What is B2B manufacturing?

Business-to-business (B2B) manufacturing is making many things for other businesses. Companies that buy goods made for business-to-business are called vendors, while those that make the goods are called wholesalers.

Most businesses hire a supplier to do their work for them. There are several reasons to do this:

• The speed of operations. Large warehouses, factories, and facilities for the supply chain are already in place for B2B manufacturers. Companies that hire B2B makers to do their work can save time and money that they would have spent building these systems from scratch.
• Ability to grow. These plants and warehouses are set up to handle large amounts of output, which lets companies change how much they make based on demand.
• I am saving money. Starting and running a production plant is too expensive because of the costs of transportation, building rent, equipment, raw material prices, and labor. Businesses save money by outsourcing their production needs to B2B makers, which lets them focus on making money.
• They are making sure of the quality. A trustworthy B2B maker has probably been making the same things for years, so they know how to do it well.

Customers of a business-to-business (B2B) company can be other B2B businesses or businesses that sell to consumers (B2C).

For example, a business-to-business (B2B) clothing maker and screen printer might make a lot of t-shirts, sweaters, and jackets for different brands and individual sellers. You can buy them directly from these companies or send them to another company, like a shopping store, to be processed further or sold.

Synonym

• Business-to-business manufacturing is the long-form term for B2B manufacturing, which is used interchangeably.

Problems in B2B manufacturing

Business-to-business (B2B) manufacturers have very different ways of doing business and getting things because they sell to other businesses instead of individuals.

This brings about a lot of new problems, most of which have to do with changing customer tastes, going digital, and sales cycles that change very quickly.

More and more, vendors and wholesalers want self-service.

Most B2B businesses preferred self-service before the global COVID-19 pandemic, but 2020 was a big turning point for self-service in the B2B customer experience.

McKinsey did a study at the height of the pandemic and found that 99% of B2B buyers were comfortable with end-to-end online self-service, even for deals worth more than $50,000.

If this is true, then sales workers don’t have to or want to be the ones who handle orders. This changes how sales teams work and how engaged customers are.

It’s hard to imagine a better buying and selling experience when the product is complicated.

Customers don’t want to discuss placing orders, checking on their status, and fulfilling them, so not having to talk to reps about these things is good. Reps can now use that time to prospect, engage new potential customers, and build valuable relationships with existing ones.

But knowing what B2B users want and finding a way to give it to them are very different.

It seems like the answer is easy: make a shopping site that allows manufacturers to do business online with other manufacturers.

But B2B makers must figure out a massive web of complicated issues, such as how to customize products, schedule orders, and divide customers into groups.

The general experience is essential for B2B manufacturers in two ways:

• Buying experience: Buyers must be able to set up goods and determine possible prices on their own. They only talk to a salesperson from one company for about 5% of the buying process. The manufacturer’s website should have as many precise and practical tools as possible.
• Selling experience: The site needs to collect and organize the correct customer data so sellers can make the most of their time with prospects. Processes that aren’t working well cause workers to be unhappy, sales to drop, and revenue to grow less quickly.

It is tough to make a platform that meets the needs of both buyers and sellers, especially if a business doesn’t have a lot of I.T. resources.

It’s not as easy to get leads in the manufacturing business.

It’s not as easy as making a few cold calls to get B2B leads for production. Marketing for B2B lead generation doesn’t have a clear answer either.

A buyer in the business sector has very different needs than a buyer in the consumer sector, and they need to be dealt with in very different ways.

Today, B2B manufacturers get leads by using targeted content marketing, SEO tactics specific to their industry, and going to events and forums for their industry. It’s not common for a salesperson to be brought into the picture until a customer shows much interest.

This makes sales managers at B2B manufacturing companies wonder, “Where do our sales reps fit into the sales process, and how are they best used throughout the sales funnel?”

There are always threats in the supply line.

76% of world trade comprises deals in the global supply chain. B2B manufacturers handle hundreds of sales daily and often have to do it all with little time and money to spare.

Sales reps for a manufacturing business must quickly adapt to changes in customer demand or supply constraints to find solutions that work for both the buyer and the seller.

