Rust Belt CRM

Heavy industries are using CRM data to speed up the assembly line for high-profit customers and charge higher prices for low-profit orders.

By Ira Breskin

December 15, 2003 12:00 PM ET

Computerworld - Think of CRM, and you tend to think of retailers, banks and call centers serving mass-market consumers. But CRM software is quietly being used in the industrial heartland, too, to better manage sales of products ranging from steel plates to factory controls.
Manufacturers are beginning to take advantage of CRM data systems to fine-tune their factory forecasts and identify their most profitable products and customers. Then they can improve service to those customers -- for example, by providing what essentially is an "express lane," or preferred status on the assembly line, for high-profit orders.
Smokestack industries are even using buffed-up CRM systems to justify higher prices for low-profit orders. Sophisticated tools that analyze customer profitability can highlight so-called free riders, or customers and products that generate a disproportionately small return, says Steve Banker, an analyst at Automation Research Corp. in Dedham, Mass.
CRM analysis sometimes yields surprises and upsets long-held planning assumptions, Banker notes. For example, a high-margin account could lose its preferred status if analysis reveals that the customer has costly handling or service requirements. Likewise, custom features or unforgiving delivery deadlines that disrupt production or shipping schedules might diminish the appeal and profitability of a once highly regarded customer.
The payoff from exploiting this kind of data can be huge: U.S. Steel Corp. officials say the company increased its annual cash flow by several million dollars soon after installing analytic CRM software from San Rafael, Calif.-based Maxager Technology Inc.
In fact, CRM initiatives at some industrial companies -- including DaimlerChrysler AG, Ondeo Nalco Co. and Taiwan Semiconductor Manufacturing Co. -- produce such important insights that they're considered too proprietary to discuss publicly, for fear of tipping off competitors.
Invensys PLC, a conglomerate that makes a full range of industrial controls, has begun using CRM data about customer ordering patterns to better forecast production and fine-tune scheduling at its factories, says global best practices program manager Deb Kumpf, who works at the company's U.S. headquarters in Foxboro, Mass.


Manufacturers like U.S. Steel are reaping benefits from CRM software, such as increased cash flow, better service for highly profitable customers and more accurate forecasting. Credit: Getty Images

"A major benefit has been to better forecast what our business is going to be and [then] transfer that information to production," Kumpf says.
Invensys uses heavily customized Baan CRM software, which is based on applications Baan acquired when it purchased CRM vendor Aurum in May 1997. (The selection isn't too surprising: Invensys purchased Baan in August 2000 and then sold it in June of

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