Ever-evolving customer demands, and increasingly challenging market conditions have kept many manufacturers and distributors on their toes, writes Jaco Maritz, Chief Executive Officer, SYSPRO. Navigating this landscape requires business leaders to take a step back, reassess the bigger picture with their company purpose in mind, and adjust where necessary to steer their organisation towards success. The manufacturing and distribution sector is working through a re-tooling from economic factors and workforce displacement to a new era of digital technologies. Now is the time to refocus on activities that will balance your risks with your projected rewards. Decision-makers looking to channel this growth mindset should consider adopting these recalibration tactics to drive growth and maintain relevance.
Tactic 1: Innovating with cost-saving strategies
One of the top economic concerns impacting business productivity and profitability is rising inflation, driven by several factors, including the ongoing geopolitical volatility. Many manufacturing and distribution industries are feeling the burn, with costs for materials, goods, shipping and more soaring, impacting their operating costs, output levels and, ultimately, their bottom line.
These industries have had to innovate with cost-savvy strategies to remain competitive and, indeed, to stay afloat. For some, this has meant leveraging technology to automate certain labour- and time-intensive tasks to lessen the number of hours and associated costs spent on task completion. Other businesses have been buying inventory in bulk with the view that these costs will continue to rise.
However, as consultancy firm CFO Selections warns, this may be a risky move – in the short-term, it means restricted cash flow. These funds could be channelled elsewhere to better drive cost efficiencies, or they might be needed to respond to unforeseen costs due to further economic or climate crises. Plus, adds the firm, there’s the more obvious risk associated with an excess in the scenario where purchased inventory isn’t used quickly enough – think “spoilage, deterioration, damage, theft, or obsolescence”.
I believe that business leaders opting for automation as a driver of cost efficiency are placing a safer bet, especially because this means they’re building business resilience to economic shocks in the long-term. Technology like ERP software is making this possible. For starters, something as simple as automating time-draining admin processes using ERP could reduce labour costs, for example. Furthermore, organisations are better equipped to streamline how they work, thanks to real-time, data-driven insights into critical business processes through the consolidated, end-to-end overview an ERP platform provides.
Tactic 2: Embracing smart technology
Intelligence around customer-buying patterns, market-trends forecasting, and effective risk-management planning. These are just some of the benefits a business can reap from an accurate, real-time source of data. This source enables an organisation to better absorb macro-economic shocks brought about by changes like a health pandemic or war, and localised operational shocks, like equipment failures, in a proactive manner that boosts agility and therefore productivity and cost efficiency, too.
The key to harnessing this agility lies in data extraction and management, which is where smart technology comes in. Chatbots, rooted in AI technology, are a great way to automate intelligent data sourcing. A feature of ERP, AI-based tools can retrieve business-relevant insights from their environments, such as through interactions with your customers, to inform decision-making around functions like marketing, sales and more.
Beyond this, chatbots can free-up crucial human resources to answer customer queries and analyse customer interactions to predict future needs for a better client experience. They can also assist internal business users on time-intensive tasks like stock lookups or ordering status, creating efficiencies that ultimately help improve productivity and revenue.
Tactic 3: Taking advantage of shifting employment trends
Remote and hybrid working are here to stay, but these employment trends needn’t dampen business continuity or productivity. In fact, I believe it’s quite the opposite. It’s clear that business leaders and their employees need to be productive no matter where they’re working from (on or off business premises), with access to real-time data to guide informed decision making. For example, in a scenario where a business is engaging with a customer off-site, having instant access to up-to-the-minute sales and service information to address concerns or confidently respond to queries is crucial to maintaining that client relationship.
Unsurprisingly, digital transformation is how businesses are taking advantage of the on-the-go nature of today’s working environment. Manufacturers and distributors who have digitalised operations with mobile ERP technology have boosted business agility by empowering staff.
Their teams can securely access and control a multitude of processes in real time – planning, forecasting, budgeting, targeting, scheduling, accounts, purchase orders, inventory, sales, workflow, asset management, reporting and analytics – right from their smartphone, anytime and anywhere. Investments like this are helping give these businesses a competitive edge that sets them apart.
Tactic 4: Prioritising vulnerability management as a cybersecurity measure
Of course, business downtime isn’t only caused by factory equipment failure. With more industries digitizing operations to keep up with demand, the threat of cyberattacks is a rapidly growing one. Without proper cybersecurity measures and regular reviews of security vulnerabilities (which can change quickly as hackers find new ways to unleash their attacks), these companies could become targets. This not only leads to business downtime but could also result in a loss of protected data and customer loyalty, reputational damage and more.
Manufacturers in particular have serious cause for concern. The recently published IBM threat intelligence report revealed that this sector overtook financial services as the most targeted by cybercriminals in 2021. The report added that nearly half of all cyberattacks on manufacturers were the result of security vulnerabilities that “hadn’t yet or couldn’t be patched”, which, the report continues, highlights “the need for organisations to prioritise vulnerability management”.
Keeping this advice in mind, manufacturers would be wise to earmark part of their budget to secure vulnerability management (VM) applications from a reputable cybersecurity provider. VMs scan the business’s IT assets to flag any weaknesses requiring immediate security interventions. It’s an upfront cost that will deliver on its investment in the long-term by reducing the (potentially financially crippling) risk of cyberattacks.
Futureproofing is the goal of any savvy business. To realise this goal, business decision-makers must take a strategic approach, which this article helps to shape. Recalibrating requires innovative cost-saving that doesn’t come at the expense of quality service delivery.
Cost reductions, in turn, can be achieved through short-term investments in smart technology that deliver big pay-outs in the long-term. This smart technology automates business-critical processes to free-up valuable human resources who can channel their insights into other revenue-generating activities. This technology also guides informed decision-making through predictive modelling, ensuring a business is prepared to tackle potential risks.
Lastly, speaking of risks, business leaders must balance progress against vulnerability. That’s why I strongly suggest you examine your cybersecurity risk to ensure the benefit that technology has unleashed is not outweighed by the financial fallout of a cyberattack. To sum up, your recalibration for success must be driven by responsible investments in technology. This is how you remain competitive and relevant in a world defined by change.