These are three examples of supply chain issues that have happened in the past and affected B2B manufacturers:

• Lack of raw materials. Not having enough raw materials can mess up the production process. This could be because of several things, including political unrest, natural disasters, or a supplier going bankrupt. Nickel costs went over $100,000 per tonne for the first time in March 2022 because of the war in Ukraine. Nickel is needed to make electric cars and stainless steel, which puts pressure on B2B producers in many fields.
• Tariffs and rules on trade. Other significant problems can come up when trade policies and rules change. The U.S. imposed new tariffs on foreign steel and aluminum in 2018, making these materials more expensive for U.S. manufacturers. They had to change how they priced their products or where they got their materials.
• Problems caused by pandemics. Lockdowns and restrictions caused factories to close, a lack of workers, and transportation delays, which messed up production plans, raised costs and pushed back deliveries. Because of these problems, manufacturers had to rethink their supply chain tactics and find ways to fix them, like switching suppliers or stocking up on more supplies.

B2B manufacturing is different in what ways?

B2B manufacturing differs significantly from B2C manufacturing and direct-to-consumer (DTC) sales.

B2B Buyers in Manufacturing

Businesses usually buy from each other, and their wants differ significantly from individual consumers. They usually want solutions made just for them, take longer to make decisions (up to 10 people), and put value over cost.

Their buying choices are based on their business needs, so you must know about their industry, business problems, and practical needs. When two businesses do business with each other, the deals are usually more significant, with long-term contracts and large orders.

Still, 80% of B2B buyers now want the same customer service as B2C buyers. This means they want answers right away, unique experiences, and openness.

B2B Marketing for Manufacturing

In B2B business marketing, knowledge is valuable. Because B2B buyers are looking for a partner who can help them with everything they need to know about their business, solution-oriented content marketing that includes white papers, case studies, and information that can be used right away is very important.

Each piece of content serves as a point of contact for the manufacturer’s ideal customers and helps make sales.

Customers in the “awareness” stage of the process can read articles and watch product demos.

On the other hand, sales workers can use product videos and webinars to show how products work in real-life situations, and demos let them show off the features and benefits of their products.

Regarding SEO, content should try to answer specific questions that B2B customers are asking, not just the queries being made. The return on investment (ROI) is higher for content that converts well but only gets a small amount of focused traffic than for content that ranks higher but isn’t as relevant.

B2B Sales of Manufacturing

From $12.98 billion in 2021 to $14.89 billion in 2022, U.S. makers and distributors saw a 15.4% rise in their total B2B sales.

This significant growth is due to the shift to digital sales for sellers in the manufacturing business. For manufacturers who sell to other manufacturers, digital change means:

• Putting in place new sales technology, like headless shopping and A.I.
• Digitizing business processes so that people can buy and sell from afar
• Making sales outlets more prominent with omnichannel experiences
• Selling things socially on LinkedIn
• Emphasizing an online shopping experience over standard ways of selling
• Adding an app-like product customization to their website for complicated items

Sales reps have been better able to meet buyers where they are and help them make a purchase choice since they started using digital tools and selling online.

B2B Models for Manufacturing and Distribution

The term “B2B manufacturing” refers to several ways goods are sold. Each is used for something different, and some work better in some fields.

Model for Distributing Wholesale Manufacturing

Goods are sold in bulk to a wholesaler, who then sells them directly to stores or customers. This is called the wholesale manufacturing distribution model.

Because of this plan, the wholesaler stores move and sell the goods, leaving the manufacturer to focus on making them.

There are several reasons why manufacturers choose the selling model:

• It increases the market size without building a lot of sales machinery. Wholesalers usually have ties with a group of retailers. This lets manufacturers sell their goods to many stores with just one deal, and the distributor takes care of the sales and marketing.
• It lets producers focus on what they do best: making products, while wholesalers take care of the logistics of storing, transporting, and selling the goods to consumers. This splitting up of work can make things run more smoothly and save money.
• Selling bulk to wholesalers keeps demand stable, making planning production easier and lowering the risk of making too much.

This model works best for companies that make many products or whose catalog of products is sold in many different stores, like those that sell clothes, toys, and tools.

It’s also suitable for manufacturers who do not want to deal with store sales or logistics.

Model for Drop-Shipping Manufacturing and Distribution

Because of the growth of Amazon and eBay, dropshipping has become a newer and faster way for manufacturers to get their goods to buyers. One out of every three stores now uses drops to fulfill orders.

The person selling a product through dropshipping doesn’t own any of the goods. Third-party logistics (3PL) is the name of the company they hire to store, package, and ship items straight to customers.

Manufacturers like this plan because it saves them time because they don’t have to store and manage inventory. Instead, they make the goods and send them out when someone orders.

It’s also very cheap because dropship suppliers usually charge a flat fee or a percentage of each item. This means manufacturers don’t have to pay for infrastructure, staff, and other costs from having a warehouse.

