Sector looks to up the tech game in the face of new realities.
Alex Witcpalek, industrial market specialist and director of sales for North America at sales-i, discusses the future of the industrial sector post-COVID.
Delegates preparing for this month’s STAFDA virtual conference will be reflecting on a whirlwind year. The US industrial sector has been hit hard by the COVID-19 crisis, with many manufacturing and production lines forced to significantly reduce output or cease altogether once the pandemic hit. Since then, a combination of fractured supply chains, muted demand, workforce challenges, and liquidity issues have all conspired to hit players across the market.
As with other sectors, the many uncertainties associated with the future course of the COVID crisis continue to act as a drag on confidence, but thankfully, there are bright spots on the horizon. Latest figures from the Federal Reserve show U.S. factory production increased for a fourth straight month in August, for example, and a separate report from the Institute for Supply Management put new manufacturing orders at their highest level for over 16 years as of this September.
There remain worries, however, that the recovery could be strained and uneven as a result of a number of factors, such as reduced government spending on infrastructure projects and seasonal demand variations, suggesting business investment in tools and equipment could remain depressed through to the end of the year and into 2021.
New marketplace dynamics
Of the many changes we’ve seen to commercial life since the crisis began, one of the most dramatic has been the acceleration of e-commerce sales. Indeed, figures show total online spending across the US in May hit some $82.5 billion, up 77% compared to the same time last year. This trend has, of course, been evident in the industrial sector, too, as equipment providers and manufacturers have looked to maximize their sales channels wherever possible to preserve cash flow, ring-fence business, and protect jobs.
Naturally, this has brought extra challenges for some industrial product distributors who have effectively found themselves cut out of the sales process as manufacturers see the opportunity to actively forge direct relationships with end users. In a climate where chasing new clients has been made significantly more difficult, this scenario is increasingly forcing product distributors to reassess the value of their existing customer relationships and work harder to nurture them, especially in highly price-driven sectors.
A step change in technology adoption
A further profound change we’ve seen as the industrial sector adapts to the practicalities of a new era has been an increased willingness to embrace technology to do better business. Of course, technology has long been a feature in more advanced industrial producers and manufacturers, but at the smaller end of the scale, many players simply haven’t had the bandwidth to take a holistic view of how technology can help them operate more efficiently and productively. The pause in activity for some operators has given them the perfect opportunity to reassess their operating systems and procedures, and we are increasingly seeing the most forward-thinking players prepared to overhaul their back office and ERP systems to make them fit for the challenges of the post-Covid trading environment.
Any organization flourishes or falters on the strength of its sales operation, but now more than ever in today’s highly uncertain economic environment, where muted and unpredictable product demand and supply is the order of the day. That means increased pressure on sales teams to do more with fewer resources and embrace new ways of working. Sales enablement software is a hugely compelling solution for vendors and distributors across the industrial field as it enables sales teams to better use customer data to create more selling opportunities. Using customer purchase information to make data-driven decisions will help foster better customer relationships as well as help organizations pivot when trying to keep up with changing market dynamics. Enabling salespeople to have data-driven conversations every time allows them to identify and capitalize on both quick wins and nurture the larger, slow-burn opportunities.
On the horizon…
As with the vast majority of global businesses right now, for operators across the spectrum of the US industry, the only certainty on the horizon is unfortunately the prospect of further uncertainty ahead. Formulating a sales strategy to cater to such a period might sometimes seem daunting – especially for smaller operators who are typically time and resource-poor. But as we have seen already, there is much resilience in the US industry sector.
However the economy fares in the coming months, ultimately, those players who are prepared to continue to embrace technology and different ways of working to become more operationally efficient and better understand changing customer requirements will be best placed to ride out the worst excesses of the storm and take advantage of growth opportunities over the longer term.