Table of contents
Executive summary
Continuous measurement and improvement
Product innovation and quality
Delivery performance and speed
Lean and "green"
Proactive alert and exception management
Summary
About Infor
Executive summary
Like most businesses today, manufacturers face a variety of factors that can impact the performance of their companies. Many of these business variables are beyond an organization's control, such as the rising cost of energy and materials, global competition, and the introduction of new regulatory mandates. But they all directly impact the cost of goods sold, influence the final price, and continually put financial performance in jeopardy. How a company responds to these factors can also impact long-term customer satisfaction and retention.
There is no question that the escalating cost of fuel and energy, as an example, will continue to drive up costs at every level of the supply chain. Global competition will also continue to force manufacturers to keep their prices low, tightening their profit margins as a result. Organizations that have proactively outsourced labor-intensive production to lower cost regions of the world may be able to apply even greater pricing pressures on the rest, leaving smaller and less agile producers with further reduced profit margins and the risk of losing long-time customers. In fact, according to a study by Industry Week and the Manufacturing Performance Institute, as shown in Figure 1, of the 914 manufacturers surveyed in the study, 74% see foreign competition as a threat.
As companies struggle to adapt to these financial challenges, they can quickly lose sight of their mission and value proposition while focusing on internal cost management issues. Although cost management is critical, it is not the sole element of a winning strategy for long-term business performance. Customer service, product quality, and delivery performance typically are impacted during the process of reducing costs, and if not managed properly, can lead to customer dissatisfaction, and in some cases customer erosion. However, organizations can leverage these elements as positive differentiators and make them strengths for improving customer retention.
All Plants U.S. Canada
Number of Plants 915 782 133
Significant Threat 14.5% 13.4% 21.1%
Moderate Threat 24.5% 24.3% 25.6%
Slight Threat 35.1% 36.1% 29.3%
No Threat 25.9% 26.2% 24.1%
In the meantime, these and many other factors have enabled unlikely competitors to threaten businesses that have long held a secure position in their markets. Manufacturers begin to ask themselves questions such as: Why do seemingly dedicated, long-time customers suddenly move to a different supplier? Do manufacturers really understand what drives their customers' purchasing and supplier selection decisions today?
What can manufacturers do to defend and secure their long-term viability as a supplier in the face of rising costs and declining prices? How can value-added services and customer support structures be preserved when profit margins are getting squeezed? And what steps can be taken to grow and retain a loyal customer base?
Price pressure is often blamed as the reason for the loss of a customer. But is price the only reason? As markets consolidate, larger suppliers emerge that are able to lower their pricing through economies of scale and lower cost production. This often leads to some shifting of brand loyalty, but is not necessarily enough to sustain long-term success. Therefore, how can small and medium-sized businesses (SMBs) position themselves to succeed? Lowering costs is an important aspect, but simply cutting costs is not enough, and often leads to the wrong costs getting cut.
Rather than trying to compete strictly by reducing costs, manufacturers must stay close to their customers, understanding and exploiting the unique value they offer in their marketplace. As SMB manufacturers get more sophisticated and fight back, they can take charge of their market by considering the following five ways to positively impact customer retention and business operations:
Continuous measurement and improvement
Product innovation and quality
Delivery speed and agility
Lean and "green"
Proactive alert and exception management
Each of these steps represents specific areas that can either improve your business performance directly though improved efficiency, or can set you apart from your competitors and help you to differentiate through product quality and innovation, delivery excellence, corporate citizenship, and company values. The common belief is that people buy from other people whom they trust and can depend on, and that the products they buy are not detrimental to the environment. In many cases, customers will pay slightly more for better quality, more dependable service, and the right technology and innovation that will help them to improve their own costs and efficiencies.
Continuous measurement and improvement
For many companies, measuring their business performance is the last step they take when launching a new business improvement initiative. Unfortunately, not reassessing the business metrics can be just as debilitating as not reassessing the business processes and procedures first. Knowing what you are looking to achieve is critical, as well as knowing at what point you will be successful, before setting out to make changes. Companies must look within and honestly determine:
Where is my business today?
Where would I like it to be in the future?
What is the plan to get there?
How will I know when I am done?
