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Dealing with the challenges facing manufacturers

Supplier: Cincom Systems of Australia By: Greg Mills, Regional Director ANZ, Cincom Systems of Australia
16 July, 2013

Australian manufacturing is at a crossroads.

We are all familiar with current industry pressures including the high dollar, high labour costs and rapidly changing customer demand. This means that to survive, an organisation not only has to be good at what it does, it also must be innovative and flexible enough to rapidly respond to changes in the environment. Whether we maintain our manufacturing industry or watch its gradual decline depends on how well the industry responds to these challenges.

In a recent survey of Australian businesses commissioned by Cincom Systems, 52 per cent of the respondents are looking to grow their businesses at rates of greater than 10 per cent per annum.

As the local Australian market in general is not expected to grow by more than 2 per cent to 3 per cent per year, this growth can only come from one of two sources: growth in the market (local and overseas) or taking market share from other players. The high Australian dollar demands that products either be made cheaper or be better in their function, design or quality to command a premium in the international market.

So what are the internal challenges that face an industry wanting to grow its business? The survey identified that Planning (46 per cent) and Sales (18 per cent) are the processes chosen for most business improvement, which points to both the underlying issues and potential solution for responding to these challenges.

A seismic shift in thinking is required by business to change from the traditional internal view of the business (focusing on more efficient internal processes) to the view of the customer (how the customer sees our business). These days, consumers have more power than ever with real-time access to product reviews, pricing and availability information and the ability to purchase from anywhere in the world. It is time to think in terms of what the customer want – even anticipating their needs.

Just like for successful sportspeople or in military operations, the hard work comes in preparing for the game or the battle; businesses that are prepared for battle are more likely to win in the marketplace.

To shift our focus to the demand side of the business and becoming a customer-oriented organisation, a number of challenges have to be faced. Let's look at each of these


Challenge 1: Making Customers' Perception of Time Your Own

Business tends to look at its own perception of time rather than the customers' perception. Studies show that if a customer arrives for a car service and does not get greeted within the first two minutes, they will have the perception that they waited for over five minutes.

Social media and the instantaneous nature of the Internet have changed customer's perception of time and responsiveness. There is a need to focus on minimising customer response times – be that for sales inquiries, proposals, processing orders, delivery and after-sales service. And remember, responsiveness is measured by the customer – not by you.

Challenge 2: Delivering Out-of-This-World Service

All levels of management must buy into a vision of exceeding customer expectations. It must be more than a mantra; it must be ingrained from the shop floor to the top floor.

Don't just give customers everything they want – become ingrained and imbedded into their business and projects and offer the best possible informed service and products.

Challenge 3: Collaborating with Customers at High Speeds

Knowledge is more valuable than price. Consumers are far more willing to buy from a supplier that is informed, understands the products and how the customer uses them and can provide a thorough knowledge base for the customer to use.

Additionally you need to provide this information when and where the customer wants it.

Making knowledgeable systems available and delivering this to the customer's computer, mobile or tablet in real time creates a level of trust that produces high levels of satisfaction and a repeat buyer who will first come to you for future needs rather than approach a competitor.

Challenge 4: Demand Chains Built for Speed

There is a lot of talk about Supply Chain velocity, but we also need to focus on Demand Chain speed. What is it? The Demand Chain starts by anticipating future demands and having processes in place to manage the capture of that demand from the first inquiry to the proposal, quotation, order and after-sales services.

The reality is that even in business-to-business transactions, people buy from people, and so as a business, you should make use of all information sources. Use social media to engage and interact with your potential and existing customers and anticipate changing demand.

Don't just sell; build an ecosystem around customers. Provide an easy way for customers to do business using a multi-channel approach – online, phone, email, fax, etc.

Social trends and changing demographics have created customers who have grown up with a sense of immediacy and always having access to product. Make sure you can meet these expectations.

Challenge 5: Knowing Which Deals to Take

Too much time gets wasted on sales cycles that have little chance of success. A common phenomena is "pipeline stuffing" where salespeople will chase every deal – even the unprofitable ones – to meet internal sales targets. New tools are available that can quickly weed out the deals that are loss makers and allow you to choose the deals that are most profitable. Using rules-based technology to manage your sales process allows you to be smarter with your sales and maximise return on your investment.

In Conclusion

The world is changing fast. In addition to the pressures that Australian manufacturers see from the current economic conditions, there is a major shift in social and demographic trends that have created much higher consumer expectations.

Being equipped to better respond to those changes through demand-focussed processes and systems that can exceed these expectations is one clear strategy to responding to the new environment.