Why are manufacturers so hard to do business with, asks Steve Ashurst, UK Managing Director, HAHT Commerce.
The manufacturing sector plays a crucial role in the UK’s economy, contributing £150 billion per year; 20 per cent of the country’s GDP. Even though in recent times the sector has been fighting off recession, it still employs four million people; approximately 15 per cent of the UK’s workforce. This sector is extremely focused on driving cost out of the supply chains – in fact millions of pounds have been invested in technologies like ERP and e-procurement in order to do this. But what about using technology to ‘sell’ things better, rather than ‘make’ things better? What about thinking ‘demand’ rather than ‘supply’? This may all sound a little theoretical, but in practical terms, competitive advantage boils down to how easy you are to do business with.
We wanted to put this thinking to the test. In Autumn last year, we commissioned independent research company Vanson Bourne to conduct in-depth interviews with 60 manufacturing heads of business and commercial managers across the UK. We did this because we wanted to understand the way UK manufacturing companies were dealing with customers and selling their products. What we actually found was quite disconcerting. While manufacturers have invested heavily in improving their production and supply chain processes, sell-side ‘demand’ processes have been neglected, resulting in disenchanted customers. In short, manufacturers are tough to buy from.
To give you an example, two out of three companies questioned were unable to integrate their ordering systems with their partners and distribution channels. Basically, they were poor communicators. Seventy-seven per cent of the manufacturers surveyed were unable to provide online inventory and delivery information to their customers. Eighty-two per cent surveyed were unable to provide their customers with an account status, only 15 per cent of customers were able to print order invoices online, and 92 per cent were unable to initiate product returns through an automated system. Not only are manufacturers failing to provide customers with high quality customer service, they are also missing chances to reduce the cost to ‘see & serve’.
So what is the big deal? Well, manufacturers have to accept that managing a demand chain is as important, if not more so, than a supply chain. Being tricky to do business with in any shape or form in today’s economy is a crime. Let’s look around. In other manufacturing markets, such as the US, we’ve seen a big shift in focus from the supply chain to the demand chain as manufacturers realise that they cannot compete on price alone. To turn this around, they are now investing in the systems and processes that actually increase their revenues and reduce the costs of sale.
This survey highlighted the fact that manufacturers in the UK could be generating more revenue and making more money by investing in their demand chains. By doing this they are able to provide customers with a more convenient, automated and flexible service that would improve and empower customer relations and ultimately drive renewed business. Wouldn’t it be good if, as well as being known for manufacturing products to a high quality, we were known in the UK for high quality sales and customer service?