The key is to determine the right metrics that will help you to continually improve:
Product quality
Product innovation
Product delivery
Product profitability
Time to market
Market share
Corporate citizenship
Customer satisfaction and loyalty
Understanding why products are selling, where they are selling, who is selling them (if you distribute through a channel or through representatives), and who is buying them can help you to adjust your business plan and production plan.
A good first step, and one that should be repeated on a regular basis, is to conduct a customer survey to find out why your customers buy from you, what they like about working with your company, and what they feel is not working or could be improved. Explore the qualities of your business with them, and why they chose you over another company. Taking a regular temperature reading through a neutral resource will help you understand your true value in the market and to your customers.
Another good practice is to survey customers who decided not to buy from you, or who used to buy from you and have switched to another supplier. Was price, delivery lead times, delivery accuracy, or product quality the reason for the switch or decision not to buy? And if those objections were to be removed, would they do business with you then?
This new information will provide some initial insight into areas that are directly contributing, either negatively or positively, to your performance. By categorizing the feedback into product, sales, services, and operations, you will be able to focus on developing department-level metrics such as:
Product – engineering and design, production, and quality
Sales – sales and marketing, inventory availability, and shipping
Services – customer service and support, warranty and repair, and field service
Operations – accounting, purchasing, supplier management, legal, corporate citizenship, and resource management
Each departmental set of metrics should maintain the theme of centering on customer-specific metrics.
At the core of establishing best practices is making a switch from traditional accounting to throughput accounting. Traditional accounting metrics unfortunately obscure our view of those measures that can actually contribute to improved business performance. In the past, measures such as product cost, labor cost, general overhead, burden, and finished goods inventory cost were evaluated and measured. These costs cannot be leveraged to improve your performance. Conversely, customer- centric metrics look at the value-added elements such as on-time delivery, lead time reduction, throughput, and profitability.
Examples of key performance indicators (KPIs) to consider in each departmental area include:
PRODUCT
Product lead-time in (hours/days/weeks)
On-time delivery percentage
Design to delivery time
Conformance to specification percentage
Market-share ranking and percentage on an annual basis
SALES
Customer retention year over year
Maintenance plan renewals (if applicable)
New customer adds by month/year, and by region and channel
Sales volume by:
Month
Region
Rep./Channel
Promotion
PRODUCT
Throughput value
Throughput increase by month and by year
Supplier on-time delivery
Supplier return percentage
SERVICE
Support call time to first response
First-call resolution percentage
Customer satisfaction ratings/percentages by month
Warranty and repair tickets as a percent of customer base
Once the metrics have been established by department, each functional area should use a Business Intelligence dashboard or reporting mechanism to track specific KPI improvements, and make changes where necessary.
Colonial Mills, Inc. (CMI) is a leading manufacturer of braided-texture rugs and accessories in the United States. Based in Pawtucket, Rhode Island, it was facing more foreign competition and increasing pressure to lower prices. The company realized that it needed to upgrade its ERP system to maintain its market position as industry leader in on-time shipment and low turnaround time on orders to shipment.
When CMI began evaluating its enterprise resource planning (ERP) system with the operational goal of improving on-time shipment rates and reducing the number of days from order to shipment, it realized the current system, including the latest upgrades, was far from adequate. Bill Turgeon, CIO at CMI, explains, "We had no visibility into gross profits and costs, with 150,000 items that needed billing but were not in the system." The technology goal at CMI was to install an ERP system that would enable entry, tracking, and shipment of a product within a five-day timeframe, and would provide quick visibility for identifying a product that appeared to exceed the five-day standard.
Notes Turgeon, "The two most important measurements determining the health of our business are the on-time delivery percentage, and the number of days from the time an order comes in until the time it ships out the door. Before implementing InforTM ERP SyteLine, life was a nightmare. The bill of materials that needed to be in the system to provide visibility required too much time to enter, and that process was error-prone. Our numbers showed 81% on-time delivery, and 7.5 days to shipment."
After implementing Infor ERP SyteLine, Turgeon asserts that the process became smooth and efficient. "Now we can view all details within the manufacturing process—the gross profit per customer and gross profit per item. We can also run the financial reports at any point during the month to check our status against budgets, alerting us to potential problems so we can react in time. The company quickly achieved 92% on-time delivery and only 3.75 days to shipment—a dramatic improvement. Most of our competition quotes delivery of 20 days or longer."
