A Costly Problem

Saint Gobain, a European leader in construction materials, owns a distribution division selling high-end cabinets.

Management was struggling to explain a 20% drop in revenues: for some reason, quoted cabinet fitting projects were not closing. Almost a third of clients cancelled mid project, requesting a refund on their initial booking deposit.

This was costing an annual loss of 25 million euros.

There was talk of staff layoffs and even of shutting down stores and factories. On top of the financial cost, Saint Gobain’s reputation was at stake, with a large number of customer complaints on the service side.

Somewhere between the sales teams and third party fitters, a sizeable part of business was being lost. How to locate the root cause? Where should they look, what should they measure?

Breaking Down The Problem

To understand the issues, Hoptech interviewed not only the sales and service teams, but all other departments of Saint Gobain. We listened to the underlying strategic objectives and organisational difficulties faced by stakeholders and identified each area’s Key Performance Indicators (KPIs).

We decided to zoom in on the first half of the sales process, where most opportunities were lost: the phase spanning the client quotation through to order delivery. We built KPIs to measure lead times between each step of the sales process. By correlating these indicators with cancellation ratios in the same period, we pinpointed where things were going wrong.

Absolving Sales

Until our diagnosis, Saint Gobain’s management had assumed most of the fault lay with sales teams, who may not have been following up on customer orders.

In fact, when we analysed the data, it was clear that salespeople were responsible and punctual when contacting clients, ordering products and organising appointments. The fault was not with sales.

Quality Control

There was a second assumption by management - that third party vendors, the fitters, were not up to scratch. This time, management was right.

Hoptech built KPIs around different phases of the fitting process to get a clearer view of the situation.

We had three separate insights:

Insight 1. Service quality

Some third-party vendors failed to provide services, delaying project completion. Some fitters missed appointments, others took longer than planned.

Using data compiled by Hoptech, delinquent providers were listed for review by the service department and, in some cases, removed.

Insight 2. Too Many Suppliers

We noticed a correlation between cancellation rates and the number of fitters assigned to a given project.

To explain: one fitter may have been assigned to take measurements of the room in which a cabinet would be constructed, while another fitter undertook the final installation. Since different artisans work in different ways, there could easily be disagreements over measurements and approaches. Because of this, cabinets were often being reordered or modified.

Hosting numerous home visits by different fitters can be frustrating for clients; it’s an invasion of their privacy and a drain on their time. It doesn’t take many home interruptions for a client to lose patience and cancel their order.

Our recommendation was to rationalise service suppliers - placing a single artisan in charge of each project. This would streamline the client experience.

Insight 3. Lagging Supply Chain

We correlated a loss of revenue with high appointment frequency.

Fitters were booking a large number of client appointments, citing late product deliveries and missing items. To investigate further, Hoptech analysed lead times between the factories, warehouses, stores and clients.

We learned that certain products arrived at renovation sites behind schedule. Specifically, the warehouse providing tiles was in the North of the country, while most clients and suppliers were in the South. This distance was causing delivery delays and additional costs.

Based on our recommendation, Saint Gobain relocated its tile warehouse to the South. This improved lead times, reduced costs, and increased customer satisfaction.

The Bottom Line

The Analytics project was executed over a year and a half and cost one million euros. Besides the research and interview phase, Hoptech was also able to extract and correlate data from outdated databases and legacy systems.

After removing delinquent suppliers, improving the fitter management process, and relocating the tiling warehouse closer to clients, Saint Gobain patched their annual gap of 25 million euros per year.