Why Do You Need CRM in the Manufacturing Sector?
Manufacturing sector along with other industries has seen a significant transformation in the last two decades. From being a distribution centric industry, it has moved towards customer centric, as inventory is losing its life span. Every month or quarter, products are changing their shape and form, all due to extreme innovation. Small scale manufacturing companies are also now taking interest in adding innovation and technology to their business.It keeps one’s data and work ahead of time to process the records smoothly.
What is Lean Manufacturing?
The automated manufacturing machinery helps with ease to change the product form and composition. The concept of “manufacturing today” and selling the same for the next 2 years is over. Lean manufacturing is about knowing what is needed in the next one week, one month, one quarter and catering accordingly. Even though the manufacturing schedule exists for the whole year, it is flexible enough to ensure changes in the last minute.
Profitability in Manufacturing Sector
There are three factors that influence in Manufacturing sector’s profitability
- Sales and Marketing Optimisation
- Operations Optimisation
- Manufacturing Optimisation
Among the above three factors, Operations and Manufacturing has already been fully optimised with usage of automated processes and robotics. But to improve profitability, manufacturing companies need to improve their Sales and Marketing using automation and technology.
Sales and Marketing typically share 1 : 3 ratio in budgetary allocations. For example if a company’s annual budget is 1 Million USD, Marketing gets 250K and Sales and Sales Operations gets 750K USD. Therefore the area left for manufacturing companies is to optimise the productivity of Sales Team to influence profitability.
Hence CRM is the need of the hour to improve profitability for manufacturing companies.
Major Sales Issues in Manufacturing Sector
1. Product Price Variations
The price list needs to be changed periodically when the change in the price occurs in the raw material. The head office must continuously update the price list to the Sales Department so that they can pass on the price change to the end customers. The Sales Department needs to ensure that the Sales personnel across all regions adopt the revised price list with immediate effect.
2. Quotes Visibility Management
Whenever a sales personnel quotes something, it is at their discretion to mark a copy and keep the head office in the loop or not. Some sales personnel might do this while others might want to send information only for selected prospects so that they are sure to win, rather than all.
Head office does not have visibility on how many quotes were given to prospective customers. Also, no one in the company has the control on whether the customer has been informed about the price variations or the discount policies.
3. Daily and Weekly Reports
The daily report and the weekly report needs to be forwarded and checked mandatory. For some reason even if one report goes missing then the link gets broken. So the next report would start as a new one and historical data along with comparison would become a challenge to understand.
4. Loss of Customer pipeline Information on Sales Person’s Exit
Sales personnel may project the prospect and the value of the order but they are incompetent in giving accurate and detailed information on the product in daily or weekly reports. Mostly the salesperson would be able to project about an upcoming order when the customer is ready to place an order. They do not feel the need for reporting all opportunities and will project the opportunities only after the customer confirms the order.
This way the production department never plans on the projections and instead they depend on the last year/month’s sales as the projection for next month.
5. Last Minute Sales Projections
Sales personnel may project the prospect and the value of the order. But they would not be able to give accurate and detailed information on the product in daily or weekly reports. Mostly the sales person is going to project about an upcoming order only once the customer is ready to place an order. They do not feel the need for reporting all opportunities and also they will project the opportunities only after customer confirms the order.
This way the production department never plans on the projections instead they depend on last year / last month sales as the projection for next month.
This is where it becomes extremely important for the manufacturing division to know beforehand what exactly is in the sales pipeline and the forecast.
Traditional methods of marketing personnel, forecasting their sales while working in silos is not going to help the manufacturing division to plan. Advanced accurate forecast about the upcoming sales as per market requirements is needed by the manufacturing division. This forecast helps manage inventory and more importantly, the schedule.
7. Lost Order Analysis
Salespeople do not have the habit of informing the head office about all the quotes that they have given and so the analysis of lost orders will not reach the product team. Hence, the feedback from the sales team about the product change will not be based on the data but instead of the sales person’s personal opinion. Therefore, nurturing the lost orders or fine tuning the product is not facilitated.
The issues listed above do not appeal to the management when the sales are good. If these issues are addressed then it becomes a key success factor when sales are going down.
8. Customer Satisfaction and Relationship Management
Customer is the driving factor for any organizational effort to take off and it requires all the functions in the manufacturing process to work seamlessly with complete synchronization. To be able to win customer’s loyalty and also preempt any customer dissatisfaction, it is very important for the sales team and the production team to become fully aware of what the customers feel about their product/service and quickly fix any issues raised by the customer and avoid repeated mistakes.
