In this blog post, we’ll examine what digital transformation means for industrial manufacturers and how software is critical for overcoming inflation and volatility-driven pricing and revenue growth challenges.
Challenges Loom for Industrial Manufacturers Amid Economic Uncertainty
The latest reports on inflation are all over the place. While U.S. inflation eased ever so slightly in early 2023, the global economy remains in a crisis state as it grapples with continued high inflation. Additionally, fears of a possible recession have “surged in recent weeks,” according to a recent Reuters article. The fact is that economic uncertainty remains in play, which is especially troublesome for industrial manufacturers as constant cost fluctuations make profitable pricing and sustained revenue growth major challenges.
Consider this quote from Slalom Senior Director Matt Baker in a recent appearance on Zilliant’s B2B Reimagined podcast:
“Manufacturers really need to focus on being nimble, responsive to the changing realities that are out there. Costs are constantly in flux. Customer expectations are changing. Is inflation going up, is it going down? Going sideways?”
But the question remains, how do manufacturers enable a nimble approach to respond to today’s turbulent economy? Broadly, the answer can be boiled down to one word: Digitalization. By ensuring organization-wide digital transformation and leveraging data-driven software, manufacturers can ensure resiliency in our era of unprecedented inflation.
“Manufacturing companies that are strategically deflating inflation with software will be the strongest revenue drivers in the coming years,” states SmartIndustry.com.
In this blog, we’ll examine what digital transformation means for industrial manufacturers and how software is critical for overcoming inflation and volatility-driven pricing and revenue growth challenges.
Digital Transformation and Using Your Data
“Manufacturers have increased their digital investment over the past few years and accelerated the adoption of emerging technologies. Companies with higher digital maturity have shown greater resilience, as did those that accelerated digitalization during the pandemic,” states Deloitte’s 2023 Manufacturing Industry Outlook.
For many manufacturers, complex systems and processes have tied the hands of pricing and sales teams for years. Previously, something as simple as a quarterly price update often took months to execute as the process typically consisted of emailing spreadsheets to sales leaders to get feedback, then manually loading them into their ERP system. That process is too slow to deal with an economic climate where costs can change daily.
Industrial manufacturers must be able to respond to cost changes, competitive dynamics, or macroeconomic events with appropriate tactical adjustments. Manufacturing companies that do not make the best use of the data ─ be it order data, product data, customer data, historical invoice data, competitive data, cost data and more ─ available to them will struggle to maintain profitable pricing. By digitally transforming and leveraging data-driven software, coupled with other innovations such as self-service tools and automation, manufacturers can unshackle themselves from technological limitations and be nimble enough to react to market changes or even capitalize on them.
Manufacturing companies that succeed in today’s landscape will be those who put pricing at the forefront of their evolution. Pricing teams need intelligent tools that can consolidate a wealth of data to set, optimize, manage, execute, and deliver prices in all go-to-market channels efficiently and effectively. Only then can price be used as a strategic lever to improve financial performance.
Additionally, the sales process is ripe for data-driven transformation. Manufacturers must equip their salespeople with point-in-time actionable insights they can use for more productive conversations with customers. By doing so with embedded visual analytics, manufacturers can give salespeople confidence in the offer they are bringing to a customer – and detailed information that answers, “this is why this product makes sense for this customer and here is the data behind why the price is the price.”