By Erik Johnson, Vice-President, Technology Strategy, Epicor Software Corporation.
How much thought have you given recently to the role your ERP system plays in enabling your customer experience initiatives? When you implemented the system efficiency, scheduling, and getting more flexibility were probably on the list of goals, but not necessarily customer experience, even though it is impacted by all the other goals.
When it comes to the customer experience, ERP would not even be mentioned if you ask a business leader what in their business contributes to a great experience. Most would point to their sales teams, support staff or the quality of their products. And yet, newly published research indicates ERP systems can be a powerful enabler of customer experience initiatives that are so essential to support customer retention and product differentiation.
Customer Experience: The New Horizon for Manufacturers
Over the past few years, most manufacturers have been operating in survival mode: Doing “more with less”, staving off worldwide competition, and keeping operational cost and profitability under control. However, recognising that a business strategy purely based on cost cutting isn't sustainable, manufacturers are increasingly adopting initiatives and strategies focused on improving the customer experience to deliver more value and differentiation.
As proof of this shift, IDC Manufacturing Insights recently conducted a worldwide study[i] of over 460 enterprises across multiple sectors including industrial machinery and equipment, high-tech and metal fabrication, and covering 13 countries worldwide. Insights gleaned from the study indicate that the top business initiatives are focused on growth and differentiation through value-added services and improved customer experience.
What is customer experience in the manufacturing realm? Customer experience is formed via a compilation all the interactions a manufacturer has with a supplier. According to IDC Manufacturing Insights, it’s the service level the supplier is able to provide to its customer, beyond the manufactured product itself. It includes, for example, the ability to deliver the perfect order -- right quality, quantity, location, and due date -- and the range of aftermarket services supporting the initial product.
Customer experience pays dividends. An enhanced customer experience can translate into customer loyalty and longer lasting relationships between supplier and purchasers. Beyond aftermarket services, customer experience encompasses a number of essential capabilities including how easy an organisation is to do business with, reliability, speed of interaction, and willingness to help or serve. These capabilities create an essential engagement to the product, service, company or brand, and create business benefits including differentiation from competitors, profit increase, and business growth.
ERP as Customer Experience Enabler
Most people equate CRM systems with customer experience initiatives, but ERP? ERP is widely recognised as the “backbone” that manages the vital data and processes that drives the business, and now it seems it’s finally getting its due as a key enabler of customer experience.
IDC Manufacturing Insights' survey respondents ranked ERP among the top three most critical IT applications that can affect customer experience, and drew a correlation between manufacturers’ customer experience practice adoption/maturity and use of ERP systems as a catalyst.
As stated in the IDC Manufacturing Insights report: Get Customers Inspired: How Modern ERP Can Support Greater Customer Experience, “The role of ERP appears crucial to improving customer experience. Companies on higher levels in the customer experience maturity model have a higher consideration of their ERP as a key tool in delivering a good customer experience.
“The research indicates that an improved customer experience can be gained through investments in modern, fully integrated, flexible and easy to use ERP systems that streamline all operational processes and connect back office with front office by offering integrated CRM, warranty and aftermarket functionalities. Flexible ERP systems that include or easily integrate those applications will add the most value to manufacturers in relation to creating a superior customer experience.”
Key Constraints to Customer Experience Excellence
The study also explored and perceived barriers to success in becoming more customer-centric. When asked “What are the main barriers to creating a greater customer experience?”, respondents cited the following:
- Lack of accurate and timely information
- No or inadequate integration and collaboration with suppliers
- Organisational and information silos exists that hamper data sharing
- Poor decision-making capability
- Ineffective, inadequate, or rigid IT systems
- Inability to rapidly adapt business processes to change
- Lack of back-office/front-office integration
You’ll note that these statements map to benefits normally ascribed to modern ERP systems. However, the response most often cited was: Lack of funds to implement changes. Sound familiar?
The size of your company (and your budget) should not impede your ability to deliver a superior customer experience. This is where a software as a service (SaaS) ERP solution fits in: it gives companies the ERP “goods” to support improved customer experience at a price point that’s ideal for small manufacturers.
Today’s SaaS ERP solutions provide end-to-end operational visibility across the organisation, from customer, to production, to financial management, that so affordable the tab is often less than their electric bill each month. SaaS also minimizes the upfront costs normally associated with software, and eliminates the onus and cost of having to manage the IT behind the system.
ERP systems have been a fixture in manufacturing sector for years now, and have helped support lean, green and quality initiatives. Now your ERP system can help you with what is potentially the most important initiative of all – evolving your business processes quickly to meet ever-changing customer expectations and help you win your customers respect and their continued business.
 IDC Manufacturing Insights white paper, “Get Customers Inspired: How Modern ERP Can Support Greater Customer Experience,” by Pierfrancesco Manenti (May 2013)