Where to focus your manufacturing company:

Traditional supply chains—both direct material supply and product sales—have been disrupted by the pandemic. And they'll continue to be disrupted for some time. Moreover, costs have increased. To remain competitive, businesses need to find new supply channels while minimizing these additional cost increases. To combat the disrupted sales channels, manufacturers must either find new sources of revenue or expand on existing ones. This might mean new geographies, new products, or new channel partnerships.

How can you get started with incorporating this into your growth strategy? Build and execute a plan to review and adjust material supply sources to improve resilience, manage costs, and adjust inventory-carrying policies. Further, you should review go-to-market options, think about diversifying your product portfolio, and prepare to expand into new sales channels.

Another consideration is reduced margins for the foreseeable future. This is simply a reality that needs to be dealt with as we recover and revive business back to its usual pace. You want your manufacturing business to remain competitive, maintain or increase market share, and improve margins. That's why your growth strategy must address the fact that direct material costs have increased while some costs have remained fixed. On top of that, in most cases revenues have declined along with productivity.

In order to start developing a plan, you need to incorporate reductions in direct material costs and fixed costs, while increasing revenue and productivity. This might include automating production lines, retooling parts of the company, and retraining staff accordingly. If it's a possibility, completely pivoting what's being produced may be a solution. We've seen a number of manufacturers do this successfully.

Staying on top of financial forecasting to respond to the current and future landscape is imperative in managing costs and cash flow. Our teams across Canada specialize in this type of future-proofing for a number of scenarios you might encounter.

It's vital to protect an organization's workforce in order to maintain productivity and plan for the future. This is especially true of the manufacturing and distribution sector, as so much of it is reliant on skilled labour. Unprecedented challenges have strained the HR capabilities of many manufacturing businesses. Many have had to lay off staff as production lines were halted. Or they were faced with a labour shortage caused by the closing of borders keeping foreign workers from being able to do their jobs.

What might the next steps towards a solution be? We recommend consulting our HR advisory team about options surrounding return-to-work programs, HR policy updates, leadership and management support, and a staff communications strategy.

It's important for an organization to have a robust business continuity plan to minimize risk of disruptions as conditions change. Most manufacturing businesses don't have a plan like this in place, making them that much more susceptible to changes in the market. As conditions in the manufacturing landscape change, your business needs to be ready to change with them—coming out stronger every time.

As part of your growth strategy, we advise building, testing, and deploying a business continuity plan to minimize business disruptions as conditions change. This would include preserving business continuity, managing cash flow, rethinking budgets, maintaining important vendor and stakeholder relationships, and leveraging technology to help keep your various platforms running. It's never been so important to plan for the future with resiliency being top of mind.

The ability to dynamically reforecast as conditions change allows businesses to maximize their use of working capital and avoid cash flow stress. Traditional budgeting and cash flow planning processes don't allow for frequent re-planning, making you more vulnerable as conditions keep evolving.

Budgeting and cash flow planning processes should enable re-planning as needed. You should be able to pivot business at any given point and react quickly to change. Every business will suffer losses one way or another, in line with the economic downturn. That stresses the importance of managing liquidity and cash flow now—taking uncertainties into account for future planning.