With the introduction of new tools to measure performance, companies can leverage technology to proactively manage exceptions and gain insight into key metrics and business trends. Most organizations have also found that exposing these key performance measures and scorecards to all employees, such as posting monthly trend results on a bulletin board, greatly assists in gaining company-wide support for improvement efforts. People like to aim for goals, and making goals visible and tangible can help you to motivate your workforce. Establishing a reward system to promote achievement and to solicit ideas for improvement also helps to sustain your business improvement initiative.
Product innovation and quality
Although most manufacturers may have established themselves in their respective markets as the leaders through some unique innovation or service, markets continually evolve and change— sometimes with little warning, and go unnoticed until a customer calls to say they are taking their business elsewhere. As markets change and larger global competitors emerge, it is easy for manufacturers to lose sight of their core competencies and the qualities that have made them unique.
For many companies, a focus on near-term sales and responding to the needs of one or two larger customers can easily result in a short-term gain, but could also allow a competitor to swoop in and introduce improved products that have new features and broader appeal. Regularly checking the pulse of all customers and the market is more critical than ever, including research beyond their current likes and dislikes.
Companies also need to evaluate any new and emerging challenges that exist for their customers by conducting executive-level roundtables. What keeps them up at night? And what are the challenges threatening their businesses? What products and services do they see a need for in the future? Is their business growing, declining, or leveling off?
Understanding where their markets are going and what is driving their customers' business will enable manufacturers to continually innovate and improve their products. In other words, what is most important to their customers?
In reviewing the market, companies also need to look at how fast competitors are coming out with new products. And as new standards and regulations emerge, how quickly are companies responding versus the competition?
Using the performance measure of time to market, a company can gauge how long it takes to bring its product to market from concept to first shipment. How does this compare in the industry? Most likely, industry data is available providing the typical new product introduction, and tools exist to measure and manage this process. Market windows are continuing to shorten, and taking too long to bring product to market can significantly impact your market share and revenue growth. In addition, customers will gain a sense of which suppliers seem to be able to introduce new innovative products quicker and more frequently. Involving the customer base in the design and product launch process can establish a level of expectation and anticipation for new product launches, and establish your organization as the leading innovator in your market.
The video game console market is a prime example of innovation, time to market, and product quality being critical success factors. The competition between Sony, Microsoft®, and Nintendo® has been fierce for years and has seen many changes in the leadership position due to these factors. Although originally the market leader in the 1990s, Nintendo found itself unseated by rival Sony, and eventually by Microsoft, which was new to the video game industry. Sony captured the top spot from Nintendo first by leveraging improved display graphic resolution and providing a better overall user experience. When the market evolved again and display technology jumped to high definition (HD) resolutions, the leader was able to leverage both time to market and innovation to capture the lead. Microsoft and Sony both had HD versions of their products in development, but Microsoft was able to deliver first, making it the market leader almost overnight. Both of these changes in market leadership evolved largely as a result of both suppliers leveraging innovation through common technology advances accessible to all suppliers. However, Microsoft was able to dominate through its ability to shorten time to market.
Microsoft's dominance could have been even greater had it not encountered product quality issues soon after units began to ship. These quality issues, coupled with sometimes scarce inventory, allowed Sony to maintain some of its brand loyalty.
The market then saw another change when Nintendo, almost forgotten in the industry, developed its own innovation rather than wait for hardware suppliers to pave the way. In launching the WiiTM console, Nintendo provided the added differentiation and innovation of a motion-sensitive remote control wand, allowing for a revolutionary, interactive video-game experience. Through this innovation, Nintendo has regained the leadership spot and broadened its market to a whole new target audience of buyers from all age groups and demographics. Through its ability to introduce its own innovation, Nintendo now outsells the Sony and Microsoft products combined. And in spite of Nintendo's extended absence from the competition, it was rewarded for its ability to eventually provide critical new innovation. Microsoft, although plagued by some early quality issues, was able to capitalize on time to market. Therefore, innovation and time to market became the most significant critical success factors in this market.
