Growth Strategies for Manufacturers in the Post-COVID Economy
For manufacturing companies struggling to survive and thrive in the post-COVID economy, there are a number of tried-and-true approaches to attracting new customers, optimizing resources, and mitigating risk. They all require some degree of organizational commitment and resources, but there’s a good track record of success for companies willing to make the commitment. For most organizations, doing nothing might be the highest-risk option right now.
COVID has dramatically altered the demand landscape across virtually every industry. Early in the crisis, demand was high for nonperishable foods, hand sanitizer, and of course, toilet paper. Groceries were up, while bulk-packaged foods for restaurants and institutions were down. Although much of that volatility has settled, businesses in many industries are seeing a need to adapt to longer-term changes in demand.
Some of those demand shifts will last years. Airlines and automotive companies will take at least three to five years to recover, according to most experts. Suppliers to those industries will need to diversify and grow their customer base in order to survive and prosper in the coming decade.
Other industries have benefited from shifting consumer preferences.Manufacturers of pools, ATVs, and laptop computers are doing very well in the post-COVID economy, – at least for now.
If we have learned anything in 2020, though, it is that we should expect the unexpected. For every business in every industry, agility is the new mandate.
We have seen some remarkable success stories emerge over the last year. One of Synergy Resources’ customers, a Maine-based manufacturer of retail fixtures, quickly shifted production and began making acrylic partitions that provide a safety barrier between cashiers or counter staff and their customers. Agility has been very profitable for them. It has been a pleasure to see this customer do so well amidst all the turmoil of 2020.
For most, however, adjusting to the post-COVID world has been more challenging. The good news is that we have seen some businesses successfully grow their revenue and increase efficiency. With a clear vision and the right tools, most organizations can position themselves to survive and prosper in the years ahead.
Let’s look at some of the strategies that successful companies have used.
1. CRM Drives New Revenue
Perhaps more than any other industry, manufacturers understand the value of process. By defining a standardized process, then streamlining and improving it; companies can produce consistent, high quality results at optimal efficiency.
The same principle applies to sales and customer service. Unfortunately, most companies are still stuck in a paradigm where every salesperson has their own way of tracking leads and pipeline. The results get reported up to the VP of Sales on a periodic basis, where they are shoehorned into a standard reporting format. To make matters worse, the marketing department may have limited visibility to results, which means they have no way of measuring the ultimate outcome of lead-generation efforts. CRM solves those problems with a well-defined process, clear metrics, and accountability.
CRM helps drive revenue in other ways as well. The ability to turn around a sales quote quickly, for example, says a lot about the efficiency and responsiveness of your organization. If you’re looking to convert new customers, fast response time creates a positive first impression for prospects.
Effective sales and service management require a 360° view of the customer. That, in turn, provides better visibility to future revenue, as well as increased customer satisfaction, which leads to increased sales. A disciplined process that is focused on accountability and metrics will inevitably produce better outcomes.
2. Use Business Intelligence to Your Advantage
In periods of high volatility, visibility to the road ahead is more important than ever. Business leaders should be forecasting early and often. The sooner you can identify shifts in demand, the better prepared you will be to react.
Effective use of business intelligence goes far beyond forecasting, though. Successful companies clearly define their target metrics and follow those numbers obsessively. When uncertainty is high, leaders need to monitor the situation closely and be prepared to respond quickly. Good business intelligence tools (and practices) help you achieve that.
Artificial intelligence (AI) and machine learning (ML) have reached a level of maturity that will spur broader adoption over the next 2 to 5 years. That will increase the value that manufacturing companies can extract from the growing volume of data that is available to them.
3. Workflow & Automation Drive Efficiency
Workflow automation has received a lot of attention since the beginning of the COVID crisis. As significant portions of the workforce shifted to remote work, many routine business processes needed to be fine-tuned to suit the new paradigm. This prompted a lot of business leaders to take a fresh look at those processes and to seek out ways to make them more accurate and efficient.
Many of the routine time-consuming tasks in running a business seem to follow the Pareto principle; just 20% of tasks require significant time and attention. The other 80% can be automated.
By creating workflows that automatically route documents and assign tasks based on predefined business rules, a great deal of tedious work can be eliminated. Instead of managing approvals by e-mail, for example; ERP software can manage an approval workflow easily and efficiently. A/P automation tools provide automated 3-way matching, eliminating a significant amount of manual effort. Management-by-exception saves time by identifying outliers and flagging them for follow-up.
On a larger scale, supplier portals provide a platform for automated collaboration, improved on-time delivery, and de-risk your supply chain. Tools like MachineMetrics allow machines on the shop floor to integrate to ERP enabling the ability to analyze more accurate and real-time data alongside other production data. Online self-service configurators and/or ecommerce sites enable customers and prospects to design their product and even get an automated quote with the effect of increased revenue.
4. Optimize Capacity through Collaboration
With dramatic shifts in demand, many manufacturers suddenly found themselves with excess capacity. At the same time, others have been scrambling to meet high demand. Both parties can potentially benefit from collaboration.
Early in the COVID crisis, several consortia emerged to manufacture respirators. Such efforts need not be limited to medical capabilities, however. Mutually beneficial collaboration may be a saving grace for companies on both sides of the demand-curve.
Innovative collaboration tools are opening up other kinds of opportunities for manufacturers as well. Tools like SourceDay are facilitating collaboration among suppliers and vendors throughout the supply chain, enabling faster responsiveness to ever-changing conditions.
5. Delivery Lead Time: the #1 Metric for Customers
The so-called Amazon affect has shifted customer expectations, not only in consumer markets, but also in the business world. In today’s economy, delivery lead time is the number one factor that drives vendor selection. As uncertainty in the supply chain has increased, there has been even more focus on this metric. Offshore manufacturing may be cheap, but it is slow, and the quality tends to be lower.
Production based in North America tends to be much faster, with higher quality. Buyers have recognized those advantages and are shifting back to domestic suppliers. Companies that can capitalize on that trend will be well positioned to grow in the coming years.
That will require a continuous improvement (CI) process, – a strategic intent to improve forecasting, accelerate the quoting process, improve efficiencies, and shorten delivery times. A good CI program requires management commitment, with a cross-functional CI team that sets a vision for the organization and meets at least once per quarter to review progress and adjust course as needed.
In times of crisis, leadership vision can be the difference between survival and bankruptcy. The strategies outlined here have proven successful for companies that have deployed them. At Synergy Resources, we work with manufacturing companies every day, helping them to align their corporate vision with the best technology on the market.