While economic uncertainty is never a desirable situation, it’s a fact that some of the world’s greatest businesses have started during a downturn or recession. Indeed, of the 100 companies listed on this year’s Forbes America’s Most Promising list, around a third were forged in the doom and gloom years of the global financial crisis.
How did these companies achieve extraordinary growth when others were in freefall? In this article we'll take a look how businesses can overcome difficult economic conditions by better planning and the deployment of agile technology.
While the wider economy struggles with uncertainty, the manufacturing sector in particular has stagnated. Indeed, last quarter it was reported that UK manufacturing has actually fallen back into recession for the third time in eight years. The woes of factories show no sign of abating after enduring 12 months of falling output.
A good proportion of this can be attributed to the difficult world economy with rising costs combining with reduced demand, the ongoing effects of the cutback in oil and gas investment and the steel crisis. On top of this, the UK vote to leave the EU raises long term concerns about growth of the global economy.
Economic cycles are a reality but the challenges and economic pressures on the manufacturing sector are distinctive to this part of the economy. This period of downturn is, however, providing opportunities for companies to emerge on top.
There are big changes happening in manufacturing through digital transformation. This fourth industrial revolution, or ’Industry 4.0’ as it is commonly referred to, is explained as a way of increasing competitiveness through the convergence of the manufacturing process with technological and innovative applications and processes resulting in a merging of the virtual and physical worlds.
The problem is that manufacturing companies have traditionally been slow to react to the advent of digital technologies across the manufacturing value chain and operating model. While there are a few manufacturing companies that have made rapid advances in deriving significant benefits from digital software such as enterprise resource planning (ERP), their number is still small.
Manufacturers should be working now to build an agile platform that will allow them to adapt to future customer requirements. Organisations that embrace the latest technologies – from mobile to scalable integrated platforms and from SaaS to next gen analytics – will be able to jump on the wave of economic recovery when it arrives.
Ensuring growth through investment
Downturns force businesses to become smarter in order to compete with, and outperform, their competitors. Coming out of the last global economic downturn, the most successful companies have made progress in boosting competitiveness through efficiency and flexibility.
Companies should be looking to invest, drive efficiency, increase productivity, and increase market share now. While the effect may be small during slow times, it could help them survive and the effects will then be magnified as the economy recovers. Companies that wait until economic recovery before they invest could be months or years behind.
Younger businesses have an advantage in this context because of their inherent agility. Nevertheless, agility doesn’t have to just be the domain of the small or the young. A list of the top ten lean manufacturing companies in the world, which includes top brand names such as Nike, Intel and Ford, shows the extent to which the implementation of these technology-driven initiatives helps even the largest companies achieve success.
Throughout the manufacturing sector, we’re seeing advances in technology that are proving to be the fundamental linchpin shaping this new business model. Technology systems like next-generation ERP give operators at all levels accurate and timely information with which to make informed decisions.
As a result, smart manufacturing businesses are investing now, with the needs of tomorrow in mind. They are also making better use of the technology investments they have already made to jump ahead of competitors and spot new market opportunities. This trend is despite, and in many ways because of, the industry downturn.
The journey is well underway from the long-outdated oil-and-overalls image to a modern and highly innovative sector.
By Andy Archer, regional vice president sales UK, Epicor Software