The Customer Is Once Again King: Manufacturing Strategy And Initiatives 2010-2012

As a discrete manufacturer your number one business strategy for the next two years is the retention and growth of your existing customer base. Your number one initiative at the heart of that strategy is improving customer fulfilment.

How do I know? Because research specialists IDC Manufacturing Insights identified and evaluated the strategies and initiatives driving discrete manufacturers. Over 720 manufacturing leaders were interviewed in the largest survey of its type ever undertaken. Customer fulfilment dominated the responses.

I know that this renewed emphasis on the customer is the result of a revitalised focus on revenue, profitability and an awareness of increased competition. Indeed, the focus on the customer is most accurately understood as a conservative approach to protecting an existing client base. As IDC puts it:

“Serving the customer well creates the groundwork for competitive advantage and thus can prevent competitors, especially from low-cost countries, from stealing market share.”

But just because this focus has arisen out of pressing business concern, it does not devalue its merit. Firstly, the research makes clear that this customer focus has dethroned short-sighted cost cutting as the main discussion in the boardroom.

Obviously, after a brutal credit crunch and recession, manufacturers like you still want to make operations and supply chains as lean, cost-efficient and cost-effective as possible, but make no mistake, customer fulfilment is front of mind.

But none of this urgency clarifies exactly what customer fulfilment actually is, nor indeed, how you achieve it. Customer fulfilment should not be understood in terms of just satisfying an order on-time and in-full (although such basics are pretty much where it starts).

Real fulfilment requires a deep understanding of individual customer needs, close relationships, and the ability to uniquely serve each client or order. This is not limited to just what the customer wants, but how they want it, when they want it, and how they want to do business with you.

For example, some customers may look to you to manage their inventory of your finished product, ensuring they can subsequently promise a level of service to their customers. Other clients may prefer to handle all processes from inquiry to invoices and returns, electronically in order to exploit efficiencies.

As a manufacturer you have to be flexible enough to accommodate all of these differences, but still be able to standardise so you can fulfill these demands profitably.

IT is critical in squaring this circle, although the research also reveals it still has some way to go. When asked in which areas they believed ERP has contributed most benefit, manufacturers ranked customer fulfilment sixth, below issues such as inventory optimisation. This would suggest that in many discrete manufacturers, ERP is focused on manufacturing operational elements rather than across the supply chain, into elements of delivery: in other words, manufacturers are missing out on potential ROI.

When asked to identify the top three additional technologies alongside ERP that can support operational excellence, ‘customer relationship management’ (CRM) narrowly lost the third place to ‘financial budgeting / forecasting’. This is despite ‘business intelligence and analytics’ topping the list of supporting technologies.

This confusion suggests that manufacturers might well want to know where they do not fulfill customer needs, but remain hesitant or frustrated when it comes to setting out to improve such satisfaction levels.

The new guiding light of a greater focus on the customer means that you need to invest in and commit to excellence in customer fulfilment. You do not need to read minds to know that those who do not will soon falter and fail.

Andrew Kinder is director of product marketing at Infor. He is charged with setting the strategy, determining focus industries, aligning forward development direction and driving global execution through marketing and sales enablement for advanced ERP and supply chain solutions.