Episode 71 Feb 02, 2023

Manufacturers Must Get Nimbler – But How?

Slalom is a global consulting firm and one of the top Salesforce manufacturing partners in the world. Matt Baker and Calvin Chow from Slalom joined the show to help us continue our exploration of current manufacturing trends and commercial solutions.

Learn why a major theme for 2023 is the concept of being nimble – in the areas of pricing, procurement, quoting, and response to macroeconomic changes. We talk through several real-world scenarios and examples of customer success.

Featuring
Calvin Chow

Calvin Chow

Matt Baker

Matt Baker

How do we take complex manufactured products and deliver that total solution with the offering? By doing that, it gives manufacturers a little bit more pricing flexibility to help drive overall margins by not just focusing on a particular line item, but the entire value  from the solutions that they're providing.
- Matt Baker, Slalom

Episode Transcript

Matt Baker: We're staring at some tough economic headwinds. Manufacturers really need to focus on being nimble, responsive to the changing realities that are out there. Costs are constantly in flux. Customer expectations are changing. Is inflation going up, is it going down? Going sideways? Where's supply chain at? We don't have enough of this piece. Oh no, we've got too much of this. Now we have inventory. It's all going to require manufacturers to really have that. pricing flexibility, but more importantly, how do we easily tie that into all of our systems?

Barrett Thompson: Hello everyone. My name is Barrett Thompson. I'm the General Manager of Commercial Excellence at Zilliant, and I'll be your host for our podcast. I'm joined today by Matt Baker, senior director Salesforce practice and Calvin Chow, quote to cash director at Slalom. Gentlemen, welcome to B2B Reimagined.

Matt Baker: Thanks for inviting us.

Barrett Thompson: To start off, I'd like to ask you to tell our listeners a little bit about Slalom and your own professional background, and even something that folks wouldn't know about you if they checked you out on LinkedIn. Matt, why don't you go first?

Matt Baker: Thanks Barrett. We're extremely happy to be here. Thanks again for inviting us to be part of this podcast. So a little bit about Slalom. Slalom's a global consulting firm. We're headquartered out of the Seattle area. Got about 40, 42 offices spread throughout the world, about 14,000 employees. We're one of the top Salesforce partners in the world as well with a deep focus on manufacturing, automotive, retail, CPG, [00:02:00] those areas.

So me personally, I've been here at Slalom for about a year and a half now, I lead up our Salesforce manufacturing practice. Prior to that, I worked directly at Salesforce for a number of years as part of their manufacturing industry team. So, manufacturing's a passion of mine. Look forward to chatting about what we're seeing in the industry and kind of seeing where how we can help you guys come up with some interesting solutions for some of the challenges we're seeing out there.

Well, fun fact about myself, I am a washed up, former, retired Ironman triathlete. I've done four Ironmans in my life a long time ago. And am now retired from that lifestyle.

Barrett Thompson: Oh my goodness, Matt, I respect that. I really do. I took a stab at that in the sprint tries myself, but my goal was not to compete. It was just to complete the doggone thing. So I admire where you're coming from. Great job. Calvin, how about you?

Calvin Chow: My name's Calvin Chow and I'm one of the leads in the Slalom quote to cash practice. Slalom has established a quote to cash practice to really focus [00:03:00] on the end-to-end capabilities of the middle office, covering pricing, configure price quote, country management, and billing.

And I'm responsible for enablement and architecture in the practice. I spent over a decade in pricing and CPQ, really helping companies to transform from cost plus to competitive based to more value based pricing. And I've been on several projects that actually have integrated advanced pricing and CPQ to really give insight to the sales person.

Something not in my profile. I was a professional or semi professional, I should say, pool player in Oklahoma. So, I was really competing and really winning tournaments and well, when I go to being professional in my career, I decided to give that up.

Barrett Thompson: So sounds like you made some money at the table.

Calvin Chow: Yes I did.

Barrett Thompson: Are you banned from any pool halls or competitive events because you're too good Calvin?

