Whenever we talk of AUDIT, the immediate association is with Financial Audit – Statutory, Internal, Forensic and so on.
These days, of course, there are some other kinds of Audit that are also happening in a number of organisations like HR Audit, SAFETY Audit, ISO Audit, 5S Certification Audit and so on.
However, it is rare to hear of SALES OPERATIONS Audit. Very close to NIL in my experience. There are several reasons for this. Number one, Sales people consider themselves above rules and regulations and zealously guard their zamindari – hence no one is allowed to look into what “they are up to”. Secondly, since they are the primary revenue generators for the company they have the protective umbrella of “sau khoon maaf” !
And, finally if per chance a CEO manages to get an Audit done and raises it for discussion in the Senior Management Committee, the Sales Head silences him with “Do you want my boys to attend to customer calls and get business or would you rather that they answer the stupid queries and observations of these audit chumps who have never brought in one rupee of business in their whole lives ?”. The CEO quietly retreats.
However, the truth is somewhat different, particularly in these very competitive times, and when, irrespective of what local business may lobby, the fact is that the Indian economy has to face the challenge of international standards of quality, delivery and service from the foreign goods and suppliers who are wedging their way into the country.
Because Sales is the primary revenue generator for the company, they seem to forget that they also incur costs and waste resources in their functioning and any reduction in such costs and waste is a direct addition to the bottom- line even though it may not reflect in the top-line.
NEED
Many, multi-product, multi-location companies have faced the
situation that while sales are “apparently” growing, profit growth is not keeping pace and liquidity is getting worse and worse. In the race to “book” sales and “maintain market share”, these two aspects of profits and liquidity often get secondary attention till a crises arises or it is too late !
Any study as to what went wrong frequently reveals that in the rush to register sales and earn incentives, the “quality” of sale was often overlooked ; branches frequently violate credit norms, discount limits, ignore advice on depending too much one or two customers / dealers, book now and accept sales returns in the next period etc.
In the process, net realisation suffers and often the “reduced” payments come in very late. The dealer community having been at this game for many years, takes full advantage of the sales executive’s eagerness to book sales, extracting maximum mileage at the time of order booking and, even more, at the time of making payments.
It is in response to this and such situations that we have developed the SALES OPERATIONS AUDIT exercise, which is detailed below.
THE SALES AUDIT
PURPOSE
To ascertain, at the designated branch / location, whether the Company’s Policies are being followed in respect of
a) Credit Limits
b) Discount Limits
c) Stock Allocation Priorities
d) Returns / Replacements
e) Credit Notes
f) Debit Notes
g) Internal Audit Observations remaining unattended
h) Stock Reconciliation Report
i) Statutory Reports / Statutory Fees/Payments remaining pending (e.g. Shop & Establishment matters, Profession Tax, GST and similar)
j) Variances of Expenses from Budgeted Amount
IN ADDITION, (and this is a very major and important aspect), the exercise also covers making a sample study of the prevailing norms/practices of that branch in respect of
1) Time taken to respond to enquiries
2) Time taken to deliver goods in stock
3) Time taken to convey requirements to factory / HO
4) Time taken to issue Credit Notes
5) Time taken to issue Debit Notes
6) Time taken to collect payment
7) Time taken to lift the telephone on incoming calls
8) Time taken to respond to service calls
9) Number of service calls attended per person per day
10) Number of dealers / customers visited per day
11) Time taken to submit Weekly / Daily Reports
12) Time taken to deposit cheques
13) Time taken to transmit money to HO
14) Time taken to respond to HO Fax / E-mail queries
15) Time taken to submit Tour Reports
16) Time taken to submit Tour Expense Reports
17) Time taken to settle Tour Expense Claims
18) Time taken to settle Local Conveyance / Misc Expense Claims
19) Number of service jobs completed / cleared every day
20) Number of service complaints remaining pending every day
21) Number of external & HO telephone call remaining unreturned every week
22) Number of external & HO e-mails remaining unanswered every week
23) Average waiting time for a customer visiting the office/depot/godown to meet the concerned person of the company
Finally, a descriptive report is also submitted on the general upkeep of the branch, premise maintenance, record-keeping practices, availability of documents and other related matters.
EXPECTED OUTCOME
We then submit a REPORT covering the above areas, insofar as they apply to the concerned Branch. Wherever relevant, we shall also give our recommendations for corrective action.
It is expected that the availability of such information will give a true picture of the ground realities prevailing in the branches and help the organisation to streamline its procedures where required and counsel concerned employees where necessary.
It is emphasised that the purpose of this SALES OPERATIONS AUDIT is not to locate or point out errant employees or make scapegoats out of anybody. The basic focus is on the systems prevailing and practised and to point out the gaps that obtain between the actual practice and the designed system ; it is upto the organisation to take necessary action to correct the situation which, of course, may sometimes include correcting some particular employee. However, the exercise is NOT to be done or should not be construed as a “fault-finding” mission. It is exactly what it states itself to be --- AUDIT of operations against the backdrop of stated Company Policies & Practices.
BENEFITS TO THE ORGANISATION
Having such an exercise carried out by an outside agency lends it greater authenticity and assures a neutral and unbiased report which will help in taking corrective action for improved operational performance.
Secondly, it will help establish a comparative basis on operating parameters amongst different branches and help the organisation to benchmark itself with competition and best practices in the industry. Over a long-term, this can bring about much greater transparency and objectivity in assessing performance.
hemendra k. varma
mumbai
November 12, 2019
