Sikich Manufacturing Industry Pulse Survey – Improved Productivity

Sikich’s latest Manufacturing Industry Pulse Survey of more than 130 manufacturing and distribution executives implies guarded optimism by some respondents regarding the business outlook. Although the respondents showed concern regarding economic conditions, particularly interest rates, inflation and an uncertain political climate, there are some that believe that demand is there, and costs are stabilizing.

More broadly, Michael Weidokal, Executive Director of ISA presents a long-term perspective on the factors affecting the global economy and impediments to growth. These include geopolitical tensions, changing demographics, labor shortages, and resource scarcity. Most, if not all, of the factors impacting the global economy are beyond the control of business leaders and executives. But how business leaders respond to the risk factors described by Weidokal is the key to continued growth and prosperity. And he correctly points to a focus on improved productivity as the response most within executive’s control.

Key to Improving Productivity

Key to productivity improvement lies in correctly defining the business architecture that can most effectively serve one’s customers and leveraging available technologies and capital to implement that business architecture most effectively. Stated simply, business architecture represents how a business is structured to serve its customers, and the processes and capabilities in place to support that structure. Robust ERP and CRM deployments wrapped around a well-thought-out business architecture are powerful examples of how to achieve impactful productivity improvement.

Fitting ERP With Your Business Architecture

I once helped lead a team that implemented an ERP solution for a very complex business. Our business implemented highly engineered communications systems through direct sales and engineering teams. These systems involved configuration and compatibility of multiple components, broad geographic installation requiring complex delivery coordination and project management, and complex revenue and cost recognition, accounting and customer billing requirements that needed to be supported. The incumbent ERP solution was configured specifically for this long-cycle business model.

External economic and market factors beyond our control necessitated an expanded product portfolio to include less expensive and less sophisticated point solutions sold through an indirect dealer channel with a short cycle order-to-cash process. This required a less complex and more streamlined business architecture. The existing ERP system became a drag on productivity when applied to “one-and done” short cycle transactions within that business architecture.

Rather than continuing to impose the existing ERP platform onto the simpler business architecture, we established a separate business unit supported by simplified ERP and CRM platforms. This resulted in a measurable increase in productivity for that business unit and a reduction in cost per order that could not have been achieved using the incumbent ERP platform. As a Group President I worked for once said when discussing aligning business architecture to the appropriate systems platform, comparing it to building a house, “Yes, but you had better understand whether you are building a mansion or a doghouse.” Figuratively speaking, we had built both.

Business Architecture Scalability With the Right ERP

Later in my career and with a different firm, one of our Divisions saw an opportunity for growth by expanding post-sales service and maintenance product offerings. In addition, the globalization of our customer base made it clear that we would need to implement a business architecture able to provide global capabilities. And it was clear that the existing business model and parochial manual capabilities were inadequate to support the growth we were seeking.

After evaluating several options, we concluded that Microsoft’s CRM/Customer Engagement platform was the technology solution that could best support our desired global customer service architecture. The capabilities implemented included call center/case management, field service technician availability and assignment, technician dispatch, parts availability and ordering, and mobile system access. Defining the right business architecture that could serve our customer’s needs and deploying the right CRM technology solution with capabilities that could best support that business architecture delivered the enhanced capabilities and productivity needed to be competitive in the post-sales service space.

Business leaders and executives can’t control the macroeconomic, geopolitical, and market environments within which their businesses operate. But they can control how they respond to environmental changes by adapting business models, processes, and technologies to the environment to maintain and improve productivity. As my English friend often says, “Horses for courses.”