Some economists predict that manufacturing’s resurgence may start to slow in 2019. However, there is a way to counter this forecast. Technology provides a layer of insulation against short-term shifts - giving modern companies that are willing to “stay the course” a chance to extend benefits of digitalization and sustain growth momentum. Continuing to invest in technology and deploy innovative concepts will help companies withstand natural dips in economic cycles, leverage new functionality, and stay on the forefront of evolving trends.
Is There Any Truth Behind These Concerns?
Even students of economics 101 know that markets are inherently cyclical - with natural ups and downs and phases of inflation and recession. They also know that a wide range of driving factors can influence a market reaction, sending the stock market into a spiral or fueling spurges in consumer spending.
The recent escalation of trade and tariff issues, from the United States-Mexico-Canada Agreement (USMCA) to the US-China tariff stand-off, are among the forces rocking the proverbial boat. A divided Congress, speculation about lending rates, shortages of skilled talent, the expansion of subscription-based buying, and millennials bypassing traditional purchases of homes and cars, are among the other factors adding up to question marks in the outcome column.
While growth hovered around 3 percent for most of 2018, late in the year, the Federal Open Market Committee speculated growth would dip to 2.3 percent in 2019. Likewise, The Institute for Supply Management (ISM) Report on Business ended 2018 on an alarming note, throwing some into a state of worry. Additionally, ISM’s Purchasing Managers’ Index (PMI) fell from November’s 59.3 percent to 54.1 percent, which is the lowest since November 2016. Lastly, the stock market and Wall Street Watchers reacted to the news with inflammatory headlines like “Growth Has Stopped”.
Six Add-On Technologies Which Can Help Extend Momentum:
Enterprise Asset Management (EAM). Whenever a cyclical downturn is on the horizon, the common knee-jerk response is to postpone investments in new equipment. Turning to EAM solutions to help manage preventive maintenance and monitor performance will help to protect and prolong the value of machinery and equipment. Adding sensors and Internet of Things (IoT) technology to monitor for early warning signs of failure is also a great investment for a company that wants to avoid facing a major equipment failure.
Customer Relationship Management (CRM). Focusing on customer engagement is a smart strategy when signs of new business start to dip. Purchases from the existing customer base can help sustain cashflow. Consider new data-centric offerings, value-add services, or ways to encourage cross-sell or up-sell purchases.
Predictive Analytics. Advanced Business Intelligence (BI) solutions are particularly helpful when the organization must focus on uncovering new opportunities and spotting trends early. BI solutions with built-in Artificial Intelligence (AI) use data science and algorithms to project likely outcomes and find complex patterns which might be otherwise overlooked by managers. This level of intelligence will help companies feel confident in their decision-making as they pursue new markets and analyze likely profitability of accounts.
Field Service Management. If sales of new products dip, opportunities to provide field service on previous purchases may go up. Manufacturers of capital-intensive machinery, industrial equipment, or complex consumer goods can turn to field service software to help them optimize the service center, turning it into a profit center. By increasing efficiency, boosting first-call resolution rates, speeding billing, improving scheduling, and supporting well-informed service technicians, the service center can become an important differentiator and source of revenue. It can also build customer loyalty which will be beneficial long into the future.
Product Lifecycle Management (PLM). In case of an economic downturn, introducing new products is one of the surest ways to boost lackluster sales and energize a stagnant target market. A modern PLM solution will help manage the entire process, from engineering and design, to testing and product launch. New product introductions can help with pursuing new niche opportunities and appeal to demographics previously untapped or underserved. Such initiatives will help invigorate sales, without overtaxing internal teams.
Configure, Price, Quote (CPQ). In today’s age of highly customized products, manufacturers are often faced with the need to produce a large volume of quotes for configured products. Speed is often essential for meeting customer demand—whether customers are consumers or business-to-business buyers. This can be a tremendous time-drain for engineering and become a roadblock for sales. Customized specs, when hastily put together, can also be prone to inaccuracies, frequent change orders, and customer rejections. CPQ solutions help manage hub-and-spoke design, stepping users through options, creating drawings for customers to approve and ensuring specifications are within approved engineering mandates.
More Tactics to Help Weather Surges and Contractions in the Economy
Cloud Deployment. Keep in mind that cloud deployment, with its subscription business model, provides an opportunity for manufacturers to invest in technology without huge capital investments upfront. The monthly payment may be more comfortable for companies that are temporarily cash-strapped but want to stay up-to-date with technology.
Phased Approach. Breaking down large projects into phases is another smart tactic to deploy when stretching budgets. By focusing on low-hanging fruit in phase-one, early wins can create savings that will fund phase two. This will also help create team buy-in and provide a chance to prove concepts and test new technology.
ROI Measurements. No matter what type of project or solution added to the arsenal, incorporate roll-out plans – including definitions of desired results and tactics for measuring results. It is important to set concrete goals and monitor progress. Also, build in milestones and a review processes so executives can determine if the project should be adjusted or terminated. Lastly, strive to achieve a Return on Investment (ROI) in a timely manner.
Manufacturers cannot be certain of the economic turns that lie ahead. But, they can be prepared. Modern software solutions help organizations finetune processes so they can remain profitable – even if new sales opportunities slide. Focusing on existing customers and enhancing internal systems can help maintain cashflow. The most critical piece of advice? Stay alert, stay agile and stay committed to continuing your growth trajectory.
Nick Castellina is Director of Industry & Solution Strategy at Infor.