Calvin Chow: Definitely. There are some that have I have won a lot and definitely my face is all the wall so.

Barrett Thompson: That sounds wonderful. Well, [00:04:00] appreciate it. You know the angles, right? Whether it's the table or CPQ in manufacturing.

Well, gentlemen, both of you, you're exactly the right ones to have on the call today and the timing is really great. In fact, recently we had Frank Barovsky from the Salesforce manufacturing practice on the podcast, and I'm sure you know him. So I'm looking forward to understanding more about how manufacturers can benefit from professional consulting and solution designing around the platform to overcome what seem to be sort of an endless stream of threats and challenges that are being foisted upon manufacturers.

So let's start our conversation here. Matt, I'll ask you, what do you see as the biggest imperative for manufacturers in 2023 from the commercial systems perspective?

Matt Baker: Yeah, sure. Happy to talk a little bit about that Barrett. So yeah, it's really the focus around that connected ecosystem. All you’ve got to do is turn the news on, read a blog, read anything along those lines.

But, we're [00:05:00] staring at some tough economic headwinds. Manufacturers really need to focus on being nimble, responsive to the changing realities that are out there. How do I work more efficiently? How do I drive return? How do I drive margin? This is really going to force the manufacturers to, to look at how do we function in an environment where costs are constantly in flux?

Customer expectations are changing. Is inflation going up? Is it going down? Is it going sideways? Where's supply chain at? We don't have enough of this piece. Oh no, we've got too much of this. Now we have inventory. It's all going to require, manufacturers to really have that pricing flexibility.

But more importantly, how do we easily tie that into all of our systems?

Barrett Thompson: I hear that. I hear about the pain of that volatility, and you mentioned supply chain complexity for a moment. Let's just take a spotlight. Can you illustrate or provide any examples of how that particular complexity is wreaking havoc on, on the pricing strategy or the practice or the [00:06:00] sales motion itself?

Matt Baker: Yep. Yeah, I can, happy to dive into that a little bit. I mean, it's, if you look at what most manufacturers are doing out there it's extremely complex pieces of equipment or, capabilities that they have. You're not just building a single widget anymore. So to do that, I've gotta source parts from all over the world.

If I'm sourcing a piece of it from the US, from China, from Mexico, what are the price differences? Freights, shipping, taxes on it. If I'm building up to a price-based formula, am I going to take a hit on supply chain related costs because I have to transport it over an ocean? Can I make up with the make up that cost by raising the price on a cheaper, more readily available component?

What's on back order or what do I already have allocated? To other customers that I'm promising to deliver on them, is that going to impact that ability to be able to deliver to my customers and the prices that I can then charge for that? Last year I was helping a customer [00:07:00] manufacturing company and they were sitting on about a billion dollars worth of inventory for some pretty complex equipment that they had simply just waiting for chips to come in.

This had a massive material impact on their finances. Ability to deliver on time to customers. And there was penalties that had to be paid for being late for delivery. Customer satisfaction issues. So how do they start to bake that cost into their pricing going forward? It was a challenge that they had to get through and they're still working through some of it, but we can see the light at the end of the tunnel.

Barrett Thompson: That’s a lot of complexity and pain in the back office. If I turn the lens to the front office, Calvin, and I'm thinking about that quote to cash and CPQ side, for example, how do these effects and these ambiguities impact the salespeople's ability to quote a deal and get it done? And in part, what do you find with the out-of-the-box CPQ tools?

Do they really provide that level of price flexibility that's necessary to [00:08:00] respond to those circumstances?

Calvin Chow: I think salespeople really doesn't have the visibility to the cost, right. Or the profit when they actually create deal and now they really train to really look at those data. Since we were really focused on just closing up the deals and not really, doing the math behind it.

