THE CURRENT MANUFACTURING LANDSCAPE
Many manufacturers’ focus on profit management is hampered today because business processes that impact revenues are managed manually or are only partially automated, leading to significant inefficiencies. Companies need to look more closely at their quoting, contracting, and pricing practices and implement tools, such as CRM to improve their process efficiency if they wish to maximize revenue opportunities.
Many daily challenges make an impact on a manufacturing organization’s ability to run efficiently:
- Improving Perfect-Order Performance— A “perfect order” is one that is delivered on time and in full with no product-quality issues. This is a key lever to driving effective growth and results within organizations as a whole.
- Managing Price Execution and Compliance— “Price execution” is rolling out optimized prices across various channels and customer segments, while “price compliance” involves ensuring those prices are being distributed to the right people at the right time. Both these steps are critical to manufacturing industries, particularly life sciences, consumer products, high-tech manufacturing, transportation, and distribution. As these manufacturing industries evolve, the pressure to improve process, technology, or both will continue to build.
- Managing Complicated Contractual Agreements— Contract management is the execution of contracts and the building of contract compliance across channels; this challenge ties directly to pricing as well. Many companies are now realizing they are leaving a lot of money on the table by not managing their contracts well.
- Dealing with Complex Sales Channels— Many companies are adding a web sales channel and increasing reliance on indirect sales channels to grow market share. These increasingly complex multi-tiered distribution networks mean that the channel mix is constantly in flux, which makes it difficult to manage and track pricing and contract information.
- Improving Sales-Forecasting Accuracy— Sales forecasts are often inaccurate due to an inability to capture a true reflection of sales probability. With CRM platforms such as SugarCRM offering real-time forecasting and performance reporting, don’t let inaccuracy bog your company down.
- Reconciling Customer Data Across Systems and Business Units— Many manufacturers struggle to get a single view of customers across a fragmented business, which can be especially difficult for companies built on mergers and acquisitions or with a number of different plants and entities. When companies have customer data spread across multiple systems, it is difficult to track buying behavior, capitalize on trends, manage maintenance and contracts, and see which products customers own. This leads to lost revenue opportunities and poor customer service.
- Customer Segmentation— Dividing the customer base according to criteria such as demographics and spending habits allows companies to market and sell to these groups more effectively. How to better segment one’s customers and create the most profitable customer experience across those segments is an important topic for manufacturers right now.
- Dealing with the Increased Frequency of New Product Introductions— This is particularly acute for high-tech manufacturing, consumer electronics, and consumer products, where capturing market share means getting a better product out the door faster than the competition. Constantly increasing the rate of new product development puts a strain on existing processes and technologies.
- Managing Regulatory Compliance Issues— Pharmaceutical manufacturers must comply with FDA regulations; all public companies must comply with Sarbanes-Oxley regulations. Today, there is a much higher standard of accountability for transactions throughout an organization.
- Handling Increasing Sales to Government and Public-Sector Organizations— More contracts are being created, compliance issues are rising, and price management problems are increasing because pricing changes when selling to government organizations.
Poor tracking of expired contracts, discount profitability, and out-of-contract pricing, as well as poor reconciliation of charge-backs, leads to a great deal of revenue leakage within manufacturing organizations. In most cases, the spreadsheets and departmental database applications currently in use simply cannot scale and will not be agile enough to meet the needs of manufacturing organizations as they evolve to meet these challenges.
These are some of the challenges that manufacturers face today while trying to grow their businesses; they are also the causes of many of the inefficiencies that cost manufacturers revenues. Identifying these causes of revenue leakage is just the first step; the next is to determine how to better address these problem areas. This is where technology tools, especially CRM, can play a role in helping manufacturers move toward greater efficiency and better profit management—while also helping them become customer centric.