The lesson learned from these manufacturers is that even with stiff competition and a loss of market share, these obstacles can be overcome. Providing innovative new products or adding more value to an existing product that exceeds the needs and requirements of the target market can make a difference. Although recovery from quality issues is possible, minimizing them is critical to taking advantage of a strategic market window of opportunity. Consider capabilities that can help to bring new innovations to market faster and mitigate quality issues in the process, including:
Centralized document and project management to ensure that all relevant and up-to-date product planning and lifecycle documents can be accessed by team members
Company-wide task management and collaboration tools to manage product launch activities, access employee work overload conditions, reset priorities, and manage human resource assignments
Workflow technology to push information proactively through the organization so that the project stays on track
Non-Conformance Management (NCM) to detect, assign, track, and address exceptions immediately for reduced scrap and rework at the shop-floor level
Delivery performance and speed
As product lifecycles and new product introduction timelines shorten, customers respond positively toward supplier performance and responsiveness. They also have a lower tolerance for missed due dates and a supplier's inability to respond quickly to changing needs and priorities. Therefore, manufacturers must employ strategies to improve delivery performance and shorten order-to-delivery cycle times as well as be able to respond flexibly and rapidly to short-term demand requirements. Doing so can be a strategic advantage and can foster long-term customer retention. But it must be done consistently. Employing a lean methodology is one of the best ways to ensure faster delivery, significantly reduce production costs, and improve profitability.
Traditionally, manufacturers have adopted push-based production methodologies such as those promoted by the use of Material Requirements Planning (MRP) systems. Even today, many contemporary ERP systems continue to use this methodology that promotes standard lead times and infinite production capacity. These planning constraints actually came into existence as a result of make-to-stock-oriented production models and computing power limitations in the 1960s and '70s. Companies have also traditionally adopted cost accounting methods that focus on individual unit cost reductions and grouping large runs of the same product together to economize on production set-ups. The net effect is increased work in process, increased inventory, and accompanying increased costs and lower profitability.
Lean manufacturing, on the other hand, employs a pull-based or demand-driven methodology that is predicated on only producing product directly as the result of a customer order. The notion of traditional cost accounting is replaced with a concept of throughput accounting, which looks at overall cost reduction. Throughput accounting focuses only on the variable costs, such as materials and outside services. The company focus becomes one of selling more products and manufacturing only to customer-specific orders. As a practice, lean manufacturing can help the organization free up additional capacity to work on customer-driven orders once the company is no longer simply building to forecasted demand.
As an example, Kaydon Corporation, a US-based designer and manufacturer of proprietary, custom- engineered products such as filters, bearings, rings, and seals, was looking to grow its business and strengthen its operational excellence by focusing on strategic initiatives in manufacturing efficiencies and process improvement. Both lean manufacturing and Six Sigma principles had been adopted throughout the company. Lean "thinking" and Six Sigma, according to Kaydon, includes operational efforts to eliminate redundant costs and nonvalue-added activities, an implementation of a proven set of tools and processes aimed at reducing variability, and developing products and services to serve customer needs.
By leveraging Infor ERP SyteLine as its technology infrastructure, Kaydon was able to embrace these philosophies and show positive financial results. "The Infor solution goes hand in hand with our lean manufacturing efforts, which is a key and vital part of delivering a world-class product and world-class value to our customer," adds Al Hubbard, Kaydon plant manager. "At Kaydon we pride ourselves in making customized products for our customers, and Infor has truly helped us achieve that," concludes Chris Hermann, Kaydon production control manager. Before using Infor applications, Kaydon's lead times increased and customers felt the impact. The company needed to find a way to reduce lead times by aligning its systems from the beginning to the end of the manufacturing process.
With the implementation of Infor ERP SyteLine, information flows through the factory more efficiently, and has yielded results including:
Improved lead times—from 12-14 weeks to 3-5 days
Increased delivery performance—by 20%
Improved inventory levels—70% maintained
Reduction in administrative and clerical work
Redeployment of employees for more strategic and tactical planning
Elimination of waste and downtime from manufacturing processes
More accurate information for the shop floor
Reduction in expedited shipment rates by eliminating the need to rush every order
Minimized customization times with better information the first time
Adopting a lean manufacturing philosophy does require a new way of thinking because it requires business process change and cooperation from all supporting organizations. Critical to the successful transition to lean is company-wide buy-in—that is, endorsement and active participation by the CEO. Lean manufacturing can also have many other positive effects, including elimination of product defects, reduced procurement transactional costs, reduced lead times that support demand-driven and pull-based strategies, and on-time delivery accuracy to ensure there is not a negative impact on the demand side of delivery performance. This more agile and response- driven philosophy improves on-time delivery, helps the bottom line, and helps to secure customer loyalty.
