The current instability in the economy, especially in the oil and gas marketplace, presents an opportunity for fluid power, hose, and automation industries to improve their competitive advantage by exploring technology options and other organizational issues that may be holding them back from achieving best practice. Here’s what your industrial distribution business should consider during an economic downturn to set your business up for future success.
Investing in an Enhanced ERP System and Technologies
The strategy of investing in technology and innovation during a declining, flat, slow or no growth period is not a new tactic and has proven successful in placing companies ahead of the competition now and when the market rebounds.
An enhanced ERP system, like the TrulinX Software System, is one of those technology investments that will allow your company to operate more successfully with less overhead, and make better use of your current resources. A business management system geared towards your distribution industry can also:
- simplify and produce cost savings throughout your operations including, but not limited to, inventory, accounts receivable, customer service and order processing, and purchasing.
- allow you to lower overhead and focus on the revenue producing parts of your business, such as bolstering sales and solidifying customer relationships.
- better manage those big production jobs while comparing estimated vs. actual to ensure you are optimizing the costs and margins on those jobs.
Key Survival Tips for Success
When the top line looks shaky and the bottom line worse, the temptation is to go after discretionary spending. Fine - but do not consider technology, product development, and innovation optional. Sacrificing your future for a slightly more comfortable present is not worth it. If you keep building, you can come back strong.
It’s counterintuitive, but true, that when the economy slows down, the pace of decision-making has to speed up, because you can’t put off the tough choices or you will pay the price once the economy picks back up. The companies that are readiest to act and communicate effectively with customers are primed to shoot ahead of the business cycle.
Evaluate your customers
In good times, companies manage the P&L; in bad times, cash and receivables matter more. Therefore, you need to identify your higher-risk, cash-poor customers and work on building a good relations, work out a way to keep going - for example, by helping finance purchases or supplying smaller quantities.
Being on the downside of the business cycle is not much fun. That said, a slump can also be an opportunity if you use the sense of urgency to improve strategy, management, and discipline. In that sense, happy and unhappy times are alike: The companies that take charge and outcompete will win.
Tribute, Inc. is a provider of ERP business management software for industrial distributors who provide value-add services.
TrulinX software can help businesses streamline operations, improve your processes and profit margins – an essential need for businesses during an economic downturn. For information on our software, contact us today.