The last two years have been unprecedented turmoil for society and the U.S. economy. Supply chain issues, labor shortages, and changes in customer behavior plagued the manufacturing sector. Moreover, most CEOs ask themselves what changes they need to make with interest rate increases and potential economic “whiplash” events that could create significant ripples in the broader economy.
Sadly enough, we observe CEOs often not asking the right questions. That’s problematic since - Dixit Socrates - “understanding a question is half an answer,” and one can (therefore) not proceed with solving any problem if they don't ask the right questions first. So let’s look at the critical questions that manufacturing company executives will need to ask if they want to create the best opportunities for growth for their company in H2 2022.
The CEO should know the company’s best customers and be able to model the most promising prospects. For example, manufacturing companies must define what qualifies as a top customer and identify them. Before the pandemic, it may have been evident before the pandemic, but in the current environment, that’s not necessarily so. For example, the CEO should know how often a previously consistent customer becomes less stable in their procurement.
Executives need to ask some hard questions. First, a CEO should know why top customers have changed behaviors. Second, a CEO must confirm the impact of changing customer behavior on company profit margins. Third, CEOs must decide whether repricing the product portfolio is necessary. Finally, since some customers will be challenging to serve, CEOs should know how to address some customers.
As customer needs and behaviors change, it's essential to continually monitor which customers now represent growth opportunities vs. which now need maintenance levels of support and reallocate resources accordingly. These principles will help prepare any business for the year's second half.
CEOs should know what services or products the company can offer to be more than just a vendor to customers. Moreover, the CEO and marketing team should understand customers and prospects' desired services or products. In a dynamic market environment, it’s critical for the CEO to be current with the Voice of the Customer to sense changing needs and wants. Finally, the company must determine which services resonate most with the customer to support the brand.
The CEO and operations team should modify the supply chain strategy to meet today's challenges. For example, the company’s delivery timeframe might compare unfavorably with competitors. Adding more vendors can mitigate the obstacles created by the previously mentioned economic bottlenecks to resolve some supply chain challenges and build more resiliency. Furthermore, when the competition struggles to provide products and services promptly, this is an opportunity to gain market share.
With the changing macroeconomic environment, growth opportunities are different now from pre-pandemic ones. Since that’s the case, executives should explore whether or not the business is capable of leveraging new growth opportunities. To start, a CEO must identify how key competitors are faring and what vulnerabilities they can leverage.
Business executives can exploit growth opportunities by realizing the opportunities to make the customer better off. Executives should explore how the company and product offerings might become more valuable to customers. First, the company must identify and help its top customers become resilient. Once the company assists them, the customers will benefit, and the business can increase its sales revenue.
The social and economic environments and markets have changed and continue to change. As a result, yesterday's strategies are often ineffective in current conditions. Since supply chain, labor shortages, and changes in customer behavior continue to challenge the manufacturing industry, CEOs can best prepare for the environment in the year's second half of the year by identifying the top customers, their changing behavior, and their actual needs to reaffirm and improve the services associated with the company’s products. Any company can be ready for the latter half of the year by converting supply chain obstacles into opportunities, but only by asking and answering the right questions.
Dennis Bailen and Bob Sherlock are Partners and CMOs with Chief Outsiders, the nation’s leading fractional CMO firm focused on helping companies build their engines for revenue growth.
Topics: Manufacturing, Manufacturing & Distribution, IndustrialFri, Jul 22, 2022