What value relationships?

Manufacturers are not only achieving the expected benefits of cutting costs and improving service levels through the judicious application of customer relationship management (CRM) technology, but going one step further and becoming more competitive by stripping time out of the sales cycle. However, to achieve these benefits, they're finding that so-called best-of-breed CRM solutions may not have what it takes. That's also the view of Paul Farrell, senior director of product marketing with mid-tier ERP vendor Epicor. "Often, a salesperson in a manufacturing business is a sales engineer. They are engineering and configuring complex products for customer requirements, involving detailed management of margins, and integration with procurement, planning and production. Sales-force automation (SFA) solutions don't have the depth of information, tools and integration to do that." The mistake people make, believes Farrell, is "looking at CRM as a point solution to help the VP of sales understand the pipeline. Delivering a lead is something, but unless you can cost, quote and manage the entire sales lifecycle it's not very useful." CRM, continues Farrell, "should be about improving the relationship with your customers, rather than improving the relationship with your sales force." So without access to the information, prices, parts lists and engineering rules, any SFA system will miss crucial CRM benefits – or create an expensive integration issue. To avoid this, one technique is that adopted by Epicor and some other ERP developers. The company has abandoned the best-of-breed approach, and created CRM by growing its existing ERP. The result, claims Farrell, is to "take dead cost out of the order cycle, and reduce the lead time from sale to shipment." At Mid-West Spring, a US manufacturer of custom parts and stampings including compression, extension and torsion springs for the automotive and bio-medical industries, another benefit of the ERP approach was the speed of implementation. Before choosing Epicor's solution, Mid-West Spring investigated and rejected best-of-breed offerings. "Some of the [companies] we were considering were talking about six months before we'd get full utilisation – but with Epicor's solution, we were seeing the benefits within two weeks," says Randy Juen, general manager. Directed information Mid-West Spring has four plants, and sells through external sales reps, its own field reps and internal customer service staff. "We used to have a corporate customer service team to provide a central point of contact," explains Juen. "Now that we have all the information about the customer available to everyone – including outstanding quotes, orders, shipping, accounting and manufacturing – we've been able to eliminate that team entirely." The result, says Juen: "We have seen tremendous benefits. We have definitely increased the level of service to the customer, and at the same time drastically reduced cost in our sales force. Although we can't measure the increase in effectiveness, the salesperson now knows everything they need to know about the customer. And whereas before they used to make calls on customers just for relationship purposes, they now make calls for enhancement purposes." That's the point of CRM. Armed with information about the value that's coming into the business, it's possible to be more proactive about the sales pipeline, by marketing appropriately. At the same time, where that CRM solution is tightly integrated with the company's ERP backbone, salespeople have a full understanding of what they're selling and exactly what the margins are, so they know the value of their proposals. As always, however, no IT solution alone can succeed without winning over people. At Mid-West Spring, the 'old-school' VP of sales needed to be convinced. That happened, says Juen, "once people could see the benefits – and how CRM enables you to become a business partner instead of just a supplier."