Manufacturers can charge more per unit than they would if the seller bought the product in bulk because dropshipping is easy to get started with and has a lot of benefits for people who want to sell things online.

Dropshipping is also an excellent way to try products and see if people are interested in a market before committing to full-scale production.

Vendor Managed (VMI) Manufacturing Distribution Model

In a VMI agreement, the manufacturer must keep an agreed-upon amount of inventory at the customer’s location. This means monitoring inventory levels in real-time, predicting what products will sell, and restocking as needed.

The maker can see what the customer has in stock and decide when to restock so that the customer doesn’t run out of items or has too many.

For example, the VMI model works well in industries with steady and predictable product demand, like the grocery or car parts industries.

It also helps with goods that don’t last long and need to be restocked quickly.

B2B e-commerce platform for manufacturing and distribution

The B2B e-commerce platform distribution approach significantly changes how companies get their products to customers. Selling goods straight to businesses through the internet is what it means.

Most B2B manufacturers use these tools somehow, even if they’re not the primary way they run their business.

Some common examples of business-to-business (B2B) e-commerce sites for manufacturers are

• Amazon Business is where companies can buy and sell goods at bulk prices.
• Alibaba is a global e-commerce site that brings together buyers worldwide with makers, wholesalers, and distributors.
• Shopify Plus is an all-in-one e-commerce tool made for large B2B companies.
• Oberlo is a dropshipping tool that helps store owners run their businesses without storing or shipping goods.

This plan differs from others because it lets manufacturers interact directly with customers. This builds stronger relationships and usually results in more sales.

B2B e-commerce platforms give manufacturers access to data-driven information that can help them learn more about what their customers want and need. That way, they can make their goods or services fit your needs better and give you special deals that stand out.

Most importantly, these platforms give you access to bigger groups of possible buyers, so you don’t have to worry about where you live. This creates new market possibilities.

Branding on Your Own

When things are made by a manufacturer to be sold by a retailer under their brand name, this is called private labeling.

The retailer is responsible for marketing and selling the product, bringing it straight to customers under their brand. The manufacturer still makes the product.

Private labeling is especially helpful for companies that are great at making high-quality goods but don’t want to or have the resources to put much effort into branding and marketing.

It also works well for stores with a significant market share and wants to make goods for other companies to make extra money.

Electronics, designer clothes, and health and beauty goods are all common examples.

Trade Agreements That Work Both Ways

A bilateral trading agreement is a deal between several people in the supply chain to trade goods and services with each other at a set price.

One partner might, for instance, offer goods from its stock in return for lower prices on goods from another partner.

These are some common examples of trade deals that work both ways:

• Cross-docking is an agreement between two or more supply chain partners to swap things without storing them.
• When a manufacturer decides to manage inventory for a partner and keep it at a certain level, this is called vendor-managed inventory (VMI).
• Joint purchasing and distribution networks: This is when many people in the supply chain work together to buy, store, and send out things.

Both manufacturers and retailers gain a lot from trading agreements that work both ways.

Cutting out intermediaries and streamlining processes helps suppliers cut costs and work more efficiently.

For retailers, they make it possible to have faster shipping, better customer service, and more affordable prices.

Why operational efficiency is essential in B2B manufacturing

In B2B manufacturing, operational speed is no longer excellent; it’s a must.

In the past few years, competition has changed a lot. This is primarily because of new digital technologies and shifting customer standards.

This change has been sped up even more by the “Amazon Effect,” which means that big companies like Amazon have raised customers’ standards for quick, easy service, smooth shopping, and excellent customer service.

This effect puts pressure on manufacturers because their business-to-business buyers now expect the same speed and focus on the customer they have to give them.

If manufacturers don’t meet these higher standards, they could lose business to rivals who can.

What B2B manufacturers can do to set themselves apart from the rest

Product, vertical, horizontal, and mixed differentiation is how B2B makers set themselves apart.

Differentiation of Products

Product difference means developing new products that give you an edge over competitors. To make a product that stands out, companies must put a lot of money into product creation and development, using the newest technologies and market research to improve their products.

In business-to-business (B2B) manufacturing, differentiating a product could also mean customizing it so that customers can make it fit their needs. But it’s essential to ensure that these unique features matter to customers and give them something extra.

Differences in height

Vertical differentiation means telling a business apart from others by the level of service it provides or the quality of the products it sells.

For example, a business-to-business (B2B) manufacturer could market itself as a premium provider by providing top-notch goods, excellent customer service, or extra services like full support or consulting after the sale.

This strategy often requires dedication to continuous improvement and a focus on the customer.

