If the customer is not happy, the rest just doesn’t matter.

“Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation.” (Efraim Turban Ph.D., Professor of Information Systems at California State University, Long Beach)

Or, more simply put:

“Customer service is the art of ensuring that customers keep coming back.”

In this article we will discuss the very broad area of Customer Service. As anyone who has toiled in the world of sales or customer service knows, marketing drives sales, sales drives customer service, and service drives a sustainable business. The sense of accomplishment and thrill of closing a piece of business can be short-lived when the quality and timeliness of great customer service is lacking.

As we reviewed in the first article, improved customer service is one of the big three objectives of a successful ERP implementation. However, in today’s tough competitive environment of globalization, outsourcing, rising material lead times and costs, along with financial tightening and recession, superior customer service can be challenging and must be a major focus for your company to succeed and grow.

Delivering a Higher Level of Customer Service

There are basically two key dimensions of superior customer service:

Today’s manufacturer must deliver on all these dimensions, to keep a customer satisfied, who for all intent and purposes-

“Makes Emotional Buying Decisions for Logical Reasons”.

Let’s review some of these differentiators to demonstrate how the connection between Customer Service and ERP can make a difference in your organization.

Tangible Differentiators

Differentiators that Help Obtain New Customers

Availability/Lead Time

All salespeople would love to have every possible permutation of their product line available “off the shelf” and ready to ship immediately. With today’s “Amazon World” mentality, many customers have become accustomed to this. Most manufacturers, however, must balance this “full wagon” approach against the expense of carrying inventory that might not sell while accruing a carrying cost expense of as high as 30%. In addition, how do companies lower their inventory and get rid of unpopular products? They usually have to set lower prices to the point where margin disappears.

So what is one secret to quoting competitive, affordable lead times while achieving excellent customer service?

A very successful solution lies in re-engineering product lines to build to sub-product components and then to assemble finished products per incoming orders. So rather than building inventory to expensive finished product levels (and white elephant options), manufacturers can utilize tools such as a matrix bills of material and product configurators to build products to a level below the finished product. This practice can actually allow sales to actually offer a broader range of products at a potential lower cost.

Let’s take an example of a common household item, a kitchen stove. Many stoves have common sizes and frames, but vary greatly on the options on the control panel- extremely basic to very extensive. In other lines of the stove, the size and frames of the ovens may also vary, and the cook tops may also come in various styles. And finally, the colors may be varied and more exotic than ever before. As you can see, the days of Henry Ford telling you that you can have your automobile in any color that you desire, as long as it is black, are long gone.

If sales, using their experience and history, can change their forecasting method from predicting the unit sales of each individual stove with a particular set of features, to a forecast of the percent of each feature in all the stoves, the manufacturing process can be greatly simplified. The forecast changes from a schedule of thousands of unique units to a forecast of only a few base components. Engineering can then create the processes and procedures to build these components efficiently, and manufacturing can setup assembly processes to quickly turn the component inventory into shipments. We then have an environment where sales can offer a wide variety, manufacturing can deliver according to a “make-able” schedule, and inventory cost can be reduced instead of discounting unsold “white elephants”.

There are products which require complete finished product inventories, particularly those in the consumer goods markets.

I still recommend that regardless of your product attributes, this out of the box approach of examining each and every product line to see if techniques such as matrix BOM’s, Product Configuration, Lean/Kan Ban, and others, will provide more choice and lower costs.

Price

Pricing can vary based on the level of competition, or on the ability of your sales force to show value added benefits. A robust ERP system can assist by offering the tools to perform what- if analysis, providing insights as to how volume discounts, material substitutions, or added features, will impact the pricing models. This what-if analysis can also provide insight into the amount of discount you can provide by using methods discussed in the previous section-matrix BOM’s, product configurator, and the like. As an example, having the ability to show a customer how ordering 100 stoves with a fixed configuration of options could yield substantial savings, may allow you to offer a lower price while still maintaining an attractive margin.

Full Product Offering

Your ability to offer a wider variety of customer demanded products and services is often hamstrung by your level of resources, or the flexibility of your production methods. ERP systems can handle the complex details and free your resources to provide further value to your customer. Functions such as data collection, MRP, document management, and others can free your personnel to look at other margin producing opportunities.

