By Mark Henry
Partner and Manufacturing and Distribution Industry Practice Co-Leader
Citrin Cooperman

After years of navigating an unpredictable market, the manufacturing and distribution industry is thriving with positive revenue, growth, and product performance. Citrin Cooperman’s 2024 Manufacturing and Distribution Pulse Survey Report surveyed 200 industry leaders, analyzing their response to market volatility and value creation. Industry leaders noted they are focused on five areas to help their businesses achieve and sustain strong performance.

Financial management and forecasting

Amid growth opportunities and pressure on margins due to inflation and other factors, manufacturing and distribution companies are leveraging forecasting and financial management tools, such as enterprise resource planning (ERP) systems, to obtain better decision-making information. Nearly 75% of business leaders say that automated strategic planning systems are in place to assist with forecasting and covenant compliance. These systems provide business leaders with insight into their top key performance indicators (KPIs), including quality control performance, inventory turnover, and material costing.

Advanced technology

The next frontier involves technology plans and investments. Forty-three percent of business leaders report they are currently implementing artificial intelligence (AI) and machine learning (ML) tools in their manufacturing and distribution company. For those who already implemented AI and ML tools, 75% say the biggest benefit is the ability to gather and utilize data outside of their company by seeing data from suppliers, customers, and other external sources. The implementation of AI and ML tools can aid business leaders by providing deeper insights to help predict challenges that may impact their businesses and have the foresight to adjust for upcoming hurdles.

Supply chain

Successful companies continuously adapt to supply chain challenges. Although conditions have improved for most, nearly 33% of respondents report that they are still navigating supply chain problems. The top actions taken to overcome supply chain issues include increasing diversification of suppliers, changing where products are sourced, and outsourcing manufacturing. Business leaders should structure their supply chain processes so they are nimble for any obstacles they may encounter.

Managing costs and inventory

More than 50% of manufacturing and distribution business leaders report that the current inflationary environment has changed their business spending habits and they anticipate customer spending to continue to slow. Leaders also report that, to manage rising costs, they are passing costs to their customers by raising prices, applying administrative or service fees, and using third-party warehouses. To remain competitive, businesses are reviewing all expenses and evaluating how to remain as operationally lean as possible without damaging or permanently altering demand.

Cyber risk

Cyber incidents and breaches can cause value disruptions to brands and companies. It is startling to see that one in three manufacturing and distribution companies reported they had a cyber incident or breach in 2023. It is imperative for this sector to fortify its defenses by taking strategic steps to halt this onslaught of attacks and reduce the likelihood of becoming the next victim of a catastrophic attack. Measures that should be considered include developing security policies and an incident response plan, setting a regular cadence for patching hardware and software, and establishing a vigorous cybersecurity awareness training program.

As you prepare your manufacturing and distribution business for the future, keep these focus areas in mind, and reach out to Mark Henry for more insight on how you can elevate your business performance.

Download the Survey Results

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