Article by Jaco Maritz, Chief Executive Officer, SYSPRO
Ever-evolving customer demands and increasingly challenging market conditions have kept many manufacturers and distributors on their toes. Navigating this landscape requires business leaders to step back and adjust where necessary to steer their organisation towards success.
The manufacturing sector is working through several challenges, including economic issues, workforce displacement as well as digital transformation. Now is the time to refocus on activities that will balance their risks with projected rewards. Decision-makers looking to channel this growth mindset should consider adopting these recalibration strategies to drive growth and maintain relevance
1: Innovate to achieve cost-savings
One of the top economic concerns impacting business productivity and profitability is rising inflation, driven by several factors, including ongoing geopolitical volatility. Many manufacturing and distribution industries are feeling the burn, with costs for materials, goods and shipping 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 as these costs are expected to rise.
However, as analyst 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 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 Enterprise Resource Planning (ERP) software is making this possible. Something as simple as automating time-intensive admin processes using ERP could reduce labour costs.
Organisations with ERP in place 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 it provides.
10 years ago, AF Gason needed an enterprise system that could be used across the entire length of its supply chain to ensure one source of the truth. The company designs and manufactures world-class broadacre farm machinery and industrial and wood-heating products. Since 2011, AF Gason has used SYSPRO as its enterprise system across its supply chain. They have had 100 per cent improvement in their results over the past couple of years, and a great deal is related to using the information from SYSPRO to give them better decision-making capability in the business.
2: Embrace smart technology
Intelligence around customer-buying patterns, market-trends forecasting, and effective risk-management planning. These are just some benefits a business can reap from an accurate, real-time data source. This source enables an organisation to absorb macroeconomic 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 customers, to inform decision-making around functions like marketing and sales.
3: Take advantage of shifting employment trends
Remote and hybrid working are here to stay, but these employment trends should not dampen business continuity or productivity. Business leaders and their employees need to be productive no matter where they’re working with access to real-time data to guide informed decision-making.
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 many 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.
Recalibration for success
Futureproofing is the goal of any savvy business. To realise this goal, business decision-makers must take a strategic approach. 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 payouts 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. To sum up, recalibration for success must be driven by responsible investments in technology. This is how you remain competitive and relevant in a world of change.
