The Sales Challenges of Complex Manufacturers

Streamlining the quote-to-order process improves competitive advantage

One of the first sales tricks you learn during your first fast-food job is the process of “upselling.” Say a customer comes to the counter and orders a soda. If they don’t specify the size, you ask them if they would like a large soda. You never suggest a small soda.

The idea is that if the customer really wanted a medium and you offered a small soda, they might take the small soda. On the other hand, if you offered a large soda and they really had a small in mind, a medium now doesn’t seem so “large.” They’ll take the medium, earning your employer a few cents. Those cents — multiplied across hundreds of franchises add up to thousands of dollars a year.

In the fast-food business, supply isn’t a problem. Sodas of all varieties are in abundant supply. It’s how much soda you can sell that sets you apart from your competition.

Complex manufacturers by nature move products that are exponentially more difficult to configure than a large diet soda. But the order process for their products should be almost as simple and transparent to a regular customer. It is a cost-savings and relationship-building process that savvy companies are just beginning to explore.

The burden of excessive supply

Ever since Henry Ford first put cars on a conveyor belt, the keyword for complex manufacturers has been efficiency. In the past, American companies were rewarded for getting more products out the door faster to a world eager to consume their goods. As the global economy emerges as a reality — and not just a buzzword — these same companies now find their manufacturing processes highly efficient, but some of their sales processes woefully out of touch.

These sales processes need to be streamlined to reflect a new business model where it’s just as important to move products as to manufacture them. In order to remain competitive, companies must capture more market share by building relationships and being easier to work with than their competitors.

The quote-to-order process is a perfect example of an area that has not had much scrutiny from efficiency experts. In reality, it can be a serious drain not only to productivity and profitability, but it can also harm a customer’s positive perception of your company.

Getting it right the first time

Like kids playing a game of telephone, the quote-to-order process is not always a smooth path. With too many operators in the middle of the action, there is a great potential for miscommunication and error.

Consider the typical quote-to-order process. A sales rep takes the call from a customer and listens as the customer describes what they want.
Even a seasoned sales rep that has complex knowledge of the product and how it is manufactured can easily overlook a customer request that contains incompatible parts or customizations that are no longer available. The result? Customers end up with quotes that are invalid or functionally not optimal.

This situation worsens when invalid quotes are manually turned into orders with invalid configurations, incomplete information, unsatisfied product outcomes, and unforeseen price discrepancies. These can all lead to lower profit margins or even losses on the sale.

With a more controlled quote-to-order process, these problems can be turned into a major competitive advantage that will capture more market share. Instead of letting the customer drive the order conversation, new technologies present sales reps with a list of questions to ask about each order. Each question, when answered by a customer, leads to another set of questions, based upon the specifications established by the manufacturing floor, procurement and engineering.

Since the system is tied to procurement and the manufacturing floor, the sales rep can instantly give the customer a much more accurate projection of when their order can be delivered. If parts or materials are missing, procurement can be instantly (and seamlessly) alerted to the needs of this order as it is being processed.

This new emphasis puts a new spin on the customer-facing process that relies on knowledge management and rules management. What does all that mean? It means that the correct information is gathered — and quoted to the customer — the first time, every time. In a sense, the configuration is the DNA of the order. If you get it right, the results are predictable.

Efficiencies further down the line

The cost-savings of a more advanced quote-to-order system don’t end in the sales office. When implemented correctly, the return on investment can extend across the enterprise.

Many companies employ engineers who are responsible for double-checking sales quotes and orders. These engineers validate the specs in the order, search for information missing from the order and then develop schematics for that specific order.

With an advanced quote-to-order system filling the need, these engineers can use their skills more effectively for new product development. The system validates each quote based upon the rules specified and begins to create schematics for the order based upon existing knowledge. This allows the shop floor to schedule appropriate staff for incoming orders much more accurately.

Changes to orders are an inevitable part of doing business. Most changes, however, should come from customers, not from an inefficient quote-to-order process.

At multiple levels, changes are expensive, requiring time and resources to process the changes through the product lifecycle. The cost of change skyrockets as the order gets closer to delivery when manufacturers are forced to scrap nearly finished products due to misalignment with customers’ needs. This complicates build schedules, engineering, and manufacturing. The total cost of change is seldom recovered with special prices. Most companies never fully recover the costs of change and see their profit margins erode.

Planning for future demand

Focusing on the customer-facing processes within an organization may be the most important initiative a company can leverage.

Imagine how much more accurate forecasts would be if:

• Quotes could be generated in minutes or hours instead of days or weeks
• ALL quotes were stored in a centralized database and available for reporting as soon as they are created
• Orders were electronically generated directly from the quotes in the quote database
• Win/loss rates were known and predictable based on the history in the quote database
• Future sales could be predicted with a high degree of accuracy several months in advance (at the time of quote instead of the time of order)

If all of this were possible, imagine the benefits to the company:

• The ability to predict labor requirements — increase or decrease labor pool based on forecasted sales
• The ability to predict inventory requirements, and stock what is most likely to sell
• The ability to negotiate purchases more effectively through more buying leverage
• The ability to offer price incentives to improve business before the end of the quarter
• The ability to provide more accurate guidance to shareholders

Focusing on customer-facing systems may be the most effective way to address the sales challenges of complex manufacturers.

Courtesy - This article was originally written by Jim Hessin, a former employee of Cincom Systems.