Market Focus: Manufacturing: Money for Future Muscle

There's a lot of space separating the company and the customer in the manufacturing industry. However, manufacturing is one of the verticals in which CRM adoption is growing the most quickly today. In a buyers' market where partner relationships are becoming more crucial to competitiveness, manufacturing companies are looking to invest in PRM and data integration to gain elbow room in this saturated space.

Customer retention is becoming more crucial as companies look to service for revenue, says Ray Wang, a senior analyst at Forrester Research. "You don't make money selling products anymore. People are looking at ways to hold onto customers not only in the presale, but after." With service fees, warranties, and upgrades contributing to profit at a higher level than the initial sale, manufacturers must not only understand their customers' needs, but also have the ability to predict them. Because of this shifting emphasis, interest in investment is higher in manufacturing than in almost any other space. A recent Forrester study found 38 percent of manufacturers are looking to adopt new or upgraded technology in the upcoming year.

Analytical tools provide an opportunity for companies to better analyze and make decisions about their customers. Additionally, customer data integration and master data management can help manufacturers to get a better picture of their top suppliers, greatest risks, and best opportunities for discounts or upsells. Although investment in this area is growing, it is an option only for large companies. "These are half a million dollar deals," Wang says. For more spendthrift companies, SaaS is gaining much ground. Hosted options are also becoming more popular as manufacturing companies often have difficulty absorbing large, complex platforms, says Bill Band, an analyst at Forrester. "They like being able to imbibe by the drink, so to speak."

Because many manufacturing companies go through a two- or three-tier distribution, excellent partner relationships are crucial for success. For this reason, in the past year, much focus has been placed on PRM, according to Rob DeSisto, a Gartner analyst. He says one of the biggest challenges in the manufacturing industry is how to get partners to "sell more of my stuff than the competition?" Order management systems can also prove valuable as they allow partners a clearer view of a product's life cycle.

Oracle, SAP, and Siebel Systems represent the top players in the vertical, as they all provide good integration with ERP systems. SSA Global Epiphany and CAS, with its new CPWerx 6.0, continue to grab high levels of market share as well, and Wang sites Onyx as a good choice for the midmarket. All of these vendors can look forward to increased sales as the manufacturing industry looks to invest for expansion. Wang explains the bottom line: "Last year was still about efficiency, still about order. Now it's about growth."

Case Study: Connecting With Big Customers
Rohm and Haas, a specialty chemicals company, touts its ability to improve the lives of consumers by doing everything from extending the freshness of fruits and vegetables to purifying antibiotics, according to the company. However, with service completely removed at the end, the company was having trouble properly connecting with its customers. In particular, Rohm and Haas had run into difficulties creating and maintaining customer relationships online.

The number of people involved in the purchasing process, as well as the size of the orders, had made online transactions and lead generation nearly impossible. "You're not going to buy two tanker cars of emulsion on the Web," says Eric Soll, the company's sales and marketing business process manager.

By implementing SAP CRM 3.0 in 2002 (the company later implemented the Internet Sales components in 2003 and upgraded to SAP CRM 4.0 in 2005), Rohm and Haas has been able to use its Web site to truly engage with its customers. Today, interested visitors who would have only gotten an email are registered as prospects in a database. Rohm and Haas will soon be rolling out lead management solutions to work with these prospective buyers.

SAP's solution enables customers to view order status, various shipping documents, and the most accurate numbers in real time. This is most important in manufacturing, as many departments of a business customer need access to such information. "When you're dealing with a customer who's not the same person all the time, having that ease of doing business makes a big difference," Soll says. "It's going to lower their want to look elsewhere." --J.S.