Differences in the horizontal plane

Horizontal differentiation means setting a business apart by its presence in the market and low prices.

To do this, manufacturers need to build connections with other companies in the supply chain that can help them save money or get their products to customers faster.

Digital technologies like automation, analytics, and artificial intelligence can also help manufacturers stand out by making their processes more efficient and quick to respond to customer needs.

Differentiation with a Mix

Mixed differentiation is an approach that takes parts of product differentiation, vertical differentiation, and horizontal differentiation.

It’s all about making a unique mix of product qualities, service levels, and other features that appeal to a particular group.

This could mean giving customers a high-quality product they can customize, excellent service, and a strong focus on sustainability.

Mixed differentiation can work well, but you need to know a lot about your target market and ensure that every part of your business works together.

Solutions for Manufacturing B2B Operations

Process automation, data centralization, and advanced analytics are all things that companies need to do to become more efficient as a whole. In this way, they can make more worth without spending more money or using more resources.

Management of Product Information (PIM)

Product Information Management, or PIM, is an ever-changing tool whose main job is to organize, manage, and share product data across different channels, ensuring that correct and consistent information is given.

In today’s fast-paced, multichannel business world, PIM is more than just a place to store product data. It’s a complete platform that improves the e-commerce experience for distributors and end users.

Technology that helps with B2B sales

Regarding B2B sales, which can be complicated, having the right technology to handle and streamline the sales process is essential.

Sales enablement technology is vital to increasing sales output because it gives sales reps the tools and information they need to find the right buyers, close deals faster, and make more money.

CRM

The most crucial part of sales support technology is customer relationship management (CRM) software. It stores information about customers and potential customers in one place and works with ERP systems to keep product and customer data in sync.

One of the main features of CRM systems is the ability to keep track of B2B deals and see how they move through the sales pipeline. They give sales teams helpful information about how customers act, which helps them plan well, guess what customers want, and eventually boost sales performance.

CPQ

Manufacturers who sell to business-to-business customers can benefit significantly from CPQ software.

• It makes quote-to-cash (QTC) work better. The average time for a business to make a sale is 2.1 months. By making the QTC process easier, CPQ can get more people to finish and make more money.
• It makes setups for complicated products easier. B2B production is hard to understand. Whether you need custom-designed goods or different order volumes for each buyer, CPQ can handle it.
• Backs up efforts for self-service. Customers can describe their needs with online product configurators before talking to sales.
• It makes order completion faster. CPQ solutions let you see how much inventory you have and keep it up to date, so once a deal is made, the order is handled quickly and correctly.

The DealRoom

DealRoom is a platform for sales interaction that handles the complexity of business-to-business transactions.

Because many people make decisions in B2B sales (product developers, marketing, the C-suite, and more), it is essential to keep communication and teamwork open and robust.

DealRoom makes this easier by allowing everyone to share documents, talk to each other as a team, and negotiate contracts. This keeps all the essential information and conversations in one place, where they can be easily found and kept safe.

This shortens the sales cycle, makes it easier for people to understand each other, and helps close deals.

Software for billing for B2B manufacturing

There are a lot of different factors that can affect transactions in the business-to-business manufacturing sector. These include customized product specs and quantity, as well as different shipping methods and payment terms.

Billing software must be robust and adaptable to handle this complexity. It should be able to handle various billing situations, from one-time purchases of goods to long-term agreements for services, while also ensuring that taxes are calculated correctly, income is recognized, and different financial rules are followed.

Since almost all sales are now done online, billing software must also work well with website builders and payment processors.

Because of this, buyers can buy things online, which speeds up the process and makes it safer and more accessible at the same time.

Platforms for Revenue Operations

DevOps teams ensure that sales, marketing, and customer success efforts are all working together to increase income in the most efficient way possible. These platforms give them the tools they need to do that.

Regarding marketing, business-to-business (B2B) manufacturers usually deal with long sales processes and many points of contact with customers.

Platforms for revenue operations help organize marketing efforts so that the right messages get to the suitable leads at the right time. They give marketers a complete picture of the customer journey, which helps them make personalized, exciting experiences for leads that turn them into buyers.

From a sales point of view, the goal is to get the most out of each person while keeping costs low and getting as many leads and sales as possible.

A DevOps tool gives you valuable data and insights that help you improve your sales processes, train your sales reps better, and get more customers to buy.

When making products, a RevOps tool works with ERP and B2B e-commerce systems to give important information about how production is going and how healthy the supply chain is. These insights can help revenue operations teams increase business margins, which means they can make more money without selling more.