So traditionally we like, they have to go through the process right after they finish creating a quote. They have to let the pricing team review the quote and approving and really it's a cumbersome process and really slow the quote turnaround time and having a tool like Zilliant really gives them the flexibility to understand the real time insight that actually they need. And they're having like a pricing guidance so they don't have to really do the math. So they can create a more profitable quote, right? And then they can also reduce their quote turnaround time and really improve their whole sales organization to be more profit focused.

And nowadays, if you look at the news, profit is really top of mind of all the executives. So this is really [00:09:00] a needed investment in the pricing space.

Barrett Thompson: Yeah, I can see how those two themes really do play together, timeliness and accuracy of pricing and, getting those two right is critical.

Well, let me ask you both then. If you kind of bring these two things together for manufacturers in this volatile cost and price environment, what is the right approach they should be thinking about?

Matt Baker: Yeah, sure. So I'll jump in first and pass it over to Calvin. You have to be nimble and have flexibility and to really be able to drive that direction of being number one, flexible. You have to be able to employ advanced price analytics. Be able to see the profitability of a particular customer down to the deal level. You know what's happening on that product within that deal. What are the margins we're seeing on it? What are the costs associated with it?

How do I look at my bill of material and analyze it? And then really use the analytics to give you the story to help you decide what needs to be done and then be able to execute on [00:10:00] that. Calvin, what are your thoughts?

Calvin Chow: I think this is kind of unique to manufacturers. Manufacturers usually have to manage a large portfolio of skills and when, as Matt has mentioned, like you, after you do the analytics, you actually have to do master update on prices.

And it's always a troublesome area for manufacturers to actually do master updates and figure out, hey, is it actually just this skills I have to update price. Is this just a regional base or is it just with some key customer you want to update prices? So these are things that, as you are analyzing the data, you actually have to figure out a way to do mass at it.

And having two like can really give that flexibility to manufacturers to do mass update in a split second.

Barrett Thompson: Thank you both. Our experience aligns with just what you've said. We've seen the success with manufacturers. Helping them all the way from visualizing their current price performance up through executing their repricing activities, which are so important these days [00:11:00] and even getting pricing right out of the gate for new customers prices that we've optimized or tuned for their business objectives.

Calvin, let me ask, when thinking about the quote to cash, we recognize it's really about executions, getting the deals quoted and getting them sold. So how could manufacturers use Slalom's service? Together with a pricing tool like Zilliant to deliver something that both delights their end customers as well as improves their bottom line.

What's your view on that?

Calvin Chow: Well, Slalom is a full service company, not just really providing the technology implementation, but also the strategy, right? Unique to figure out what kind of pricing strategy you want to execute. You want to also improve your pricing process as well where you want to make sure you have your right governance structure.

To actually improve your prices and also have, you also have to think about the change management aspect, even though you may apply optimized pricing guidance to sales reps. How you actually roll [00:12:00] it out to many of your sales organization who has reach traditionally. Just update like a percentage point on your price basis and really taking the time to actually analyze and mass update prices intelligently.

Lot of things that we actually can help. And also one, one piece is the integration piece that, after you set your prices, using, seeing as a pricing master, you have to feed all the downstream systems, right? You figure out, hey, maybe your e-commerce side needs to have a different prices, then you're ordering in your ERP side, right?

And so we can help as a company to really look at all the areas around pricing.

Barrett Thompson: Those are critical pieces and I hear that strategy, process improvement, change management, which I would say is perhaps the most commonly and grossly underrated success factor in these projects and integration that together with data and algorithms and so on, and the other things we provide.

That's a winning formula when you bring those together. Shifting [00:13:00] gears just a bit, one idea that I've written about and promoted is for manufacturers to get away from thinking about line items per se, sort of strictly line item focused in the way they think about pricing or evaluating what's going on inside of quotes and deals.

And instead, I've encouraged them to envision and think more about a total solution for the end customer. Right, and think about the total package of goods and services that I'm selling them. That of course will include the configured product that's going out, but it might be associated services, design services, installation, training, other value that might be delivered on invoice and off invoice rebates and strategies, right?

