recruitment or selection as he “knows a good sales person as soon as he sees one”.
While you will need to undertake further analysis the following information is available:
Sales territories are organised on a geographical/product basis. There are effectively two sales teams: one for cardboard products and one for plastic. The territories have not been changed since the company was established through the merger. Eachsales person is responsible for all the accounts/customers in their area who buy their specific product, irrespective of the size or importance of the account.
At the time of the formation of the company, the sales office function was rationalised with Halifax closing and all sales administration being moved to Coventry. The number of area sales people remained the same at 25. In the past year 4 sales people and 2 ASM’s have left to join other companies. All have been replaced.
Sales forecasting has been based on the assumption that there will be continued year on year growth in each territory. Each year, projected total sales have been largely determined by the Directors. The figures were given by Slater to the Area Sales Managers who had little involvement in setting the overall target but broke the figures down, allocating targets to the territories. The annual sales expenditure budgets have always been set according to a financial resources view of what the company can afford. Individual sales people feel they have no influence on forecasts or targets. A ‘top-down’ management approach and autocratic leadership style seems to be present, especially from Slater.
Sales people in the cardboard sales force are paid a basic salary based on whatever they negotiated individually when they joined, together with various increments related to their length of service with the company and their achievement against their previous year's sales target. Basic salaries range from £28,000 to £43,000 with the mean salary in 2013 standing at £37,200. All have company cars, non-contributory pension, ‘office allowance’ [£800 pa to run a personal office in their home] and the usual expense allowances. An annual bonus of 10% is paid based on company performance. All the cardboard sales people were rewarded the bonus in 2013.
Sales people in the plastic packaging sales force are paid a basic salary for of £15000 and commission of 0.5% for every pound of sales. The mean salary in 2013 was £31,500. All have company cars, contributory pension and the usual expense allowances.
All sales staff get 22 days holiday per year plus the normal 8 statutory ‘bank’ holidays.
There are 8 sales people aged over 60, 6 of whom are in the cardboard sales force.
There is no formal job description for their role of ASM as they have all ‘grown into’ their jobs. The ASM recently appointed in Scotland (for cardboard products) had been with the company for 11 years as a salesman, so it was felt by Ian Slater that he would be able to ‘step-in’ to the role.
Sales people are expected to average 22 sales calls per week of which 3 are to be made to prospects. Customers are expected to receive an average of 20 calls per year though this may vary due to customers individual requirements. Visits can take between 30 minutes and 2 hours, the latter where there are technical discussions or meetings with several DMU members.
The only system of evaluation and feedback relates to each sales person’s sales achievement against target. Any training or development relies on the management style and approach of the ASM for the area in which they work. There is consequently considerable variation. No formal training process is in place because Slater believes sales people learn best ‘on the job’.
Although sales order processing is part of the financial computer system, sales people keep their own paper based records of visits, plan their own activities and communicate with the internal sales office by telephone and email. Paul Green has suggested that a more sophisticated computer based system might be helpful, especially as the 6 staff in the sales office have complained to their manager, the Chief Accountant, that they are not being kept up to date with changes in customer organisations. Slater is no great enthusiast for computers.
9 customers each have accounts worth over £500,000 per annum. 5 are located in the southern area (plastics); 2 in the midlands area (plastics), 1 in the north (cardboard) and 1 in the midlands (cardboard). In each case the account is serviced by both a plastics and a cardboard area sales person.
In total 214 customers purchase both plastic and cardboard products.
The sales force structure is shown below
Sale force (Plastic Products)
Sales Director
(IanSlater)
General Sales Manager (Plastic Products)
(Ben Wishaw)
______
|| |
ASM (MidlandsASM (South)ASM (North & Scotland)
& Wales)
| ||
4 sales people 4 sales people 3 sales people
Sale force (Plastic Products)
Territory / Sales 2013(£ millions) / Number of accounts / New accounts in 2013
Midlands & Wales / 12 / 143 / 14
South / 14 / 126 / 11
North / 10 / 109 / 8
TOTAL / 36 / 378 / 33
Sale force (Cardboard Products)
Sales Director
(IanSlater)
______
|| | |
ASM (Midlands)ASM (South)ASM (North) ASM (Scotland)
||||
4 sales people3 sales people 5 sales people 2 sales people
Sales force cardboard products
Territory / Sales 2013(£ millions) / Number of accounts / New accounts in 2012
Midlands / 7 / 106 / 6
South / 5 / 125 / 3
North / 7 / 104 / 3
Scotland / 1 / 34 / 1
TOTAL / 20 / 369 / 13
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