Pivoting in Response to Industry Changes in the Manufacturing Sector

Pivoting in Response to Industry Changes in the Manufacturing Sector

The events that began to unfold in 2020 serve as a warning for manufacturers to develop more efficient systems for navigating economic disruptions[1]. In order to remain successful, manufacturers must carefully analyze changes within their market, re-valuate their strategies and react vigorously to shift production accordingly.

 

A Focus on Delivering Value

The importance of shifting production to manufacture products with greater value and higher profit margins cannot be understated. According to David Morley, Manufacturing Practice Lead at Gerent, “It's about being more competitive. And by being more competitive, I don't mean offering the lowest cost. In every business that I've run, I've thrown out the notion of competition in terms of price; we’ve based our product line around value and we've stopped making things that are of no value. The idea is to stop building things that you don't make any money from, that are taking up capability that can be used elsewhere.” 

In addition to providing value, most successful pandemic-related pivots find a way to serve a demographic in need with speed and flexibility[2]. A few companies that were successful in quickly adapting to changing markets include General Motors, Unilever, RPM and Sherwin-Williams.


From Vehicles to Ventilator

General Motors(GM) made the decision to retrofit its factories in order to help relieve the shortage of ventilators in the United States. The manufacturer teamed up with Ventec Life Systems to deliver 30,000 V+Pro Critical Care Ventilators to the U.S. Department of Health and Human Services. GM employed an additional 1,000 workers in order to scale up production and fulfill the $489.4 million contract[2]. As a result of this undertaking, GM shares were up 1.8% during pre-market trading in 2020 – while the stock was down 41.8%[3].


Meeting an Unprecedented Demand

Food and personal hygiene mammoth, Unilever demonstrated its ability to successfully pivot to meet the demands of the pandemic economy by making use of existing resources. Rather than exploring the idea of breaking into new markets, the company began dedicating more resources to divisions that manufacture hand sanitizer[4]. To meet the enormous surge in demand, Unilever went from producing 700,000 units per month to 100 million units – and increased its worldwide production capacity by more than 600 times[5].Unilever’s hygiene arm jumped 26% in the second quarter of 2020 and sanitizer sales increased by over 20,000%[6].

Catering to a New Audience

If a product begins to lose profitability, shifting production in a new direction is essential to staying afloat. An example of this can be seen when we compare the third-quarter financial results of three publicly traded companies in the chemical blending space: RPM International, Sherwin-Williams and PPG Industries. All three manufacturers produce industrial and residential paints and sealers. RPM and Sherwin-Williams reported record third-quarter sales, beating the market by an impressive 24-30%. Conversely, PPG had a reduction in sales and profits, missing the market by 25%. What did the first two companies do differently? They pivoted in response to changing market demands.

The pandemic facilitated an unprecedented rise in the demand for residential paints, as more people decided to renovate their homes to keep themselves busy. At the same time, industrial markets for paint were significantly down. RPM and Sherwin-Williams recognized that in order to cut their losses and take advantage of the booming home renovation trend, they needed to shift their focus to producing residential paints.

 

Regression Analysis Made Easy

Salesforce’s regression analysis tool is powered by artificial intelligence, eliminating the manual process that typically requires a full-time employee to execute. This technology informs manufacturing executives when an industry is growing or shrinking, allowing them to act accordingly. If a manufacturer can see that a particular market is shrinking, Salesforce allows them to shift production in a more advantageous direction, as in the examples above.  

At Gerent, manufacturing is our largest area of focus. We deeply understand the challenges faced by the industry and how to help manufacturers get the most out of their Salesforce implementation. Our project completion rate is 40% faster than other Salesforce implementation partners, ensuring you see results and value for your business sooner.

To learn more about how we can help your company drive digital transformation with Salesforce, please visit gerentllc.com

 

[1] https://www2.deloitte.com/us/en/pages/energy-and-resources/articles/manufacturing-industry-outlook.html

[2] https://www.forbes.com/sites/jasonwingard/2020/04/17/pandemic-pivots-these-3-companies-are-making-it-work/?sh=6471e68d6f44

[3] https://www.cnbc.com/2020/04/08/gm-to-build-30000-ventilators-for-us-for-489point4-million.html  

[4] http://www.tradeready.ca/2020/featured-stories/3-key-ways-companies-are-pivoting-business-models-to-stay-profitable-amid-the-pandemic/

[5] https://www.unilever.com/news/news-and-features/Feature-article/2020/how-our-hand-sanitiser-business-adapted-to-meet-global-demand.html

[6] https://www.wsj.com/articles/americans-in-lockdown-buy-cleaning-products-and-ice-cream-lifting-unilever-11595495473

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