Manufacturing companies are under pressure. Cost of raw materials is rising, while increased competition is driving down end user pricing. Salaries are rising at a level that manufacturing automation alone cannot absorb and the race to acquire talent is increasing. This forces manufacturing companies to find other ways of boosting profitability.
While research from analysts such as Gartner shows that most manufacturing CEOs are looking for growth, revenue increases alone will not deliver instant profitability. While COVID-19 has increased the willingness of CEOs to invest more in innovation, these benefits will only show over the long term. Here are five tips for manufacturers on how to boost profitability in the short term.
Streamline your processes
In many organisations, especially the bigger ones, divisions do not necessarily work well together. Every department has its own priorities, KPI’s, reporting and may use different IT systems. Sales and Marketing are focused on CRM, Supply Chain is firmly locked into ERP and Finance is using its proper specialised accounting and consolidation tools. This situation is, of course, an accident waiting to happen.
Quote to Cash can do away with these silos, by streamlining the entire process, building an end-to-end life cycle of how a company engages with its customers during the sales and marketing process, all the way through to the consolidation of accounts and the recognition of revenue related to sales. Streamlining processes avoids revenue leakage, reduces cost of sales and eliminates human error.
Establish a single source of truth
One of the problems that large organisations face is the accuracy of data and reporting. When each department collects its own data and produces its own reports, it’s hard to establish which numbers are correct or not. That’s why it is crucial to have all company data in one comprehensive place, for instance in Sales Cloud. Without this single source of truth, it is nearly impossible to analyse data and base solid business decisions on this data. Centralising data in a single platform gives Sales, Service and Marketing real-time visibility into customer performance and allows more effective engagement with the customer. Add-ons such as Einstein and Tableau can analyse this data and deliver user-friendly reports to assist better decision making.
Spend your marketing budget wisely
Manufacturing has never been known as a big marketing spender, but fortunately, this is slowly changing, and manufacturing is catching up with other industries in terms of marketing spend vs overall revenue. And no surprise: the manufacturing industry is spending more on digital marketing, especially as traditional B2B marketing tactics such as trade shows and other industry events have been cancelled because of the pandemic. This is helping marketers in manufacturing organisations move from being product marketers to customer focused marketers.
Marketing automation allows manufacturing companies to get the best results for their budget. Tools like Pardot and Marketing Cloud help manufacturers market and sell smarter. Based on customer insights, marketing can craft the right message and send it at the right time to the right prospect. By mapping out the customer journey, marketing messages can be personalised, making the marketing process more effective. Marketing analytics will show what campaigns are most successful in influencing sales and will help identify the most valuable leads.
With the rising cost of raw materials and the need to service demanding customers quickly, maintaining the right inventory levels is key for manufacturers. While it may be convenient to maintain a large inventory, it is also eating working capital. Accurately forecasting customer demand is crucial in striking the right balance.
Manufacturing Cloud provides everyone in the organisation with an accurate 360 view on both customer activity and product performance. Thanks to Sales Agreements, it is possible to unify run-rate business with ERP data as well as one-off opportunity purchases thus providing a complete picture of the total order book. Order management systems can be unified with negotiated contract terms.
Increase external collaboration
Can you read a customer’s mind? Just imagine if it was possible to predict when a customer will order what product, and what changes the customer might want to make to a run-rate contract. By extending the automation of a value chain to the customer (or to the partner selling to the end customer) orders can be entered more efficiently, and production processes can be adapted to the most recent information. This is now made possible thanks to tools such as Community Cloud and the CPQ B2B Commerce Cloud Connector. This creates a win-win situation for customers and manufacturers: customers can quickly get offers and place orders automatically, and manufacturers can integrate customer demands into their streamlined processes easily.
Applying automation and technology to core processes provides a fast track to increasing profitability in manufacturing. To find out more about the benefits of digital transformation in manufacturing, get in contact with us.