To build a sustainable organisation, there must be a holistic approach to customer service. CNH Industrial Executive Managing Director, Raymond L. Osgood speaks about the evolutionary goals for the Australian and New Zealand (ANZ) arm of the global capital goods leader.
CNH Industrial has a long history as a global leader and innovator across multiple industrial and commercial sectors, and geographies. Iveco, its commercial vehicles brand, is a case in point: it has worldwide reach, with products manufactured at production facilities in Europe, China, Australia, Argentina, Brazil and Africa, and business activities in over 160 countries.
For those unfamiliar with CNH Industrial, the company is a powerhouse in capital goods. Its 12 brands, including farming equipment giants, Case IH and New Holland Agriculture; prominent construction equipment players, Case Construction and New Holland Construction; commercial vehicle manufacturers, Iveco and Iveco Bus; and industry leading firefighting vehicle icon Magirus, to name a few, are some of the best known in the world particularly in industrial and agricultural sectors. And together these brands have led a relatively recent revolution in product integration.
However, while the group is in its formative years, its combined history is deep. Case IH and New Holland Agriculture Equipment, for instance, form the backbone of CNH Industrial’s agricultural business, with nearly 300 years of experience between them, selling 540 different models of tractors, hay and forage machines, grain, grape, cotton, sugar cane and coffee harvesters, self-propelled sprayers, seeders, planters and balers.
There is however more to be done within the organisation. In Australia and New Zealand in particular, CNH Industrial under Executive Managing Director Ray Osgood is recalibrating this incredibly successful business from a product focused company to one also aiming to optimise the customer experience – from purchase through to end of product life.
“At CNH Industrial, we want to be a solutions provider that interacts with the customer through the life of the product, and then sell him another one,” Osgood says.
The CNH Industrial management philosophy
The Boston born, Harley Davidson riding leader has worked around the world. Initially moving from the US to England, followed by France, Switzerland, and now Australia, while working in Europe, Africa, the Middle East, Asia and of course Australia and New Zealand, Osgood has held leadership roles with various companies including Case (which later formed part of CNH) and CNH Industrial. Through these roles and his strong commitment to CNH Industrial’s customer-centric principles, he has developed a well-respected philosophy which is reflected in the way business is done.
“Through the international experiences I have had in different industries, and markets I have developed different perspectives around how business should be conducted,” Osgood says. “I don’t go into an organisation and say ‘this is how we do it’. I take a holistic view of the business and adapt the approach to the market requirements.
“There are the hard elements of business including the finances, the economy, the products and the markets. Then there are the softer elements such as the composition of the leadership team, the way we treat people and motivate them, and the way that leaders team cast a shadow on the whole organisation”
It is this end-to-end business philosophy that will ensure CNH Industrial fulfils its core customer support objective through to the end of the product life cycle.
And it begins inside. Building a high performance team was once done on intuition. Today, according to Osgood there are more scientific approaches, psychometric analysis and personality tests and he has been introducing those into CNH Industrial’s ANZ organisation.
“There are elements of somebody’s character and personality that are hardcoded at a young age which are difficult to change, but you can by implementing a long term development process. So we try to identify and recruit people with the competencies and values that are aligned with the values of the business.”
The key to successful leadership is to have staff that buy into the goals and values of an organisation and promote them on a daily basis.
Once you have that acceptance, you start the cultural change journey,” Osgood says. “That is the role of leadership; to establish the direction and goals, channel people towards those goals and then provide the resources to achieve them.”
The ultimate goal of business
In explaining how CNH Industrial’s leadership philosophy reflects on the end goal internally and externally, Osgood says that the ultimate goal of a business is to profitably satisfy customers by providing them with the products and services that they require to be successful themselves.
The role of leadership is to set the direction and to ensure that the organisation delivers the products, processes and services that meet the customer’s requirements.
However, fundamental elements change. Take the way we communicate for instance. Osgood believes that with the vast changes in communication tools, sometimes we don’t use what is available to our best advantage. Nor do we communicate as we should.
“The speed of business communications has accelerated at a rapid rate. The use of computers and computer technology has drastically changed the way business is done. Years ago, when I was a sales manager, I was given a roadmap and a list of contacts. I had to call my boss once per week, but today we have 24-hour-a-day, instantaneous communication. I think in some way we need to move back to a point where people do business with people. Those types of contacts and relationships are paramount.”
Osgood is promoting the personal touch. The future of the business is to be customer-focused; to build personal relationships with new customers and nurture old ones, and to evolve the market while securing a greater share.
“We can’t get away from technology,” Osgood says, “but we can focus on the real business practice of people doing business with people. When you look at our core business it is in agriculture: with farmers who are in touch with the land, who have their feet on the ground and who like to deal with people that they can relate to.”
