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2020 brought mayhem. 2021 continued the supply chain chaos. 2022 hasn’t yet concluded, but looking into the next year (or several) is murky. It’s hard to plan for the future, but the distribution industry has weathered a near-complete shutdown, labor shortages, dwindling supply, up-and-down customer expectations and demands—the list goes on.
In June of 2022, The Wall Street Journal cited a 44 percent chance of a recession looming within the next year. Although experts seem to agree that a recession is on the horizon, no one knows exactly when it will hit.
Unfortunately, recessions build slowly. It’s hard to pinpoint an exact “start date.” Economists and other analysts can only make sweeping generalizations, such as within 12 months or sometime in 2023.
Recessions aren’t officially declared or acknowledged until businesses and consumers are struggling through it, which means that distributors need to be prepared well in advance. The way to do that: Don’t be afraid of making investments in technology.
When looking at a potential recession, business priorities shift to survival, recovery and disruption preparation. Amid economic stress, continued pressure from competitors and the uncertainty of what lies ahead, your instinct may be to withdraw and tighten purse strings to protect your business.If you’re not sure which move to make and you’re concerned you’re at risk, Enavate can help you evaluate your current challenges and systems. Learn how disruption-proof your ERP is by taking our quick quiz. Get answers on how equipped your business is to handle disruptions, risk and growth.
But one of the most effective solutions for businesses to weather current challenges and prepare for future disruption is to invest in technology. When you invest strategically in the right technology and service offerings, you’re more likely to come out ahead after the market bounces back.
McKinsey & Company investigated the last major U.S. recession and found that distributors who survived the economic downturn and came out ahead of their competitors were the ones that continued to invest in digital. One of the examples in their research ended up becoming a digital leader in their industry as a result of their strategic digital investments during a tough time.
Before 2020, many businesses hadn’t prioritized remote capabilities as part of their preparation for a potential downturn. They didn’t see the need until it became a scramble.
Previously, technology investments to prepare for and manage through an economic downturn or recession may have included:
Recessions will demand distributors to continue to invest in remote capabilities and expand the importance of digital.
Now, businesses must:
From strengthening customer relationships and building a prospective client roster to keeping a constant and vigilant birds-eye-view on supplies and production, technology exists for better management of every aspect of distribution. Investing in these tools—investing in the future of your business—is one of the strongest ways to survive and thrive during an economic downturn.
Rather than cut staff or services in fear of an upcoming recession, turn your attention toward internal processes.
Investing in technology can keep your sales team productive while also creating opportunities to engage with new and existing customers. These tools can also be used as launching pads for experimenting with new sales techniques.
For example, Microsoft Relationship Sales combines the power of Microsoft Dynamics 365 for Sales with LinkedIn Sales Navigator. This duo provides critical data on 500 million professionals, allowing salespeople to spend more time engaged in activities that could lead to increased sales—rather than wasting time tracking down prospects and qualifying leads.
Investing in your sales team during a recession is a smart way to retain your best people and limit turnover. For example, invest in tools that give your salespeople, who enjoy interacting with customers in person, the ability and flexibility to work remotely when they need to.
Consider revisiting goals and processes for both internal and field sales reps. Learn what challenges these reps face and how they might take more initiative in their roles. Provide the technology that allows them to take greater ownership of data through productivity apps, Enterprise Resource Planning (ERP) or other Cloud-based tools.
According to an MDM article, “Too many firms reduce their marketing expenditures during a recession only to find that when the market rebounds, they have lost contact with key customers.”
Even if you feel stretched, don’t lose focus on your customers. Continue to stay engaged and interactive.
Old, inefficient technology can put your organization at risk of not being able to continue during a significant disruption. If your ERP system is on-premises and you only operate a few applications in the Cloud, unexpected events could easily halt operations.
In addition, if you don’t have the means to check the status of every aspect of your supply chain—with automatic updates—then you’re already behind.
Severe-risk companies have:
At a limited-risk company:
If your organization doesn’t operate primarily in the Cloud, now is the time to consider migrating.
Many companies are hesitant to adopt newer technologies, whether it’s eCommerce or an ERP platform. But to conquer change and come out ahead after a downturn or recession, instead of scrambling to catch up, action must be taken.
Research potential tax advantages, too. The IRS Section 179 is a deduction meant to help small and midsized companies make valuable, business-building purchases, which means you can invest in a SaaS ERP solution.
You have choices on what technology path addresses your needs. Enavate can help you prioritize risks and requirements, and help you take a phased, methodical approach to get you where you need to be. Talk to an Enavate expert today.