When management proactively wants to maintain leadership in their domain, these issues become setbacks. Addressing these issues should be a priority whether a company hits roadblock or not.
What are the uses of CRM in the Manufacturing Sector?
CRM not only helps to address these above mentioned obstacles but also brings in more value to the table.
Key Features of CRM in Manufacturing Industry
1. Product Catalogue and Pricing
Traditional CRM products facilitate the products and quotes module, where the company can put their comprehensive product catalogue in the system.
Typically in a manufacturing organization, the head office or the product team manage the product cataloguing. Whenever a new product is launched or the price of a product changes, the product catalogue is updated at the head office. All sales personnel are trained on the CRM application which is typically a web application. So, the information is made available automatically across sales teams.
Typically to generate a quote, the sales personnel are required to enter only the product and quantity information to create a quote. As the interest level of the prospect goes the quote can be modified to include new products or changing the pricing. Hence once the complete quotes are available for modification, price changes can be approved by the management.
The system facilitates sending the pre-formatted quote to the customer either by an email template designed in the CRM or generating a PDF quote. The PDF quote is attached in the email to the prospect.
3. Obsolete Inventory and Excess Inventory Discounts
An automatic consolidation of all quotes created by sales personnel from across the regions can be made available in the CRM. More than anything else, the management gets to know details of the products which have been quoted to each prospect/customer. Manufacturing division can take decisions to clear their inventories from different regions.
Discounts for certain products and bundling (upsell/cross-sell) of products can be specifically targeted to the prospects to whom a quotation is already given by a sales person instead of advertising across the board.
4. Invenory Planning
Analytics of the products that are moving in particular regions can all be looked into and future plans be drawn accordingly.
An automatic forecast will be readily available for the sales manager and a product specific forecast will also be readily available for the manufacturing head. Over a period of time, the company can make accurate forecasts by implementing certain processes as well as by training their sales personnel accordingly.
5. Quotation Ownership
The process of using CRM quotations ensures a uniform quote given by the sales personnel across the organisation. These quotations are available to the managers and most importantly to the head office. If by any chance, when the sales personnel leaves the organisation, all the information remains intact within the system.
6. Product Team Field Level Feedback
Suppose when sales personnel lose some of the probable orders, the product team will have enough data to analyze if a pattern exists or not and to pinpoint the problem. The CRM data will also help understand if certain products are losing visibility because of a new variant or changes implemented by a competitor. Literally, product variants can be created based on the feedback from the market instead of designing at the board room.
7. Customer Complaint Management
On the other side, if the customer is facing challenges with their product or delivery or any other issue, he/she can complain to the sales person or support member. These complaints can be tracked by assigning ticket ids or case ids that will help in maintaining all communication together. Complaints can be analysed to deduce the problems and rectified. By taking preemptive actions on customer feedback and avoiding future complaints, the company gains goodwill from customers.
8. Integration with Backend
Traditionally all CRM systems come with integration capabilities that help in getting the product level inventory information to CRM. This way a sales person can confirm on the spot at the field about accepting an order as well as its delivery schedule.
Most of the manufacturing company’s sales team is distributed across the geography. When they are on the field, a mobile application for CRM will be handy to them. Most of the CRMs have a mobile application for both android and apple iPhone with offline capabilities.
10. Exhibition Participation and Return on Investment
Many manufacturing companies participate in Events and Exhibitions specifically in the manufacturing sector to build their brand and contacts. Once participants collect contact information of their stall visitors or other company contacts, they just move on by contacting only the immediate prospective ones.
These exhibitions are typically outside of the sales person’s city and sometimes country. These events happen to be one of the most expensive marketing activities of the company and occurs year after year.
To help, CRM comes with a campaign module that helps in capturing all the Exhibitions and Events along with the leads and contacts generated during the event. Once the entry is made against the campaign and allocated to the sales executive, the return on investment (ROI) is automatically measured over the period of time. This helps in optimising the marketing spend as well as make the management understand the relevance of Event participation.
CRM can add significant value by helping companies to manage their customers, contacts, leads, opportunities, quotes and development amongst other activities under one roof. In Manufacturing, a CRM can be a boon to the companies that don’t want to lose out important clients and want to move ahead of their competitors.
The best CRM for Manufacturing we can suggest is SugarCRM. Bhea is a partner of SugarCRM from 2007 and has more than decade experience in implementing a CRM for manufacturing companies and other industries.
Get in touch with us for detailed information and practical application of CRM used in Manufacturing Industry.