It is these relationships that are crucial to the whole supply chain, especially in a country like Australia that must deal with the complexity of time and distance which forces CNH Industrial to forecast and estimate what the market requirements are. This means ordering product six months in advance, unaware of weather patterns or what is happening with commodities and other relevant market dynamics. Despite these difficulties, the organisation has a set of contingencies in place that works for them and their customers including carrying large stocks of machines and parts and being able to distribute and reallocate based on customer and market requirements.
Each customer has a unique product requirement and individual needs are catered for to the extent that one customer was sent by CNH Industrial to the USA to visit the factory and actually watch his tractors being built on the assembly line. When customers are going to outlay half a million dollars for pre-ordered products, personalised service counts for a great deal.
In this cutthroat industry, where every organisation is bound to high manufacturing costs, (CNH Industrial manufactures and assembles Iveco trucks and bus chassis out of its production facility in Dandenong, Victoria) or high import volumes (80% of its imported product originates from places as diverse as the USA, Turkey, India and Europe) and high transportation costs, businesses must have a point of difference: CNH Industrial’s is its approach to customers.
Operational efficiencies
One of the achievements in his career that Osgood is most proud of is his key role in restructuring the commercial operations at CASE in Europe during the 1990s; essentially how CASE delivered products to market. It was a two-year project and the lessons learnt from this have served him well for the entirety of his career and shaped his approach to the market today.
“That is similar to what I am doing now,” Osgood says. “We have a very large organisation (across Australia and New Zealand) with several distribution networks and products and I we need to jump into the helicopter and look down at our organisation and distribution footprint. So we need to look at how we are going to market and position ourselves against our competition to become more customer-focused.
We have recently done some internal studies and benchmarking to improve efficiencies and effectiveness and we believe that there are at least 30% improvement opportunities.”
Osgood says CNH Industrial’s number one strength is its distribution network.
“This is one of the keys to our success and a differentiator; our dealer network is close to our customers. We sell capital goods and customers invest in productivity, so the real value in what we do comes in keeping products running for the duration of their life. Therefore, in the case of agriculture, dealerships need to be close to the farms where our farm products are being used and we need that extensive network of suppliers and dealers to understand that good customer relationships are built on proximity and service and this in turn ensures that the network is sustainable.”
Building the dealer network has been an evolutionary process. What often began as small service shops have evolved into significant dealer networks over the years as the industry has grown. The dealers and suppliers have thus built healthy businesses and maximised opportunities by creating and strengthening customer and brand loyalty.
“We have customers who have used our equipment for generations. And when new customers come in and buy for the product features, we look at building brand loyalty among them as well. We want to be the dominant player in the market with regard to customer experience and then be at least on par with the market on price and product offering.
Looking forward
CNH Industrial’s commitment to its customers is made easier by the way it embraces every aspect of sustainable growth, from within and outside the company, from the products and manufacturing processes to the logistics, people, and the communities in which it operates.
The Australian and New Zealand sub-region has net sales of around $1 billion a year and a workforce of just under 1,000. The numbers are impressive and the business has survived market difficulties due to its large structure and operations, and the fact that Australia is a well-established and mature mConversely, China – for example – is a developing market for CNH Industrial and has huge potential, but at the same time, different market challenges than Australia.
“There are aspects of the Chinese agriculture market that are still managed and run traditionally, however there are other aspects that are best in class. So we look at those markets and the segmentation including truck owners and equipment distribution on the farm side and we can see that the market is moving towards large farming corporations with heavy government investment in the commercialisation of agriculture. We have recently built a brand new factory [in China] and are producing and building large-scale commercial farming equipment to position ourselves as a major manufacturer in the region who can help local communities achieve their goal. Commercialising agriculture will help the Chinese farmers modernise and improve productivity to optimise their agricultural sector.”
CNH Industrial is an over $30 billion worldwide corporation. It thrives because there are managers such as Osgood who can look at where the business is today and where it needs to be in the future. Sometimes this means taking a strategic view and building a factory in a region where success is gradual. The goal is simple: to build long-term relationships and brand loyalty, so the resource outlay is offset by future projections.
“The world’s population is growing and the world’s economies must be capable of feeding and mobilising their people, so there are fantastic growth opportunities for mechanisation and commercialisation of agriculture, as well as transforming other sectors. As a company we have factories in significant developing markets and when we open a new factory we are also building a mini industrial ecosystem around that which is good for the overall local economy.”
While the ANZ markets are at a very different stage of maturity, the sub region has a big role to play in the future of CNH Industrial and it will come via the establishment of a more customer focused organisation.
In order to achieve that goal, Osgood is looking at the whole supply chain to ensure that every aspect of the business, starting from the end customer who purchases a truck, tractor, or large excavator, through to the dealer network and internal staff all work in synergy so that the customer’s experience with the company is one to remember and be built upon for future generations. BF
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