Manufacturer’s Supply Chain Resilience, Customer Relationships Vital in a Time of Crisis

Hayley Null, Alliance Marketing Manager

April 16, 2020

Almost 80% of manufacturers believe that COVID-19 is likely to have a financial effect on their business, according to a recent National Association of Manufacturers (NAM) survey(opens in new tab). Many of those manufacturers are working to navigate these effects by building supply chain resilience(opens in new tab) and deepening customer relationships.

Building Supply Chain Resilience

Many organizations that manufacture products in China have been feeling the effects of the coronavirus since the beginning of the year. Now that COVID-19 has spread globally, all manufacturers are experiencing supply chain constraints no matter where their manufacturing operations take place. The same NAM survey found that 35.5% of manufacturers are already facing supply chain disruptions today. Here are the top levers that manufacturers are pulling right now to increase supply chain flexibility.

Shift resources to manufacture essential items if possible. An overwhelming number of manufacturers have come together to address the massive shortage of medical masks, ventilators and other essential supplies. Some states, like Illinois, have organized a coordinated effort to ask manufacturers who have the ability to donate or provide essential parts(opens in new tab) to come forward and participate in relief efforts. Other organizations, like the Manufacturing Extension Partnerships (MEP), are identifying manufacturers who have the capacity to ramp up production of essential supplies. If you’re a manufacturer looking to start essential supply production in your own plant, reach out to your local MEP(opens in new tab) for guidance.

Consider reshoring. While the “Made in America” manufacturing movement is nothing new, recent events have catalyzed some international manufacturers to look at bringing their manufacturing efforts back to the United States. A recent Thomasnet survey shows “that over half of manufacturers are ‘likely to extremely likely’ to bring production and sourcing back to North America. Additionally, 47% of U.S manufacturers report they are now seeking domestic sources of supply.” The Alliance for American Manufacturing has put together a “How to Make It in America” resource list(opens in new tab) to get started.

Diversify suppliers. Manufacturers must use this time to audit their supply chains, eliminate inefficiencies and cut costs where they can. Some manufacturers that rely on single sourcing are finding themselves in a precarious situation today if their supplier has had to slow or halt production. Those supply chain professionals that aren’t already doing so should start the process of diversifying their supply chain to mitigate risk in the case of future disruptions. Businesses that have more diversified supply chains today will be able to bounce back more quickly from COVID-19.

Improving Customer Relationships

 With consumer spending and behavior changing daily, it’s important for businesses to increase transparency and improve relationships with customers. Forward thinking manufacturers are using this time as an opportunity to form more genuine connections with their communities through better communication.

Align your tone with the market. Interactions with customers – both prospective and existing – are shifting dramatically with empathy front and center. Edelman’s recent survey Brand Trust and the Coronavirus Pandemic(opens in new tab) found that 75% of respondents “want brands only to speak about products in ways that show they are aware of the crisis and the impact on people’s lives.” Adjust your communications to address the current climate and be sensitive to how consumers are feeling. The responses and strategies that you put in place today will not only set your business up for survival but determine your eventual success. According the same Edelman survey, “Sixty-five percent of respondents said that a brand’s response in the crisis will have a huge impact on their likelihood of purchasing it in the future.” If you’re not adjusting your conversations, you will inevitably lose customers.

Prioritize existing customers. It’s essential to keep in mind that acquiring a new customer costs five times more than retaining an existing one. Companies are shifting their marketing strategies accordingly. According to one Forbes(opens in new tab) contributor, “many are decreasing ad spend, switching from acquisition-based to retention-based tactics.” Part of these retention-based tactics must include concentrating on longstanding customers. As manufacturers experience stockouts and shipping delays, you should consider prioritizing this limited inventory for loyal customers who are the most profitable. This rewards most important customers for their business and will keep them coming back.

Increase customers interactions. Step up your customer service and make it proactive. Manufacturers should increase real-time communication with customers for things like delayed delivery dates or low inventory to manage customer expectations. How you approach communicating with customers should be revisited as well. They might prefer to communicate via email or phone, or maybe even video chat or text. Make sure your business is available how customers want to get in touch. Finally, make sure you’re consistently posting on your website and social media with updates so consumers can connect with you there as well. Manufacturers that are contributing to COVID-19 relief should amplify that on their digital channels and in conversations with customers.

The bottom line -- stay focused on your suppliers and buyers. This crisis will end. What can your business do today that will make you a better business in the future? Improving your supply chain and customer relationships is a good place to start.

Learn about The Value of a True Cloud ERP for Manufacturing Companies(opens in new tab).

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