Waterstone Consulting News & Events

High-Tech Sales Tools Increase Manufacturers' Service, Efficiency Managing Automation, December, 1998

By: Julekha Dash

MANUFACTURING MANAGEMENT -- Thinking that software designed for sales and marketing is not much help for workers on the shop floor or shipping dock makes sense. However, in many manufacturing firms, sales force automation (SFA) software is gaining wider acceptance as a tool that can help order takers and order makers achieve a common goal: improve customer service and boost efficiency.

SFA tools come in many shapes and sizes. For example, interactive selling tools offer a precise sales methodology that takes some of the guesswork out of turning prospects into customers. Contact management tools bring each customer's vital account information to one location and prompt sales personnel to contact accounts at key times. Product configuration software, popular in make-to-order industries, provides sales staffers with a rules-based product-modeling tool that informs them of options they can offer when selling complex products.

In the past, SFA software has been sold as a stand-alone product unconnected to other transaction systems and limited to sales department use. Now many companies, including manufacturers, want to deploy the technology throughout the enterprise and to integrate SFA with customer support, enterprise resource planning (ERP), and advanced planning and scheduling systems.

By connecting SFA with back-end systems, companies seek to provide sales personnel with the latest informaation about product features, pricing, inventory, and availability. Having that information ready reduces the number of phone calls and faxes that sales representatives make to the home office, increases order accuracy, and enables manufacturers to shorten the time between receipt and delivery of the customer order. According to Scott Geller, president and CEO of BT Squared Technologies, it also allows sales representatives to provide customers with accurate delivery dates when taking an order.

Moreover, giving operations access to sales data means the factory can produce to meet actual demand, boosting efficiency and responsiveness. "You can't make mass customization work unless you're making [product] to customer demand," says Dave Dobrin, a partner with Benchmarking Partners, an information technology (IT) research firm.

SFA software provides manufacturers with visibility into the sales pipeline-that is, what products they are selling and what products they should build-according to Brian Tuller, director of product marketing at Vantive Corp., a large SFA vendor. Understanding customer buying patterns also helps manufacturers fine-tune their sales forecasts.

However, improving customer service was the most important reason North American manufacturers cited for investing in an SFA system, according to a technology-integration survey sponsored by International Data Corp. The study surveyed more than 900 companies last spring, including 153 manufacturers. About one-fourth of the manufacturers were evaluating an SFA technology or product.

In addition, many manufacturers who have installed SFA software-a large number making consumer packaged goods and pharmaceuticals-want to integrate this front-office system with a back-end ERP to better align sales and production.

In response, major ERP companies scrambled to offer an integrated SFA-ERP package in the past year. The Baan Co. added sales force automation to its product line with the 1997 purchase of sales and marketing software vendor Aurum. SAP has included an SFA module in recently introduced R/3 4.5 and will soon offer a stand-alone SFA product. PeopleSoft, through partnerships with Vantive and competing Siebel, expects to provide SFA capability by the first half of 1999. Oracle Corp. recently introduced internally developed sales and marketing software that will include a product configurator from Concentra Corp., the sales force automation vendor acquired recently by Oracle.

Likewise, Extended Systems, a manufacturer of print servers and mobile systems products, wants to leverage its SFA and ERP investments. Early next year, the company will begin the next phase of its SFA implementation: integrating SFA and ERP data. The goal is to compare inventory against orders and SFA-based projections to determine to whom sales personnel should promote those items that will use overstocked inventory identified by analyzing ERP data. The systems now run on separate Oracle databases.

Since 1995, Extended Systems' sales force has been using Aurum's Customer Enterprise software (originally called SalesTrak) mostly for contact management. But since early 1997, as the company began introducing new product lines, management wanted the sales force to better understand customers' needs and transfer that information to manufacturing. To do so, it created a cross-functional team to implement the more advanced features of the SFA software.

Indeed, Customer Enterprise's sales-funnel process system has helped Extended Systems better understand sales prospects and plan production accordingly, says Amy Reino, MIS director. The software defines several phases in the selling cycle as a sales lead moves from prospect to customer. Sales representatives must show how close they are to making a sale by ranking each lead. The system takes the many leads and puts the most likely prospects at the top of the funnel.

Extended Systems also recently implemented Business Objects' business intelligence module, an add-on feature that Aurum offers CES users, to analyze SFA data in order to recognize selling patterns and trends.

Having this information and using it to plan production and secure the required inventory can be useful toward the end of a calendar quarter, Reino says. "We know that the last two weeks of every quarter is crunch time," she says.

Extended Systems has met quarterly revenue targets since going public early this year, partly because of the insight Aurum software offers, Reino says. As the end of the quarter approaches, sales personnel make a concerted effort to target accounts deemed mostly likely to place orders. SFA software helps classify those accounts, information that is shared throughout the company.

Therefore, the manufacturing staff knows how many prospects are about to turn into purchasers, and can make sure that the necessary parts are in stock. This enables Extended Systems to "react on short notice," says Reino, and configure products at the last minute.

Configurators Help Customize Products

Makers of complex made-to-order items are relying more on SFA product configurators. The tools, when connected to such back-end systems as order fulfillment, allow the sales force to quickly determine the time it will take a new order to be filled and shipped. Correctly configured orders travel directly to the plant, cutting days off cycle time and increasing order and pricing accuracy.

Configurators are rules-based SFA software modules that apply constraints against the input data to create a what-if scenario. This allows the salesperson to quickly determine what selling options are feasible without returning to the engineering department.

Without the configurator, often accessed through a laptop computer, a field-based sales representative must often lug an unwieldy five-inch-thick ring binder, says BT Squared Technologies' Geller.

Tracking which configuration options customers are buying can help manufacturers to determine why some products are selling and others are not, says Dave Dobrin from Benchmarking Partners. Such visibility enables manufacturers to adjust forecasts and plan production better. Sales and marketing, in turn, can try to improve profit margin by promoting slow movers.

A configurator can put "the knowledge of engineers into the hands of the distributor" by giving the sales force accurate, up-to-date product information, says Don Jacobson, principal at Waterstone Consulting.

However, State Industries, a company that manufactures water heaters and cooling pumps, needed a configurator to create a bill of material (BOM) that accurately reflects the cost of what it is selling. With 15,000 stock-keeping units (SKUs), privately held State Industries could not rely on a generic BOM.

State Industries views the SFA-based configuration software as an "instrument to properly call out how to build and cost products based on the exact components used," says Drew Smith, vice president of engineering. "When you ship millions of dollars" worth of water heaters, you need to generate a bill of materials that is exactly what the customer's going to get," he says.

In addition to enhancing the accuracy of costing, Smith hopes that the new configurator, included in BT Squared Technologies' 2order interactive sales software, will help State Industries forecast product-specific demand better and reduce the number of SKUs.

"Virtually every department in the company will be using" the new tool, with a total of 300 seats, although it will be implemented in phases, Smith says. At first, only 30 people in customer service will use it.

However, "thoroughly understand the [configurator] software before you buy it," Smith advises. "You can't just take a first-blush view. Look at what the software can do and at its compatibility with other systems. Be very specific in the needs you're trying to serve."

Why is all this necessary? Finding a configurator that suits specific needs is tough. According to Smith, State Industries wasted three years trying to use a configuration module that was not user-friendly or compatible with other internal systems before discarding it. In fact, the company recently went live with the 2order software. The company's information systems (IS) department built interfaces between the SFA software and its order entry, MRP II, and costing systems.

Getting payback from BT Squared's SFA product takes six months to two years, Geller says. The system costs between $2,000 and $5,000 per seat, depending on options selected.