There is no doubt that the last six months have forced manufacturing and distribution companies to reassess almost every aspect of their business. So many business processes and strategies – from levels of staffing, office space, use of technology, and sales and distribution channels – have potentially had to shift drastically to keep up with the ever-changing times. Yet so much is still uncertain. Will investments made now pay off in 5 years? Are things going to stay this way or will there be some hybrid model of the past mixed with the current (and future) state? Will consumer buying revert to 2019 levels?
A lot of these questions are hard to answer. Many businesses continue to thrive, while others are within the last weeks of their Paycheck Protection Program (PPP) funding and hoping that the next round of funding is right around the corner. For the businesses that are thriving, what is it that sets them apart?
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Citrin Cooperman’s Manufacturing and Distribution Practice recently launched our inaugural industry survey. The survey report provides a pulse of the industry – provided by 200 executive and senior-level management personnel at manufacturing and distribution companies – to measure the current health of their business amid the pandemic and their future priorities or challenges. Some of the findings from this survey, include:
- 47% of manufacturing and distribution companies report some/modest to significant growth amid COVID-19.
- The highest rate of success and growth has come from manufacturing and distribution companies that have technology/e-commerce platforms.
- 68% of manufacturing and distribution companies with a technology/e-commerce platform say that online sales have grown between 11-50% over the last 12 months.
These report findings tell an alarming story into the secret of what is keeping some manufacturing and distribution companies afloat during this time. Those businesses that were unprepared and did not have the technology in place or did not have the foresight to invest in newer technology are quickly losing traction. Aside from just an e-commerce platform, the use of artificial intelligence, data analytics, and business intelligence are now propelling manufacturing and distribution businesses that made the early investment forward. Those that did take those steps prior to COVID-19 are now thankful, as it appears to be paying dividends in this new environment.
Additionally, the survey reports that the biggest keys to future growth strategies with manufacturing and distribution companies are technology at 47% and e-commerce at 42%. While smaller and medium sized businesses may not be able to afford the latest and greatest technology on the market, this survey shows that initial conversations should be approached with your company leadership and trusted business advisors. If owners find the right business consultant who can walk through their business with them and understand the pain points and where they see the business in the future, the consultant may be able to bring small suggestions without a big price tag that will pay for themselves in relatively short order.
During your discussions with your company leadership and trusted business advisors – bankers, CPA’s, and business consultants – here are some questions you should approach:
- Is it time to speed up the investment in technology?
- Should I re-evaluate the use of office space in this remote environment? Has working from home truly worked? Are people as efficient and is collaboration still occurring?
- Have you explored process automation to cut out excess tasks to make your processes more efficient?
- Do you have an idea of what technology your competitors are using to be successful?
- What are the potential shifts in sales through e-commerce platforms?
You are encouraged to contact your network of professionals and trusted business advisors to evaluate the best path forward for your businesses to withstand the current environment and future challenges.
Citrin Cooperman’s Manufacturing and Distribution Practice recently launched our inaugural industry survey. The survey provides a pulse of the industry nationally in the moment – amid the COVID-19 pandemic – to measure the current health of their business and to take stock of future priorities, concerns, and challenges. For more on the current state of the industry, check out our Manufacturing and Distribution Pulse Survey Report.
Citrin Cooperman is a nationally recognized, full-service CPA firm, currently ranked in the U.S. top 25. The firm offers assurance, tax, and business advisory services to help clients remain competitive in today’s market.
Jennifer Hogencamp is a Partner in Citrin Cooperman’s Providence office, with almost 20 years of public accounting experience. Jen provides audit services to a wide array of clients including those in the education, hospitality, technology, and manufacturing and distribution industries.
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