In a marketplace where it is often impossible to differentiate between competing products on the basis of cost, quality or timeliness, customer service is all that will distinguish one company from another. Indeed, such is the influence of this trend that customer-focused metrics such as share of a customer’s total purchases, are becoming as important as traditional indicators of success such as overall market share.
According to John Pendlebury, EDS director for manufacturing, retail and distribution for Europe, Middle East and Africa, service quality and the service component are becoming critical differentiators. When the aircraft manufacturer Boeing buys an engine it makes the purchasing decision on the cost per passenger mile; when a haulage firm buys a truck it wants to know how many kilometres it will go before it needs to buy a new one.
They assume the product is fit for its purpose and are more interested in issues such as spare parts supply, cost and frequency of servicing and technical back up.
IT has a central role in manufacturing companies with CAD CAM, enterprise resource planning, supply chain management systems, and electronic data interchange (EDI), as well as traditional commercial systems that are applied in sales and marketing, invoicing and human resource management.
Where once separate, and often incompatible systems were used to control production plants, distribution, sales and marketing, manufacturing companies are installing enterprise application packages such as SAP, Oracle and Baan, to provide an integrated view of customer requirements, and how that fits into production processes. In other words, IT is allowing manufacturers to pay more attention to customers, but this is not at the expense of the product, or of the operations.
This tight linking between demand and supply makes it easier to control the supply chain. It will also underpin mass customisation, in which goods are made to order to an individual customer’s specification.
There are already some examples of how IT can deliver mass customisation.
The jeans manufacturer Levi has installed systems in shops which allow customer to place orders for factory produced, yet made-to-measure, jeans.
The personal computer manufacturer Dell has a website where customers can specify, and then order and pay for, a machine. The order is transmitted directly to the company’s factory in Ireland for assembly and dispatch in 24 hours.
Although there will be a lot of progress in the next few years, mass customisation of complex products presents considerable technical hurdles.
It is one thing to make a pair of jeans with the waist half an inch bigger and the inside leg half an inch shorter than the standard size, but if you allow a customer to specify his or her own car you need to be sure it will all work together. For example, if you want air conditioning, will this work with the windows you have chosen, and will the vehicle need a larger battery?
Once an order is placed electronically, be it for a standard or a customised product, IT supports the relationship by allowing customers to access production and inventory systems to check the progress of orders. On the other side of the equation inventory can be made visible to suppliers.
As Pendlebury puts it, “IT has become a core, leveragable competence”.
While sectors such as financial services and retail recognised this a while ago manufacturers had their attention elsewhere, for example, installing lean manufacturing systems. However, there is currently a sharp kick in IT spend as manufacturing companies put in place a technology-enabled business strategy.
Nuala Moran is a freelance journalist
Call centres: keeping in touch with customers
Another technology that is driving through major improvements in customer service and customer relationships, is the call centre. These not only present an efficient and consistent interface to a customer, they provide the means to manage and track every interaction with that customer. This information can then be applied to develop strategies for customer acquisition and retention, and to determine what level of service they require.
Data from call centres provides feedback to manufacturing plants, leading to product improvements. The types of queries and problems handled by the call centre also provides a guide to what sort of information manufacturing companies should include on their websites.
Call centres feed data warehouses which can then be mined for patterns and trends that would otherwise go unrecognised. Such customer intelligence gives manufacturing companies the power and information to do one-to-one marketing.
Rolls Royce: driving for better performance
Because they see IT in a new light – as central to profitability – manufacturing companies are worrying about how to run it, and this is fuelling a move to IT outsourcing. The partnership between Rolls Royce and EDS exemplifies this trend. Rolls Royce builds the most technologically advanced aeroengines but it recognises that if you are selling a product with a lifetime of 25 years you must also compete on the basis of customer service.
Since the partnership with EDS was initiated, the two organisations have set up the Better Performance Faster programme to apply IT to achieve performance breakthroughs from seven broad initiatives.
Apart from cutting costs and generating product improvements, the programme will give Rolls Royce superior service capability around the world. One objective is the provision of customer technical information to eliminate re-work, another is to provide 24-hour technical support for engineers anywhere in the world.
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