To be truly lean and agile, however, manufacturers must also have lean, flexible, and agile extended supply-chain partners.
Lean and "green"
While product innovation, time to market, and quality improvement have long been a visible concern of manufacturers, managing equipment assets has not typically been at the forefront of the manufacturing agenda. However, with the rising costs of fuel and energy, asset management should be the next step in addressing business performance and customer retention.
Manufacturers have always had an eye on the usage of equipment and facilities since proper asset management can help to sustain the life of the asset, as well as reduce maintenance and repair costs. However, many progressive companies are realizing that these traditional approaches to enterprise asset management are no longer enough. Increasingly, manufacturing leaders realize that they also must proactively manage the combined challenges of rising energy costs and increasing public and government focus on environmental concerns, such as emissions of CO2 and other pollutants. Minimizing energy consumption to contain costs, combined with raising the stakes as a "green" or environmentally friendly organization, can set the manufacturer apart from its competitors.
To be considered a progressive company today, a manufacturer must surpass government and compliance mandates, and demonstrate true corporate citizenship that extends beyond the minimum requirements. Called "social responsibility," "environmental sustainability," or "environment commitment," the leading Fortune 500 organizations have embraced this notion of corporate citizenship. In fact, 18 of the top 20 Fortune 500, which include representation from energy, retail, manufacturing, banking, insurance, and healthcare industries, have dedicated content related to their corporate citizenship policies on their website.
A good place to start with a corporate citizenship initiative is to build enterprise-wide awareness of company policies on a safe and healthy work environment, including any efforts to minimize energy consumption and reduce hazardous materials and pollutants in the workplace and into the environment. Next, add asset performance to your key performance measures, including energy consumption. By integrating energy with other asset performance parameters, you will have a more complete picture of how each asset is performing and the impact on your business. In the process, be sure to:
Consider tracking energy consumption for individual asset.
Monitor assets for compliance with existing and impending regulation.
Incorporate asset sustainability alert management capabilities to monitor how equipment is functioning against established KPIs with notification of issues to prevent equipment failure.
Include preventative maintenance and action management capabilities to determine the appropriate action needed to address an identified anomaly or event.
Use asset sustainability planning tools to facilitate design changes in asset infrastructure to reduce energy consumption, lower emissions, and save money. (Using the GAS index on sustainability, integrate energy metrics with other asset performance data to determine whether a piece of equipment should be repaired or replaced.)
Include energy and other environmental factors into the asset maintenance decision process.
By better understanding the energy performance of each asset, you can drive out inefficiency and cost from your operations. You can also begin to integrate energy metrics with other asset performance data to determine whether a piece of equipment should be repaired or replaced, or identify the most energy-efficient supplier technology that is compatible with your asset infrastructure. It will also enable you to begin to compare alternative energy scenarios. Alternative energy can not only allow you to practice good environmental stewardship, but can also provide additional cost savings. Most states now provide energy efficiency tax credits and renewable energy rebates to companies that meet their environmental program criteria.
As larger companies take the lead in establishing "green" initiatives, SMBs will need to follow suit to compete. Despite the effort involved, the benefits of doing so are significant. Traditional asset management practices enable you to gain insight into only about 35% of your asset expenses. And although that has typically enabled organizations to make tangible improvements in the efficiency and cost-effectiveness of their asset infrastructure, it hasn't addressed energy consumption, which is by far the largest expense in most operations and maintenance budgets.
Taking asset management to the next level will enable proactive management of rising energy costs, minimize the emission of CO2 and other pollutants, and demonstrate an ecologically responsible posture in the market. In addition to the cost savings, it can be a compelling differentiator and marketing message to like-minded organizations that are looking to partner with eco-responsible suppliers. Now you can go green and have a positive business case at the same time.