ERP systems can also allow you to explore more flexible methods of building your products to offer more options, and more services; all while maintaining an efficient shop floor. You no longer need to fear special requests, or low quantity orders, with the flexibility and real time controls of an ERP system.

Value Added Services

Many manufacturers and retail distributors such as Best Buy, have learned that value added services can not only be a great revenue generator, but can also be a key factor in the purchasing decision.

Having the integrated ERP capability to provide these services, such as installation support or product warranties, can mean the difference between a win and a loss.

Differentiators that Keep Customers Coming Back

Delivery Reliability

On-time delivery continues to be one of the most important factors in sustaining existing business relationships. Low prices are quickly forgotten in the face of late deliveries or poor quality. These on-time deliveries are highly dependent on your ability to plan and monitor shop activities, while quickly adapting to problems. ERP tools such as MES, with real time data collection, visual scheduling, CMMS, and real time manufacturing scheduling can keep your customer order on track. Additionally, available pro-active monitoring tools with active exception reporting can intensify your focus on the progress of keeping your customer promises.

Quality

It is still a “no-brainer” that one of the most important factors in retaining existing customers is the maintenance of good quality. What is also required, and in many systems is lacking, is a robust method of tracking and analyzing these quality issues, along with the capability to pro-actively address these issues before they impact the customer order. Real time shop floor information, up-to-the-minute documentation, and an integrated quality function can vastly improve your quality efforts.

Warranty/Aftermarket Support

For those products that include warranty, it is critical to track all the warranty activities and provide immediate feedback to all upstream functions. The faster you are able to respond to problems, the faster you are able stop producing products that will require costly rework or replacement. Whether the problem is caused by defective materials, poor production methods, or off the mark quality, the root cause needs to be traced to the original source and quickly corrected. An ERP system can simplify this process by capturing the problem in real time, identifying repeating trends, and providing trace-ability. Using this approach, some manufacturers have been able to extend their warranty periods while maintaining a cost at or below that of their competitors. You can imagine the effect of being able to offer your product with a longer warranty period, with no additional cost.

Aftermarket sales of service and replacement parts can also be an important revenue stream, representing as much as 40% of the revenue of some businesses. Having the ability to monitor and track these items, while also being able to consolidate these items into the procurement process can lower your costs while improving your revenues. Some ERP systems also offer the ability to sell these items directly on the web.

Intangible Differentiators

Although the tangible differentiators are critical to high levels of customer satisfaction, there are another set of intangible factors that also heavily influence the satisfaction of the customer. These factors can best be summarized with the three most important words in successful sales- Relationship, Relationship, Relationship.

Know Your Customer

Your company interacts with your customers from every corner of your business. If you are going build a relationship with that customer, your people need central access to all the information necessary. Although a standalone CRM can provide information about any sales or marketing communications, only an ERP CRM can provide a 360 degree view of everything that is going on in the business. Often, there are times when information about order status, quality, and warranty are necessary. A robust ERP CRM system can provide details on every interaction with and for the customer.

Make it Easy for Your Customer to Do Business

Does your company look like hundreds of single individuals or as a coordinated functioning team? When your customer calls with a question, is he passed from person to person looking for an answer, or does every person seem have the capability to answer all the questions. A good ERP system will make it easy for everyone to understand and access any information. By creating easy to understand workbenches, each person quickly knows where to go to find an answer. By creating roles, they can avoid the learning curve of mastering the entire system. They can also easily cross departments and operate effectively.

Be Where Your Customer Is

We all have experienced Amazon, eBay, Best Buy, Wal-Mart, etc. and the easy accessibility they have via the web. An effective ERP system will also provide similar Web access for your customers, allowing you to offer another connection to maintaining a great relationship.

Share With Your Customer

A last, but very important, factor in building great customer relationships is the ability to collaborate with them. Collaboration allows your customers, suppliers, and remote employees to access via the Web all the information they need to make decisions, and become informed regarding their relationship with your company. Blueprints, notes, instructions, and the like can be shared easily and safely over the Web.

Summary

Understanding the fundamental tangible and intangible factors in delivering exceptional customer service is critical to every manufacturing organization. Each factor needs to be carefully analyzed, brainstormed, and executed to create an environment that can win against the competition.

This process, combined with effective tools, can start an organization on the path to higher customer satisfaction, growing revenues, and stronger margins.

The message is clear- satisfy your customer and thrive.