Manufacturers have lived in an Omni-channel world for some time. Direct sales, web sales, resellers, distributors, channel/customer sales to end-consumers, catalogues, trade shows, ecommerce sales, as well as servicing customers through call centers, service network partnerships and customer web self-service have been deployed for the last few decades. Omni-channel is really not a new thing for a manufacturer. However, the channels are often not aligned and the customers experience in B2B lags behind what these same buyers may experience as consumers.
In addition, today’s sales staff is armed with mobile devices. Customers expect, if they buy direct through an account rep, to have in-depth conversation about products and services. Sales reps need instant access to all the information to support a personalized experience delivered through online/mobile with real-time visibility from suppliers and inbound item-level inventory to fulfilled/complete customer orders. As well, they need to be able to discuss future product strategy.
In continuing the discussion from the first blog post, in this post we focus on the manufacturer with an emphasis on B2B markets. (We will return to consumer sales in the third post.) When ChainLink did our annual Business Priorities survey we noted that Manufacturers rated revising their ecommerce strategy just as highly as consumer facing companies – see chart 1 below. That is very telling. And supply chain conferences are filled with Omni-channel sessions, the attendees of which are logistics people. That’s telling too!
Today manufacturers are seeking new ways to reach new markets, strengthen their brand, gain a greater share of the customers’ spend, and introduce new products, services, and business models. And the B2B customers expect all the same experience they get as consumers. So for manufacturers, it’s really an Omni-everything world. What are some of the issues they should consider as they contemplate broadening their models?
Sales channels: The diversity of channels and customers presents many factors for manufacturers to consider.
- Firstly for manufacturers is managing content across all their channels—product data, pricing, graphics/images on the web vs. catalogue and aligning their product information with each channel.
- One of the big questions for product companies is pricing by channel. Channel costs differ. For example, an army of direct sales staff may be more expensive than a website. It may be tempting to charge more in direct than through web selling. But customers are savvy. They want the service of the good account rep or the local warehouse stock for pickup, but they know the price on the web. And customers can price check across the web. Manufacturers have to find the competitive price and provide appropriate support expected across the channels.
Product offerings: Customers often want unique offerings and packing. Will products differ by channel? If so, then what will be the impact on manufacturing and production? Can common parts, suppliers and so on be used? For complex products these might also require special skills sets. So hidden under seemingly simple requests can be quite different processes, people, and suppliers, for example.
Logistics: Delivery methods, freight costs and policies can change. B2B is also under pressure, like consumer markets, in some categories to reduce freight costs, provide specialized delivery methods and provide, sometimes, free shipping. How to respond is a huge consideration. Smart fulfillment can gain and retain customers. Often, it is timely delivery that wins the sale. But doing it profitably is essential.
Inventory management: As a supplier you might consider ensuring visibility across the channel. This can come in handy when one channel is more effectively selling and is increasing demand while another may lag. How do you decide the best place to hold and allocate inventory for each channel?
Gaining a Greater Share of the Customers’ Spend
Part of the thought process behind all this is assessing the models that might be most successful in the long run to keep customer loyalty and yet win new business. It may not be more customers, but rather, gaining a great wallet share of the customers. During our research, many manufacturers told us that the latter strategy was a higher priority than seeking new customers – see chart 2 below. This leads to the service side of the equation.
Seeking to gain revenue by expanding horizontally (i.e., increasing sales with existing customers through new services) subsumes business and work that used to be done by distributors. As manufacturers contemplate selling direct vs. through a network of resellers and distributors what will be the impact on service? Should the manufacturer also provide service directly?
Rich omni-models also exist in services. So models to contemplate are:
- Developing, training, and managing service networks where third parties are rep’ing your products
- Wholesaler parts distributor who holds and distributes parts
- Developing and maintaining your own service centers
- Field/Customer service organizations within the enterprise
- Reseller/dealer/distributor empowered with installation and/or service
Models include some or all of the above. Sorting through the best models to gain and retain lifetime customers while retaining the high performing channel partners is crucial. Also essential is understanding the costs confronting everything from labor management and training, long term inventory planning and ownership, stocking and retention policies to warehouse/depot managing and fulfillment/logistics.
Information Management for Sophisticated and Demanding Customers
One thing we all learned since the beginning of the web era was the need for transparency and real-time information: “is it in stock”; “when will it ship”; “it shipped and here is the carrier’s tracking number”; and so on. Mobile adds a new dimension of intimacy and methods for reaching customers. Not only are omni and agile business models required, but also information at the ready to support all these models such as demand collaboration, inventory and shipment visibility, and so on.
Visibility goes beyond data with greater collaboration in the relationships. Channel partners are beginning to participate in integrated business planning/S&OP to jointly manage their go to market, pricing, promotions, fulfillment strategies, and product lifecycles.
Old, Yet New
Omni-models are just as relevant—and sometimes more complex—for manufacturers than retailers. No doubt, some of the issues noted above are as old as the supply chain, but the urgency to resolve them as the world speeds up and business become more transparent is critical. Decisions here define ‘what business are we in.’ Many ideas have added costs. To pay for these changes, which are urgent responses to the changing market, requires increasing sales or decreasing cost—probably both.
And that will lead to my next blog. To increase sales, some manufacturers are thinking beyond the channel. Stay tuned for the next installment.
 or to reduce/not pay sales commissions when the rep’s customers uses the web self-service