How Customer Service Can Prevent Lawsuits

If there is one thing that pretty much anyone working in business fears, it is a lawsuit. Multiple complaints about a single product or service can be used to create a single class action suit, and these have a nasty reputation for going in favor of the consumer. This is why companies need to do everything they possibly can in order to prevent lawsuits from happening in the first place. After all, prevention is definitely far better than a cure, especially when the chances for curing something are low.

However, recent announcements have given manufacturers a reason to celebrate. One of the biggest problems with lawsuits is that multiple plaintiffs tend to combine their complaints and roll it all into one big suit that would end up costing the defending company a lot of money. The announcements concern a case that was recently concluded in the Supreme Court that set an interesting precedent that a number of lawyers are going to want to look into. However, before you look into these new developments you first need to understand what exactly the requirements are for a class action lawsuit of this magnitude.

The Requirements For Such Lawsuits

The first thing that plaintiffs have to do is prove that a common thread runs through all of the complaints. They need to show that the complaints come together to reveal that something is wrong with the way the company being sued is operating. They also need to prove that this common thread is more important than the particulars of each individual case. These similarities are so crucial that if the legal representation of the plaintiffs fails to prove that they exist, the lawsuit might not be allowed to proceed in the first place.

An example of the common thread rule can be seen in the various lawsuits faced by people that manufacture products that go into the construction of buildings as well as other similarly large structures. The reason that the manufacturers of these products often get sued is because of the fact that all of their products end up in buildings, and if anything goes wrong with the building than the manufacturers of said building’s individual parts face a lot of flak. The products are not seen as individuals but as part of a whole, and if the whole is getting sued than the individual parts are getting sued as well.

This means that people often file lawsuits against buildings. These happen because of health risks, safety risks, general mismanagement of the building as well as a variety of other reasons. The number of these suits that actually go to trial shows how frequently judges ignore the individual differences in each case, allowing lawyers representing such clients to go for higher payouts and causing a lot of loss to companies that end up getting caught up in these suits.

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How a Manufacturer Drastically Reduced Customer Product Request Times

The manufacturer named Bernstein AG was first established in the year 1947. The main items that they manufactured had to do with elevators and escalators, as well as automated entry points for buildings. Specifically they constructed components of these machines as well as entire systems that would allow their consumers, malls and other large structures, to provide safe elevation for their own consumers.

Their product line includes components such as sensors, along with enclosures and other safety features. These safety features are essentially meant for the people operating these machines as well as the machines themselves. The manufacturer now employs hundreds of people, and offers its products and services to people all around the world.

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Why Manufacturers Should Also Become Service Providers

The majority of companies that deal in manufacturing goods tend to overlook the service sector. According to a recent research conducted by Deloitte, this is putting their entire line of work at risk. This is because such manufacturing firms face stiff competition from businesses that offer lower cost solutions to customers. Other reasons include the supply chain becoming more complicated to navigate pretty much all over the world, as well as the ever increasing demands of the modern consumer.

The Results of The Study

One of the things that the recently conducted research did was that it put a number on how much the services provided by manufacturing firms are worth. These services bring in a global revenue of about one and a half trillion dollars every year. That is an enormous pie, so it is understandable that the researchers highly recommend all manufacturing firms to try and get a piece of it. In fact, the research went so far as to imply that the most successful manufacturing companies out there are in fact earning a full half of their revenue from providing services to their customers. On average, manufacturing companies earn a quarter of their revenue from services.

There is a reason that the most successful manufacturing companies earn half of their revenue from services. Services are generally a lot more profitable than pretty much any other aspect of the manufacturing business. To put a number on it, services earn seventy five percent more revenue. If you do the math you can see why businesses that get more revenue from services would be earning a lot more profit than those businesses that avoid getting into the services side of things.

Problems Currently Being Faced

One of the more striking statements presented in the study from Deloitte was that the viability of the manufacturing industry as a whole comes from the services sector. This is because a lot of manufacturing companies depend on service provision, otherwise they wouldn’t be nearly as profitable as they currently are. Businesses that provide a lot of services grow ten percent faster than businesses that don’t. The most service oriented of these businesses, the top quarter to be precise, grow at almost double the rate of all of their non service oriented competitors. Half of currently operating manufacturing companies are not earning enough profit to make the initial investment worthwhile. Providing services can help them get past the finish line in this regard.

