How digital agreements help in manufacturing

agreements-manufacturing

How digital agreements help manufacturers compete better

By Charlie Cowan – Strategic Enterprise AE at DocuSign

Every industry is different, made up of a collection of unique processes that enable them to create and sell their products and services.  All of these processes require agreements every step of the way - agreements with a company's own employees, and agreements with third parties like suppliers and customers.

In this post we’ll look specifically at the processes in manufacturing businesses . We’ll see how agreements feature the entire length of the manufacturing value chain and how the digitisation of these agreements really can help manufacturing businesses to compete better.

 

What is a manufacturing business?

First let’s define what we mean by a manufacturing business - it’s a wide ranging term as nearly every business that is not a service company ‘makes’ or manufactures a product.  We might think of a car manufacturer, or a consumer packaged goods company making tinned goods, or a steel company making the raw ingredients that feed into both of those companies.

Within our definition we’ll include any company that takes some kind of raw material, transforms it into a finished product and then sells that product, either to other companies or to end customers like you and me directly.

 

History of manufacturing

Henry Ford famously disrupted the traditional manufacturing industry in 1913 when he launched the first production line that could build an entire car in one single journey through the factory.  The time to build a complete car dropped from more than 12 hours to just two hours 30 minutes.

This revolution highlighted that the faster you could design, build and get a product into a customer's hand the more successful your company can be.  

This same strategy continues to be played out today in many manufacturing segments - fashion is a very visible example where companies have disrupted traditional high street chains by being able to get new products into the market quicker than their competitors. They do this by speeding up every step of their design, and their manufacturing and distribution chain. Companies that move faster win.

 

What does the manufacturing value chain look like?

Let’s look at each stage of the manufacturing process and see where agreements exist today.

 

Engineering and R&D

Before a company can start making anything they need to come up with their designs.  What is it they are going to build?

For most companies they have teams of in-house designers that will go through extended phases of prototyping and testing as they perfect their next product.  All along this process agreements are required:

  • Project approvals
  • Budget sign off
  • Requirements management
  • Design acceptance
  • Design changes and approvals
  • Professional Engineering Seals
  • Testing feedback
  • Product certification

These agreements already exist today, but typically are handled in an offline format - paper based, or Word templates that are printed out to be signed.  Designs are often signed by hand and rescanned to be stored, losing the integrity of the document.

The DocuSign Agreement Cloud eliminates paper, automates the process, allows agreements to be signed electronically and stored in the cloud. 

Top Tip: DocuSign products can be used with any document where someone’s signature is required for approval. Make sure not to just think of “contracts” or “agreements” but also “forms”; pieces of paper asking for inputs into a new design or product that are then approved or signed off - which are prominent in manufacturing

Check out DocuSign’s Guided Forms that can help build these forms dynamically to speed up completion and remove errors.

 

The procurement process 

Now the designs are signed off and before we can start making things we need to purchase the raw materials via our procurement team.

Manufacturers will have an extensive supply chain that goes through many tiers of supplier’s suppliers, and supplier’s supplier’s suppliers - all of this hierarchy needs to be carefully managed and monitored to ensure the manufacturer themselves is compliant with global laws and codes of conduct.

Agreements that we see manufacturers using in the procurement process include:

  • Master Service Agreements with suppliers
  • Individual supplier orders
  • Purchase Orders
  • Supplier Onboarding forms for banking details and tax information
  • Codes of Conduct - sustainability, anti-bribery, anti-slavery and so on
  • Requests for Proposals and Tender processes
  • Freight and storage agreements for material transport
  • Import and export agreements

Check out DocuSign’s integration with SAP Ariba to see how procurement teams can initiate all these agreements from the system they already use.

 

The manufacturing process

Now we’ve got our raw materials into the factory we can start putting them together to create our product.  Manufacturing today is a beautiful combination of automation from machines carrying out repeatable processes together with human effort for detailed and skilled work. Both require agreements to manage and report on them.

  • Production/Release Processes
  • Work Orders
  • Equipment Calibration
  • Quality Control (testing and certification)
  • Import and Export documentation
  • Handling and disposal of materials
  • ISO compliance
  • Health and safety reporting
  • Inventory control

Throughout the manufacturing process there are significant points of handover where traditionally you might have seen a manager with a clipboard signing a piece of paper. But in a competitive environment, the ability to automate these processes and digitise the agreements can be a differentiating factor.

Check out DocuSign’s Public API where your developers can integrate digital agreements into your own workflows.  Imagine signing off on Quality Control within your own manufacturing process application.

 

Distribution

The product has now been made and we need to get it out to our customers - whether they are B2B customers further down the line who will incorporate our product in their own, or B2C customers like you and me.

In addition, there are multiple channels to get the product into the hands of customers - either directly (we see a surge in this today with “Direct to Consumer” brands like Eve mattresses, or Peloton for spin bikes). Or, via distributors and resellers where a wholesaler will purchase and sell into the end customer themselves.

 

Direct sales

In direct sales we see a wider range of agreements that vary depending on whether B2B or B2C clients are involved:

  • Master Services Agreements
  • Online Terms and Conditions
  • Customer contracts and order forms
  • Quotes and quote approvals
  • Price lists and agreed discounts
  • Change Orders
  • Statements of Work

 

Indirect sales

Relationships with wholesalers, distributors and resellers brings in an additional layer of agreements to consider:

  • Partnership Applications
  • Partner agreements
  • Partner onboarding
  • Partner training and certification
  • Partner billing set up
  • Partner refunds and incentives
  • Custom quote approvals
  • Pricing and discount lists
  • Customer orders

Check out DocuSign CLM to help you prepare, negotiate and approve complex high value customer contracts before you even get close to signing.

 

Logistics and customer service

The deal is done and we now need to ship our product to our customers and make sure that we support it and they have a great experience.

Once again agreements are everywhere:

Logistics

  • Import and Export approvals
  • Freight agreements
  • Bill of Lading
  • Outbound/Inbound receiving documents
  • Load tendering

Service

  • Service Contracts
  • Product Registration agreements
  • Warranty claim documents
  • RMA processes
  • Entitlements
  • Field Service Engineer quotes
  • Field Service Engineer project sign off
  • Product recall
  • Reimbursement processes

Today there is huge innovation happening as the global logistics industry digitises and the opportunity for manufacturers to integrate their agreements into these new processes is huge.

Check out DocuSign PowerForms where you can put agreements into your customer portals ready for your own customers or partners to initiate - no need to send an RMA form to a customer, let them complete it themselves.

 

Supporting functions

We’ve now walked through the core manufacturing process and seen that agreements exist everywhere. Supporting direct manufacturing are the corporate services that help a company run.

We won’t go into the details of contracts here as they occur across all industries - but departments you should consider include:

  • HR
  • Finance
  • Compliance
  • Legal

We provide some example documents in our summary graphic below.

 

Summary

In this post you’ve seen that agreements exist all around a manufacturing business.  Today many of these agreements are paper based, or at best manual Word document processes.

By starting to map out your agreements across the manufacturing value chain you can start to build a roadmap with DocuSign to digitise and accelerate your production process from design all the way to customer support.

agreements-manufacturing

 

Watch our on-demand webinar: Control Your Manufacturing Spend by Digitising Your Agreement Processes where market leaders from across the manufacturing industry come together to discuss the key trends facing the global manufacturing industry.

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DocuSign Contributor

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