THE IMPORTANCE OF BECOMING A CUSTOMER-CENTRIC ENTERPRISE
Historically, many manufacturers have differentiated their companies based on price. But in today’s dynamic environment, industry experts say it is becoming increasingly important to differentiate not solely on price, but also on the quality of customer service, the quality of products, and the quality of customer interactions. This more customer-centric approach ultimately results in brand equity and the solid reputation that is needed to secure a competitive edge.
Becoming customer centric is not an easy change for some companies to make, because they are accustomed to operating in a particular way. And becoming customer focused can represent a significant shift in business strategy for many organizations.
But ultimately, being customer centric is a simple concept:
it is a strategy to get to know customers well and share this knowledge across the company wherever it can bring value, as well as with distributors and other third-party partners.
For example, tracking which products customers own and which additional products they may or may not be interested in, then applying this knowledge to all sales, service, and marketing interactions, helps increase profitability by highlighting opportunities for cross-selling and up-selling. Even more importantly, though, it also helps cultivate loyal, life-long relationships with customers by reflecting deeper knowledge of their businesses and needs in all interactions.
In the long term, better customer knowledge results in faster transactions, better targeting of resources, higher customer satisfaction and loyalty, and greater profitability. But becoming customer centric is difficult without the right tools to collect, disseminate, and apply this customer knowledge.
THE EVOLUTION OF MANUFACTURING CRM INITIATIVES TOWARD PERFECT-ORDER PERFORMANCE
In the beginning stages of CRM technology adoption, many organizations start with a departmental, tactical approach to solve a single pressing issue and move toward company-wide, strategic deployments over time. While it is advisable to work out a full corporate CRM strategy before commencing a CRM initiative, using a phased approach is a good way to roll out the project in manageable stages.
The first step for many firms is a sales force automation (SFA) initiative or a focus on improving contract and opportunity management, as these are common challenge areas for manufacturers.
The next area of focus is often the management of the inquiry-to-order process, which spans from the entry of a prospect or suspect into the sales pipeline all the way through order capture. In streamlining this process, your company will be able to achieve the ability to deliver an order on time and in full with no product-quality issues.
Order management is a process that pervades an entire manufacturing company; it is not unique to a single area or piece of technology. Nonetheless, its key data and workflows reside within a CRM system at most companies. Once an order is captured in the CRM system, it is typically handed off to order processing and fulfillment, which is usually managed within an enterprise resource planning (ERP) application and may then be passed through a supply-chain application.
The challenge to building the perfect order is to align all these departments, software applications, and processes. A tight integration between all these elements is a critical component to getting to the perfect order.
Achieving better perfect-order performance is a complex set of steps involving multiple software systems, departments, and processes, but given the front office’s important role in this workflow, CRM is a perfect tool to accomplish longstanding corporate goals. Subsequently, CRM systems can automate all of the key processes that affect order performance: pricing, contracts, and the quote-to-order process.
In today’s evolving business environment, manufacturers need to compete on more than just price. They need to differentiate on the quality of their products, their processes, and their customer service—in fact, on the whole of the customer experience. Becoming customer centric by utilizing CRM is imperative for manufacturing businesses that want to retain existing customers and attract new ones.
The concept of a customer-centric manufacturing firm is not about sinking higher costs into customer service. Rather, it entails weaving a more strategic approach to the collection and use of customer intelligence into the full lifecycle of customer interaction. Customers are demanding more from manufacturers, and they are looking for ways to reduce costs while increasing quality. This can be accomplished by having the right CRM in place that helps you manage time and resources efficiently so that you can provide the best possible service at an affordable price point.
HOW TOKARA SOLUTIONS IS READY TO HELP YOU GET THE MOST OUT OF YOUR CRM:
The business landscape is anything but static. Having a fully integrated, end-to-end CRM for every step in the customer journey is essential for any business looking to achieve the most while maintaining an ease of mind! Tokara Solutions offers help in providing the best CRM for you and your company! With an average of over 18 years of CRM consulting, Tokara’s wealth of knowledge in integrating and maintaining CRM systems is rooted in our devotion to supporting small, medium and large manufacturing enterprises.