Because Mohawk Fine Papers, a producer of premium writing and printing papers, has many large, high-profile customers, social responsibility has been a growing concern. And with growing awareness of climate change, many of these companies are seeking to reduce not only their own environmental footprints, but also those of their suppliers. "Large companies continue to need paper in order to communicate. But the medium needs to match the message," says Joe O'Connor, senior vice president of sales at Mohawk. "If you're going to produce a piece that discusses your company's environmental initiative, it had better be on a product that helps you speak that message."
To meet such client needs, Mohawk now designs and markets environmentally friendly papers. Mohawk has a historic commitment to stewardship of natural resources. It adopted an environmental management program more than 30 years ago, and in 1992 voluntarily capped emissions on its New York operations. It has also been involved in leadership programs with the US Environmental Protection Agency, including the Green Power Partnership and the Climate Leaders Program. But in response to the new demands from customers, the company redoubled its efforts.
Most recently, Mohawk has developed papers that have a high percentage of recycled content, which require less energy to make. It has worked with the nonprofit Forest Stewardship Council to ensure that the virgin fiber it does purchase is harvested in a sustainable manner. It has invested in renewable energy, particularly in the form of wind-generated electricity. And it has purchased carbon offsets for the nonrenewable energy that it does use.
Despite recent improvements in sourcing renewable energy, an even more sustainable approach would be to require less energy in the first place to drive down internal energy consumption. "The company has set a priority on energy management in part," O'Connor adds, "because it makes financial sense. To us, the true definition of sustainability today is where environmental performance equals financial performance." Given the rising prices of energy, reducing consumption can lower costs and thus increase profits even as it reduces carbon dioxide emissions.
But to gain more control over energy consumption, Mohawk needed more information. In particular, it wanted increased insight into what was happening on the factory floor. Infor's Enterprise Asset Management (EAM) solution will provide Mohawk with comprehensive information about the company's assets, which will lead to better decision making. "I think the most important thing we'll gain is visibility into the entire lifecycle of our equipment," according to Paul Stamas, vice president of IT at Mohawk. "We're casting a wider net on the parameters and inputs and outputs that we can affect. We'll further our efforts to move from a reactive mode of doing maintenance to a proactive mode of doing preventive and predictive maintenance. Such information will also standardize the way assets are treated across the company. Everyone will be performing maintenance on the equipment the same way," says Stamas. "And, with Infor EAM, our executives will have visibility into which equipment is consuming the most energy at any particular time."
Mohawk purchases 100 million kilowatt hours of energy per year from its green sources. If it achieves a 10% reduction, and prices remain at the current 8 to 10 cents per kilowatt hour, Mohawk will save hundreds of thousands of dollars per year. These cost reductions go directly to the company's bottom line. Another factor, not always measured in financial reports but perhaps equally important to society as a whole, is CO2 emissions. Future regulatory schemes, such as carbon cap or cap-and-trade programs, may make it possible for Mohawk to monetize these savings eventually. But even today, such impressive environmental initiatives improve the company's brand outside the traditional selling channels. "Essentially, we didn't used to have a brand," says O'Connor. "We have no retail distribution; our paper isn't sold at Staples or Office Depot. But with our corporate customers, we've been able to build a brand around environmental management." In other words, environmental stewardship has led to not only lower costs, but higher sales. "At the end of the day, we are looking to sell a product," says O'Connor. "We manufacture a product and we want it to be sold. But we've found that the sales process is also about aligning values, what we do as a company and what each of our customers does as a company. And compared with our competitors, we are continually investing more time and effort and capital into our environmental philosophy. The EAM solution is just one example of a set of values that has really resonated with our customers."
Proactive alert and exception management
The final step to improving customer retention and business performance is to leverage technology that can help to assist in proactively responding quickly to critical supply chain activities, exceptions, or events. Supply chain complexity has increased significantly due to suppliers and materials being sourced on a global basis, and customers are demanding faster turnaround times and responsiveness on their orders. Given these dynamics, manufacturers need to be more adaptive than ever before. When they encounter exceptions, such as last-minute changes to orders, manufacturers need to be able to sense, respond, and act appropriately to ensure their customers get the products they want in the right quantity, and at the right time, place, and price. They also need to be able to have upstream and downstream visibility of their sourcing, production, and order fulfillment transactions so that corrections can be made swiftly, and not impact the quality, timeliness, or profitability of their customer orders.