They all come together when you think about what the end customer's total experience is with a manufacturer. So what's your perspective on that mindset shift and if you think it has legs, are there [00:14:00] examples where you've helped customers achieve that sort of total view of their business versus being too line item fixated?

I would love to hear your point of view and any examples you might share.

Calvin Chow: Let me jump into this real quick. I really couldn't agree more on this. I really look at we need the total package or total value they offer their customer as the foundation for their customer strategy. Recently I really helped a company to really not just focus on their Apollo offering, but the automatic parts, the warranties, the services that really superior to others to actually capture those value and you price it in the right way so you can actually increase your profit at the end of the day.

Right? And let's be real, machines are going to breakdown at some point and having other areas that are important and superior to other competitors is just as important as having a supreme machine themselves.

Matt Baker: Yeah. Echo a little bit what Calvin mentioned, they're, we're seeing more and more customers, they're really looking to bundle total solutions [00:15:00] together.

As you mentioned Barrett, it's how do we take complex manufactured products? How do we bundle that with field services for warranty? How do we bundle that with consulting services for how to use the product? How do we bundle associated software on top? And they're not going to want to have to dig through a 500 to 800 line item bill of material to pick certain areas out but, I'm going to adjust this cost or that cost.

But it's really how do I deliver that total value with the offering? And, by doing that, it gives them a little bit more pricing flexibility to help drive overall margins by not just focusing on a particular line item, but the entire value they're providing from the solutions that they're offering.

Barrett Thompson: That makes such sense to me. I mean, price has a role to play, but the value proposition for manufacturers and how they engage with their customers is bigger than just the price itself. And you guys have illustrated that. Appreciate you sharing there. I want to thank you both so much for being here on the [00:16:00] podcast today.

We are planning to have you two on again later in the year so we can go deeper into the nuts and bolts of how our joint solutions work. But before we leave today, I would like to ask if you have any parting thoughts about the state of manufacturing in 2023 or what executive leaders should be focused on in the near term, Matt?

Matt Baker: Sure. And yeah, thank you again Barrett for having us on the podcast. We're excited to be part of it and also excited to talk about future podcasts and going into a little bit more detail. But, me personally I'm excited about 2023. Manufacturers and everybody's really trying to put the last three years behind us, look to the future.

Kind of just go on from there. The world is still a little bit in flux. Like we said, we're trying to figure out inflation, what's happening across the globe. So I think the key things that we talked about a little bit earlier is manufacturers are going to have to stay nimble.

They're going to have to be able to quickly adjust how they go to market. How they price, how they deliver. We're [00:17:00] going to continue to see manufacturers really lean into that digital transformation to enable this flexibility for them going forward.

Calvin Chow: A little bit more pessimistic view, about 2023, I think yeah, you can continue to expect the focus on growing profit and I think there's still a lot of macroeconomic factors.

There are known just such as the war in Ukraine, the Covid in China. So there will be still a volatility that a company have to deal with and I think it's really important for a company to really invest in pricing. Keep in mind that 1% increase in price gives you 8% in profit, so it's more the most effective lever to increase.

And I just want to keep everyone in mind that you are looking to invest into a pricing project. Pricing is a journey, but you need to really prepare for what's ahead. It's not like just one time exercise. You implement the tool and you're done with it. You really need continuous refining, adding additional [00:18:00] data points, data structure in place. And also setting your organization to have a really holistic customer pricing strategy so you can actually execute and become a company that has pricing excellence. So I think that's a point I want to make sure everyone is prepared and are looking into pricing.

Barrett Thompson: Thank you both for sharing those viewpoints today.

Matt Baker and Calvin Chow. It's been a pleasure to have you on the podcast. Thank you.

Matt Baker: Thank you.

Barrett Thompson: And I also want to thank each of our podcast listeners for being with us. It's a privilege to connect with you in this way. We're committed to your success, and if you need any assistance, please reach out to us at Zilliant.

Would you do me one favor before you go and rate and review the show in your podcast app as it helps us to continue to put out great free content? Until next time, have a great day.

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