How CPQ for manufacturing helps companies overcome some challenges

How CPQ for manufacturing helps companies overcome some challenges

How CPQ for manufacturing helps companies overcome some challenges

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Author: Mirza Baig

Manufacturing companies have common sales and production challenges. Some of these include increasing overall revenue, shortening sales cycles, reducing production costs, and improving supply chain - just to name a few. 

Among other things, they are always looking for ways to empower their sales and production teams. Choosing the right business application, such as Configure, Price, Quote (CPQ) software, can help overcome some of their challenges.

While an Enterprise Resource Planning (ERP) software can help optimize production and supply-chain inefficiencies, CPQ software stands out as the perfect solution for sales teams and for the hand-off of orders from sales to production teams. 

Without a CPQ solution in place, the sales team can often lose time, effort and revenue. For instance, in the quote stage of the sales cycle sales reps may have to look up various price lists. They may not be sure about available product features and their inter-dependencies. As such, reps keep going back and forth with the production or engineering teams confirming product configurations. 

All this adds up when a manufacturer sells hundreds of products. A sales rep’s poor selling journey can result in the customer's poor buying journey, potentially ending up with lost opportunities. 

Customer Expectations

With the competing manufacturers looming in every industry and product niche, it’s important to address each customer's needs beyond their expectations. Once they have issued an RFP or an RFQ, customers expect a quick turn-around with accurate quotes.

Whether it’s a standard stocked item or complex made-to-order product, customers expect expedited delivery schedules. This requires manufacturers to rethink and optimize their whole quote-to-fulfillment process, not just the sales process. 

Another expectation is prompt discounting abilities, which sometimes involve sales reps getting approvals from their managers. Buyers don’t want to wait for the approving manager to get back vacation in a few weeks. The CPQ software of the manufacturer should have a delegation assignment to transfer approval rights when a manager is away. 

Products, services, and pricing may now be secondary compared to customers’ overall buying experience across all touchpoints.

Ask About CPQSales Reps’ Journey

Sales reps cannot use the old ways of searching spreadsheets for products and their pricing. These prices can be inaccurate and outdated. Even if manufacturers have a home-grown software application to store this information, if it’s not a good-fit nor user-friendly, then sales reps will likely go back to using spreadsheets.

Also, many complex product offerings require sales reps to add/select a valid set of product features or options to match customer needs. These product features are often compatible with only certain products and not others. Also, adding a particular product feature may require them to add or remove another product feature manually. Doing this manually is not only a tedious task, but it can also result in errors.

After eventually getting the product and pricing right, sales reps must swiftly respond to any negotiations that take place. Requesting a discount approval from the sales manager should be available at their fingertips and be an integral feature of the same CPQ software. 

Finally, sales reps must deliver a professional-looking proposal right away to the customer or new prospect. This can be a PDF or Word document sent via email from the same CPQ software. Alternatively, manufacturers should be able to provide access to the same CPQ portal for customers to configure their own products and view their quotes.

Fulfillment & Forecasting

Discrete manufacturing involves making distinct products that are built-to-order. This process uses production orders and Bill of Materials (BOMs) to assemble a product or components of an end product. A CPQ solution that can integrate well with backend ERP systems will have an added advantage to fulfill orders seamlessly. 

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Besides ERP integration for actual orders, production teams want to stay a step ahead in their planning of manufactured goods. CPQ solutions should provide accurate forecasting data on what's coming up, this way manufacturers are well prepared to meet the production demands.    

SAP CPQ for Manufacturing

With SAP CPQ software, sales reps can easily build complex products with updated and accurate pricing. Pricing can be modeled for various markets and currencies using the built-in market factor and exchange rate feature.

Based on the set up of business rules for related products, SAP CPQ can offer cross-sell and up-sell prompts to maximize deals. In addition, promotions can be set up by various parameters to show up on relevant products for a specified timeframe.

Administrators can set up business rules for valid product configuration by only allowing compatible product features. These rules can be complex and dynamically display or hide certain product features, as required. This takes away the guesswork from the sales reps and only shows them what product features are applicable for a particular product.

By simply setting a few checkboxes sales reps can easily select which sections or pages, such as marketing brochures, technical specs, terms and conditions or CAD drawing, should be added to the base proposal document. This proposal can be instantaneously previewed and sent via email to the customer.

Any negotiation between the customer and sales rep that requires further discounts can be managed within the Quote. Sales reps can also provide discounts up to a certain threshold limit or quickly submit discounts for approval by their managers if it’s beyond their threshold point. Managers receive email notifications and can approve/disapprove additional discounts, thereby protecting the profit margins.   

Once accepted by the customer, quotes in SAP CPQ can be converted into an ERP sales order. This CPQ-ERP integration is crucial to hand-off customer's orders from the sales team to order management, fulfillment and billing teams. 

SAP CPQ also offers native integration with SAP Variant Configuration (VC) or SAP Advanced Variant Configuration (AVC) part of SAP ERP (ECC and SAP S/4HANA respectively). This is a huge benefit that some CPQ vendors can’t offer.

Conclusion

Modern times require manufacturers to reimagine their business. Today, selling and delivering products is not enough. Manufacturers should also delight their customers with an amazing buying journey. 

SAP CPQ empowers the sales team so they can quickly deliver accurate proposals to their customers and prospects. Instead of wasting time looking up various inaccurate price lists or reaching out to product owners to confirm which combination of features are valid, sales reps can now focus on selling and closing deals.

Using a single data model and native data integration between front-office CPQ and back-office ERP solution, SAP CPQ empowers the production team with a smooth hand-off from sales to production team.

It’s not just about efficiency anymore - it’s also about being effective!

Interested in learning more, or seeing a case study? Canidium has driven 40% revenue growth, sustained, for a manufacturing client. Want to watch the live interview between our client and Canidium? Just contact us with the button below! Opt-in to receive more thought leadership from Canidium. 

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