What does the COVID-19 pandemic mean for manufacturing in this country? The crisis is changing every aspect of how Australian manufacturers buy, sell, and engage with customers, distributors and dealers, writes Richard Blatcher.

Even before the COVID-19 crisis, Australian manufacturing had suffered many years of decline. The pandemic has already had the effect of increasing production locally, particularly personal protective equipment (PPE), medicines and medical devices. It’s impossible to know exactly what the long-term effects will be, though there are plans emerging for stronger exports, with food and renewable energy leading the way.

With COVID-19 and the recent oil-price volatility, manufacturers have been among the most affected. The simple human cost of COVID-19 is already being measured in lives changed, economies and supply chains disrupted, plants and factories closed, futures made uncertain, and loved ones lost.

Every manufacturer in Australia is facing the startling fact that their business plans for 2020 and beyond are now worse than outdated; they are irrelevant. Choosing to follow the current plan could be detrimental to the success, or even the survival of the business. The truth is, the way manufacturers buy, sell, and engage with customers, distributors, and dealers has suddenly changed. Planning for the impact of that change is consuming manufacturers — especially when the situation and even the data changes hourly.

It is becoming clear that change will continue; between tariffs, global supply chain disruptions, weather events, oil prices, supply and demand bottlenecks, and now global pandemics, manufacturers have had to navigate through endless change that will only continue.

What does this mean for the Australian manufacturing industry as we know it? There will be three phases to the impact:

Short-term: survival

Every segment within manufacturing has been impacted, but in different ways. While the food & beverage, chemical products, primary metals, and even electrical product manufacturing industries saw some recent growth, many, such as machinery manufacturers, experienced contraction. When faced with the rapidly changing impact of the pandemic, a strong control of pricing and agility of price strategy needs to be top of mind.

Even those segments of manufacturing that are seeing spikes in demand must now manage through an explosive change in their business and respond appropriately to avoid price gauging. For every manufacturer, price and margin optimisation, in close partnership with dealers and distributors, are key to optimal commercial response. The focus should be on tight control of pricing and agility in price strategy aligning with business rules.

Others might be tempted to cut prices as a reaction to dramatic drops in demand; however, acting without understanding what’s driving demand in your market could erode future price points without growing sales. Simply put, reducing prices may not spur demand that isn’t there. Alternatively, in some businesses, competitors may be dropping prices as a result of changing demand or reduction in material costs, and failure to act could also negatively impact your business.

In the short term, the best strategy manufacturers can employ is to start with responsibly protecting prices and margins through agile, dynamic management, and to do so based on an understanding of the market signals: shifting customer needs, volatile supply chains and commodity costs, and strong pricing discipline throughout the business.

Mid-term: re-alignment

Manufacturers around the globe are at different stages of dealing with the pandemic, with the majority of plants across America and Europe closed, plants are rapidly reopening across Asia. As manufacturers respond to market changes and move through the initial phase of establishing agile price management processes, they will then have to realign their sales process to meet these new market conditions. Inevitably, for many businesses, that results in equipping a traditional sales force to sell more through digital channels. This means sales teams must be enabled to respond in a more agile way to customer demands and potential new competitors, all while operating remotely. They must be equipped with insight and tools to respond immediately and accurately to customer requests.

Pricing, commercial terms, and configuration information must be fed to sales teams in real time, as conditions change so they can deliver personalised, accurate quotes quickly and easily. Failure to do so will leave remote sales teams with out-of-date pricing and configuration information, and an inability to respond to more agile competitors meeting the rapidly changing needs of digital buyers.

Long-term: optimisation

As manufacturers move through this next year, they will begin to optimise their operations to conform to the new normal of a digital-commerce-first business. This means that digital transformation projects must focus on sales process transformation. Not doing so will divert critical resources away from customer-facing and customer-enabling projects, wasting time that equates directly to lost market share. Simply put, businesses are already moving online and the changes in buyer behaviour as a result of the COVID-19 outbreak has accelerated this drastically.

The mantra is simple: optimise online or lose business to those that do. Manufacturers must align their sales, dealer and distribution channels more effectively. Buyers should be able to fluidly move between in-person, e-commerce, and other digital channels to feel as though the experience is connected and consistent including pricing, ordering, configuring, and buying experiences.

Ultimately, whatever changes arise from the COVID-19 outbreak, Australian manufacturers can, and must, embrace the opportunity to move to digital commerce, both to react appropriately to the current state of global commerce, and be ready for the future state.

Richard Blatcher is the Director of Industry Marketing and Business Intelligence at PROS

www.pros.com