The problem isn’t just that a lot of manufacturing companies aren’t offering services. Many of them are, but their services division is just not given as much attention as all of the other disparate parts of their enterprise. Over sixty percent of manufacturing companies have service divisions that are growing at a crawl when compared to the rampant overinvestment that other areas of the company are seeing, in spite of the fact that they are not nearly as profitable.

After sales services is clearly being underplayed, but the after sales spare part business is also being criminally ignored by manufacturing companies. Spare parts are always going to be an essential aspect of the business, and they serve as an opportunity to earn incredible profits from people that have bought your products anyway. Many manufacturers don’t offer spare parts because it is an ostensible admission of the fallibility of their products. They may be loath to admit it, but the products they are manufacturing are definitely going to break down at some point. Profiting from this inevitability is only smart business and nothing else.

One of the authors of the study states that the service sector should be thoroughly conjoined with manufacturing. The benefits of providing services does not just benefit companies in terms of increased revenue and profits. It is also a way of staying competitive in our increasingly challenging market. Customers like to work as little as possible, and they like instant gratification. Hence, purchasing their products from a manufacturing company that would also provide services is something that gives customers more value for their money in their eyes.

Why It Hasn’t Happened Yet

Upon reading all of this, one might wonder why more manufacturers aren’t jumping on the service sector bandwagon. One of the major reasons is that many of them don’t realize how beneficial, and frankly necessary, service provision is. Their assumption is that manufacturing is their main concern, so that is where their focus should lie, and that if they focus on just manufacturing all the other components of their business will handle themselves. Another possible reason is that they don’t quite know how to implement services. This can be handled through a customer support software like Kayako and the ticketing system it offers which can help organize requests for services and streamline the whole process.

Many manufacturing companies also just don’t have the kind of work environment that would be suited to services. They have operated for years with the manufacturing aspect of the company serving as its backbone and incorporating services into their corporate culture at this point might seem to them a huge waste of time. However, there are examples of companies that changed the way they do business in order to take advantage of the way things have changed in the world. Siemens AG Medical Solutions is a good example of a manufacturing business that has shown renewed interest in providing after sale services.

Another problem that prevents companies from providing services is the fact that their customers are often all over the world. Providing services means having boots on the ground, service centers and other facilities. Opening up such facilities in every location they have customers in will be prohibitively expensive for manufacturing companies. That being said, this is another problem that has been solved by a company. Caterpillar Inc has customers in every part of the world, and they manage to deliver spare parts to them within twenty four hours. Their methodology can be studied by companies struggling to do the same.

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About The Midwest Manufacturing Business Coalition

Our Mission

We are a non-profit organization centered on providing continuing support to small and mid-sized Midwest manufacturers, aligning front-of-the-house operations with back-of-the-house production. Our goal is to help manufacturers in developing efficient, effective, and competitive manufacturing business operations in a global environment.

Our Regional Focus

Centered solely on manufacturing business education and networking, the coalition brings together C-level manufacturing executives across the Midwest, including North Dakota, South Dakota, Nebraska, Kansas,Minnesota, Iowa, Missouri, Wisconsin,Illinois, Indiana, Michigan, and Ohio. Our offices are located centrally in the Quad Cities, in Davenport, Iowa.

Our Partnerships

The Midwest Manufacturing Business Coalition also works with other manufacturing organizations including regional state MEPs, Innovation Hubs, Universities, and Co-Labs to bring together resources for funding, innovation, R&D, production operations, and technical development, to help manufacturers advance their competitiveness.

Our Organizational Goals

  • Become the Midwest’s premier manufacturing business coalition for small and mid-size manufacturers
  • Become a catalyst for a paradigm shift in the business of manufacturing
  • Help small and mid-size manufacturers to think and act progressively, both regionally & globally
  • Create and provide actionable, educational programs to improve manufacturing strategic business operations and competitiveness
  • Help establish the Midwest region as the center of manufacturing best practices and knowledge
  • Help move those manufacturers that are simply “surviving” to “thriving”