6 Ways Manufacturers can Boost Financial Performance
In an ever-evolving industry, today’s manufacturers have faced major disruption from both Brexit and the pandemic, along with increasing pressures to maintain their position in a competitive marketplace.
In many cases, manufacturers have struggled to modernize their approach to keep up with emerging technologies and successfully increase profit margins. We know that learning how to improve financial performance in a manufacturing business can be the difference between a struggling operation and one that thrives. Here are some ways to do this.
1. Reassess pricing of your products
Pricing is one of the most powerful yet underutilized strategies available to manufacturers to boost financial performance. Under-pricing can help increase competitiveness, but the amount that you are charging must always be sustainable. It’s a good idea to constantly re-evaluate and see whether your pricing is appropriate. For goods that require a larger investment on the outset, a higher price may be taken more seriously because many potential customers will see a relationship between price and quality. Try and find that middle ground and remember that you can always scale your prices back again if margin permits.
2. Build on customer loyalty
On the whole, the manufacturing industry is focused more on the product rather than how it is presented to the customer. However, relying on the strength of your product design is no longer enough and could impact their financial performance. Manufacturers need to view the world through the lens of their customers and their priorities, so they can build on their loyalty and remain competitive. After all loyal customers are more profitable, they are cheaper to market to, and make more frequent purchases. And, when they get repeat business from the same customers, customer loyalty is improved.
3. Becoming true partners with distributors
The relationship between a manufacturer and distributor can be a major driver of your company's financial performance and growth, or a major hindrance to its progress. Without your distributor, your product will not make it to the consumer, and without the consumer picking your product, you will lose out on sales. Distributors also tend to handle the logistical and marketing requirements that manufacturers aren’t regularly involved in. Most strive for an open business structure with the focus on getting products into the hands of the consumers in a way that everyone shares in the success.
4. Evaluate your customer and supplier bases
If a large part of your orders come from only a couple customers, or you rely on a few key suppliers for raw materials, any disruption to these relationships can have devastating consequences for your financial performance. In uncertain times like these, it’s not unrealistic that one of your customers or suppliers’ businesses may fail. To secure your success, evaluate the risk of your customer and supplier bases and consider how you can expand that base.
5. Don't be afraid to renegotiate deals
In order to boost financial performance, you need to regularly review any long-term contracts for your deals with distributors. Over time if you have developed a strong relationship you may be in a far better position to negotiate a stronger deal, having proven your reliability and previous history. With a rebate management system like Enable you have instant deal visibility putting you in a stronger position to renegotiate.
6. Offer more complex deals
At Enable we see a lot of different types of deals, from simple loyalty rebates - where you get a percentage of a product - to complex incentive deals, where specific behaviours such as pushing a particular product range are encouraged. Especially if it’s new to the market or to prioritize higher margin products. Complexity can allow you to target more specific behaviours but it’s important that both parties have clarity otherwise you could end up with disputes over money which could effect your financial performance.
With a rebate management system that manages complexity, manufacturers will never have to worry about their financial performance again. Automating your complex deals means that your data is more reliable and new deals that are agreed, are going to be populated better. You can be confident when data comes in the correct calculations are going to be triggered and no touch points are missed.
Automate and improve financial performance with Enable
If rebates are a high priority and impact your financial performance in your manufacturing organization, you should consider automating your rebate processes. This would help to mitigate business risks by taking the pressure off those key members of staff and freeing up their time to analyse the effectiveness of the deals and help the procurement teams going forward.
Automation can be done in a rebate management system, which allows the team to represent their deals accurately and check how their financial performance. For example, distributors and manufacturers can see if their objectives are being achieved. Distributors want to know if they are earning what they thought and from a manufacturers point of view are they selling more of the products they are incentivizing with rebates.