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Six Steps Manufacturers Can Take to Combat Inflation

September 1, 2022 Beth Devine

In July, the National Association of Manufacturers (NAM) posted a webinar on its website titled “Smart Responses to Inflation and Volatility for Manufacturing Leaders.”

A global management consulting company, Bain & Company, hosted the webinar at the end of June, and two of the company’s partners, Karen Harris and Jason Heinrich, presented. They analyzed the impact of rising inflation on U.S. manufacturers, and offered tips for reducing its risks.

In her analysis of U.S. inflation, Harris, whose specialty is macroeconomics, shared some historical data. Since World War II, she noted, the U.S. has had seven inflation spikes, each lasting between 23 and 47 months, with a median time frame of 30 months, before ending with (or during) a recession. If the past is any indicator of how long an inflation spike will last, Harris said we can expect our current spike, which began in March of 2021, to end around September of 2023.

“Recessions break inflation cycles,” she said, “and then we see a drift back down to a normal inflationary environment.” Given that Harris predicts at least another year of high inflation, her colleague, who specializes in business performance improvements, offered his strategies for managing its risks.

“Today’s inflation presents significant risks for businesses,” Heinrich explained. They’re seeing declining gross margins as the Cost of Goods (COGS) skyrockets, along with rapidly increasing labor and energy costs. They’re seeing an increasing cost of capital due to the federal government raising loan rates. Their customers are becoming more price sensitive, and they’ll look for cheaper options, which is another threat to businesses.

Bain & Company researched the activities of 3,900 companies over the past 13 years to see why some companies outperformed during times of inflation while others failed. “Businesses that are playing offense during periods of disruption outperform their industry peers over a long period of time,” Heinrich said, before offering these six strategies:

1. Elevate the role of the CFO to C-suite quarterback. The CFO must play a central role in connecting the front end of the business to the back end. The CFO must determine how to translate rising costs into price increases to customers. The CFO must determine the increase rate. Best in class CFOs will arm their sales and marketing teams with the rationale for price increases, so they can explain it to customers.

2. Double down on customer relationship building. Inflation typically reduces customer loyalty, so it’s time to focus on contract renewals and renegotiations. Identify potential defectors, and focus on them before they leave for a competitor. Develop compelling new offers targeted toward acquiring new customers who are out shopping for a better deal. Invest in digital marketing to reach them at the right place and time. Selectively absorb some cost inflation for your most loyal, price sensitive customers.

3. Pricing strategy is important. Exchange price for value by offering other benefits, such as volume guarantees, bundled products and adjusted service levels. When necessary, pass on surcharges for customer behaviors that reduce profits. Equip the sales team to dynamically adjust customer pricing based on different market scenarios. Utilize index-based pricing in raw material contracts.

4. Build resilient, growth-focused procurement and supply chain operations. Consider reconfiguring your supply chain due to increasing transportation costs.

5. Prioritize automation. Identify opportunities, and develop automation targets with a multi-year roadmap. Share automation best practices throughout the company.

6. Invest to build the best workplace. Retaining employees is a bigger challenge than attracting them. Reassess your total rewards package. Consider offering one-time lump sum payments to combat inflation, rather than implementing wage adjustments. Look for opportunities to cross train.

The webinar, which lasted just under an hour, ended with a strong Q & A session. You can register to watch it here.

Rising inflation has made this a turbulent time for manufacturers, and you need to have a plan. If you don’t have one, it’s a good time for a Needs Assessment. The Connecticut Manufacturers Resource Group (CTmrg.com), a subsidiary of Web Savvy Marketers, routinely conducts Needs Assessments to help companies prosper in times of economic uncertainty. Contact Us to learn more.

Connecticut Manufacturers Resource Group Supports UCONN Grant Process

June 9, 2022 Beth Devine

Sen.ChrisMurphy

The Connecticut Manufacturers Resource Group (Ctmrg), a subsidiary of WebSavvy Marketers, worked with other manufacturing industry groups, including the Naval & Maritime Consortium and ManufactureCT, to help the University of Connecticut (UCONN) secure a $1.75M grant from the Department of Energy (DOE).

The grant will help fund the university’s DOE Industrial Assessment Center (IAC), which helps small to medium sized manufacturing companies reduce their energy costs and carbon emissions. The IAC will conduct complimentary energy efficiency assessments for 20 companies throughout Connecticut, Rhode Island, and/or New York each year for five years.

According to the Department of Energy, IAC assessments typically identify more than $130,000 in potential annual savings opportunities.

“The key to getting the grant was bringing everyone together to work on this common goal,” CTmrg’s founder, Beth Devine said. “As a result, we have a complete solution for manufacturers who want to improve their energy efficiency.” Devine serves on an advisory panel that assists UCONN’s IAC in implementing the energy assessment program.

At a press conference on the UCONN Storrs campus on May 20, U.S. Energy Secretary Jennifer Granholm announced that the Biden administration will dedicate $7M to free energy assessment programs at additional schools in California, Delaware, Georgia and Texas. Devine attended the press conference with U.S. Congressman Joe Courtney, Connecticut’s Department of Energy and Environmental Protection Commissioner Katie Dykes, Connecticut’s Chief Manufacturing Officer Paul Lavoie, Connecticut Secretary of State Denise Merill, and UCONN President Radenka Maric.

The Connecticut Manufacturers Resource Group (CTmrg) helps small and medium sized manufacturers find and take advantage of programs and resources. CTmrg partners with workforce boards and educational institutions, navigates state and federal programs, and vets the best resources available to provide Connecticut manufacturers with a single source of services and information to help them grow their businesses. Contact Us for more information.

Unclaimed Funding for Manufacturers

April 28, 2022 Beth Devine

The Federal Government and the State of Connecticut have numerous programs that provide a significant amount of funding for manufacturing companies. These monies typically come in the form of low interest loans, grants, vouchers, and fund-matching programs. But much of this money goes unclaimed every year.

So why aren’t manufacturers snapping it up?

The number one reason is many manufacturers don’t know about these programs. Sure, you might hear about training dollars from your local chamber or the MVP from CCAT or even NETAAC funding via an industry group, but after receiving multiple emails for a variety of programs, it can seem overwhelming. Finding them on your own isn’t easy either, especially if you don’t know exactly what you’re looking for. One could easily spend hours, or even days, looking for them online. And once you’ve found the programs, there’s time spent determining whether or not your company qualifies for that specific funding.

Then, when you’ve finally determined that you qualify, there are the applications to be completed. Finally, there are stipulations on what the money can be spent on, so even after your application is approved, you may not be able to use the money in the way you intended. (Example: you can’t use funding retroactively, and some funding is exclusively for equipment) The entire process can be daunting and exhausting.

Most business owners are hyper extended just trying to get their products out the door. The pandemic has added to their workload with new challenges, too, like supplier shortages and shipping delays. They don’t have the resources to complete this additional work.

So, what’s a manufacturer to do?

Simply put, get some help from someone who already knows about the available programs and can complete the applications and qualifying processes for you. Reviewing your funding options is just one aspect of the Needs Assessment. We will review what your needs are and match them with funding opportunities.

The Connecticut Manufacturer’s Resource Group (CTmrg.com), a subdivision of Web Savvy Marketers, has a long history of helping manufacturers obtain state and federal funding. We understand the nuances of each program and how to manage the application process. With our help, you can increase your chances of getting some of that unclaimed money. Contact us for more information.

Six Steps Manufacturers Can Take to Combat Inflation

Connecticut Manufacturers Resource Group Supports UCONN Grant Process

Unclaimed Funding for Manufacturers

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