What Every Mid-sized Manufacturing Executive Needs to Know

Oct. 26, 2011
How to look big and act fast.

Think big, look big and act fast -- every mid-sized manufacturing company that takes these three tenets to heart can grow its business faster than its competition. But how do you implement these tenets within the culture of your organization?

At this stage of your company's lifecycle, your greatest challenge is the scale of your operations. As a small manufacturing business, you were able to stay close to your customers, be nimble and offer superior service, while still making respectable margins. These attributes were the source of your competitive advantage. But as you grew, you began to get squeezed from both sides -- you can no longer be as flexible and personalized as your smaller competitors, but at the same time, you do not have the operational sophistication to compete with the big boys. This affects your ability to grow at the pace you want.

The next goal is to look big in the eyes of your large customers -- where the average lifetime contract value is highly prized and will provide fuel for your rapid growth. But in order to successfully acquire such customers, you must appear seasoned in all of your customer interactions -- from your marketing campaigns, to your sales force's interactions with your customers, to your after-sales support and service.

To achieve this objective, you need to develop two key capabilities.

In the current economic environment, customers have the luxury of demanding more from their suppliers. Manufacturers who can offer a consistent and superior customer experience across all company touch points will come across as more 'trust-worthy'. Such manufacturers enjoy an unfair advantage over their competitors. Understanding customer experience through surveys and conversations and then using the insights to identify and proactively address issues is a core competency at such companies. By using such techniques, they not only improve customer satisfaction, but also end up creating a volunteer army of customers who become active promoters of their product (Think iPad). In addition, the sales organization at these companies clearly understands how their product is used by their customers and the value it brings them. Many sales organizations fail in this regard - they know their product extremely well but struggle to clearly articulate why their customers use it. Your sales organization needs to develop such core competencies.

Figure 1: Sample Operational Metrics

You also need to develop some technical capabilities to make your customer interactions more sophisticated. Such capabilities include:

  • Being able to segment your prospect base and deliver highly customized marketing campaigns to them at a caliber one expects from large companies.
  • Enabling your sales people to have ready access to information such as pricing; configuration and shipment commit dates via their mobile phones, providing for rich customer interactions.
  • Providing specialized support to your VIP customers by routing calls quickly to your best support people and rapidly escalating unresolved issues.

Fortunately, CRM technology will allow you to implement such capabilities. As a result of investment in CRM, you will appear seasoned and operationally sound to your bigger prospects -- putting you at an advantage to get their business.

While 'thinking big' provides you with a compelling vision and 'looking big' gives you a perceived advantage over your competitors, they alone are not enough to help you grow. The third element, acting fast, is essential to a sustainable business growth.

The 'acting fast' capability provides the operational sophistication to predictably deliver the right product to the right customer at the right time in the right quantity at the right cost. It requires extremely tight integration between the front-office (sales, marketing and service) and back-office operations (engineering, planning, procurement, manufacturing, distribution and finance) to coordinate all aspects of the supply chain to meet customer commitments. It requires that you eliminate any information silos within your organization and across your supply chain, so nothing can fall through the cracks. The act fast capability also requires that you have deep insights into key operational metrics across all parts of your organization, so that you know what is working well and what needs to be improved (See Figure 1 below).

Finally, it requires adaptation, so that you can constantly identify and implement best practices within your environment. Such capabilities allow you to combine the predictability in delivering on your operational commitments with the flexibility to support sudden changes in customer requirements, empowering you to become the preferred partner to larger customers -- despite your actual size.

Fortunately, every company can afford to build the right customer interaction capabilities to 'look big' and the right operational capabilities to 'act fast.' By speaking with their customers and by capturing their current operating metrics, they can identify their core business process issues. While the lack of system may not give them accurate metrics, it gives them enough to get started and prioritize the processes that first need to be addressed.

To build some of the technical capabilities described earlier in this article, implementation of a, next generation ERP system, delivered in a SaaS (Software as a Service) model, provides a good starting point. It delivers an integrated front and back office environment, enabling you to easily synchronize your internal operations and your customer facing activities with your supply chain to deliver on your commitments. As a result, everyone within your organization is on the same page and aligned with your overall objectives.

Stand-alone point solutions for CRM, procurement, finance and manufacturing simply do not offer the degree of integration you need between your departments to get everyone aligned. SaaS-based ERP system's built-in analytics give you the ability to understand what is working well and what is not, allowing you to make data-driven decisions to quickly address issues. These analytics also surface issues you would normally not be aware of, ensuring that your operations continue to hum. Finally their SaaS delivery model gives you a significantly lower cost of ownership.

A fast growing mid-sized manufacturer of audio products found that a lot of 'blood, sweat and tears' was going into simply getting their products to the customers on time. There were a lot of spreadsheets being passed around. The warehouse had a spreadsheet for shipment plans; operations had a spreadsheet to forecast demand, sales had spreadsheets to track their customers etc. Things began to fall through the cracks and customer shipments were beginning to get affected. According to their president, "the most important thing for our large customers is to feel confident that we can deliver; that whatever the challenge, we can get the product there. When you're talking about a very large global distributor and major customers, missing a shipment is death to a small and growing business." With an affordable SaaS-based ERP system, things are back under control. Sales reps can access information like product availability and shipment tracking numbers themselves, enabling them to improve customer service. Operating managers can run their own reports and get the information they need when they need it. Their information is now catching up with their growth.

A combination of right business practices and SaaS-based ERP system makes a mid-sized company (such as yours) look and act like a big company, but with a significantly lower cost of visibility, alignment and optimization. You will still possess the flexibility to easily turn on the dime, so you retain the advantage of a smaller company. Such a combination of attributes will give you the capabilities you need to successfully compete against both smaller and larger companies in your industry and grow your business.

Mike Morel is senior director of Marketing at SAP.

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