Employing technology that can trigger proactive alerts when exceptions occur becomes critical to heading off potential delays or added cost burdens. Having the ability to respond to changing customer demand in a positive and controlled fashion can be an advantage. Customers respond to adaptive suppliers, and entrust more business to them in the future. However, as a manufacturer sets the expectation that it can respond and support change, this expectation can increase the risk of exceptions at a number of points along the supply chain. Having technology that can proactively notify the appropriate individual or groups of individuals of changes through email and other forms of communication is crucial.
Del Monte Foods, one of the country's largest and most well-known producers of premium quality food and pet products for the US retail market, wanted to improve its efficiency in managing exceptions, even though it had well-established processes for alerting employees to existing or potential order fulfillment problems. "We had people manhandling the information in our existing ERP system, trying to find if there were problems in their areas of responsibility," according to Andy Wojewodka, director of business systems and decision support, Del Monte Foods. "Once they uncovered a problem, they had to go to other screens to find out what action they should take." To eliminate this inefficiency, Del Monte Foods deployed an event management solution from Infor.
"The solution was not only helping our users find a needle in the haystack, but also giving them the right information they needed to respond to issues as they surfaced," he says. "As a real- life example, Infor Event Management has the capability to help us evaluate the order pull for specific products, on a specific day, determine which distribution center should be responsible for fulfilling the order, and whether there is sufficient inventory. For situations where there is a shortage of the right product, the solution provides users with information about incoming re- supply and, if that is going to be inadequate, the steps they should take. I can see business activity monitoring being of value to many other areas of our operations," Wojewodka says. "It's as basic as informing someone of an event that would have a negative impact on a given process, and then supplying the information in a meaningful form so they can take preventative action."
In addition to dealing with real-time exceptions, event management technology can also be leveraged to expose trends—when and where changes and exceptions are occurring so that some amount of anticipated change can be planned for, with procedures established to improve responsiveness. For example, change events may be heightened and added staff needed during specific seasons or campaigns. Organizations can plan for these events and increase staffing levels in advance to ensure the transaction volumes can be handled appropriately.
A common mistake an SMB manufacturer makes is to focus only on the internal operations of its plant. By encompassing the entire supply chain, including both the supply and demand side, in its thinking, it can significantly improve the speed and effectiveness of new product development, procurement, and order fulfillment. The SMB can also optimize its supply chain interactions at every link in the supply chain through technology supports that trigger proactive event management activities. Event management technology can be instrumental in helping companies to achieve:
Quicker routing of order status information to customers and supply chain partners
Improved on-time delivery performance
Faster resolution of supply chain problems
Fewer last-minute "fire drills" caused by a faulty alert system
Improved ability to detect the root causes of problems
Lower purchase prices, fewer expense overruns, and improved cash flow
Reduction and elimination of excess inventory and stock-outs
Improved teamwork, collaboration, and employee effectiveness
Improved supply chain efficiency and effectiveness
Summary
Maintaining strong business performance and retaining a loyal customer base requires continual vigilance and assessment. Establishing key metrics that focus on value-added and customer- centric performance allows manufacturers to operate as an agile enterprise and stay close to the pulse of market changes and dynamics. Performance tools such as dashboards and reporting can help to monitor performance and enable better and faster decision making. More importantly, manufacturers need to focus on innovation, quality, time to market, and event responsiveness as critical success factors when it comes to sustaining strong business performance and customer retention. Each has the potential to increase revenue and reduce operational costs for improved profitability, and can strengthen customer relationships.
Keeping close to your customers is one of the best ways to see where the market is heading and enable you to address customer service issues and market changes before they impact your business. Even if you think customer satisfaction levels are high, it is important to keep in touch with where customers are going, what their expectations are, how their business is changing, and how they can be better served. Businesses need to continually assess the current state of the market they are in, analyzing who they are competing with, and who they could be competing with in the future. Our global economy continues to sprout new competitors and challenges, but working proactively to adopt and rethink your key business metrics, focus on continual innovation, quality improvement, delivery performance, and customer responsiveness can help you to improve business performance and sustain ongoing customer loyalty.
