Alexander Group is currently engaged in a comprehensive research study of manufacturing and distribution revenue models, Manufacturing & Distribution Industry Trends: Strategies, Insights and Metrics.

Despite the massive disruptions that have resulted from COVID-19, 50+ leading manufacturers and distributors have been eager to share in-depth insights and benchmark data on their constantly evolving commercial coverage models. Executive participants in the research also revealed both short-term and longer-term impact of COVID-19 on their businesses. As the research continues to gather data and recruit participants, Alexander Group presents some initial and timely findings on the unprecedented challenges from the current pandemic.

Initial Impact and Response

Executives responded quickly to the crisis with holistic strategies spanning operational and commercial functions. Despite numerous challenges, each executive interviewed was optimistic about the resiliency of their companies due to multiple standard strategies and strengths already in place:

  • Supply chains are robust and flexible: Despite global lockdowns that forced many production facilities to close, manufacturers and distributors adapted quickly by adjusting production schedules, introducing safety protocols to re-open facilities and diversifying sourcing. Sales and service teams communicated closely with customers about production and delivery schedules, in particular limiting new orders for scarce products. Most importantly, companies shifted production and sourcing regionally and globally to adjust to local market conditions.
  • Past investments in technology and enablement prove invaluable: From CRM and e-commerce platforms to online training programs, many executives were enthusiastic about the existing tools they could leverage to respond to the crisis. A global sales leader in the industrial capital space stated, “We were well prepared with a robust digital strategy for our business. We had already developed training capabilities which we quickly transitioned over to.” Another executive in electrical distribution affirmed, “We had invested in segmentation/CRM/digital tools for field targeting, but never leveraged (them). This crisis may have helped us move into the new systems better, as we were a forced to adapt.”
  • Sellers engaged despite cost cutting: Many manufacturers and distributors experienced a 15-30% decline in revenue in the April-May timeframe and were forced to take a variety of cost cutting measures including reduced seller headcount, 2-3 week furloughs and base pay adjustments of 20%+. However, multiple firms considered providing some guarantee for incentive pay, in particular for sellers with high incentive to base ratios. Despite these measures, sellers remained engaged and surprisingly productive. Most companies did not significantly reduce seller headcount. Many pointed to strong company culture and past commitments in prior downturns that fostered goodwill and strong engagement from selling teams. Additionally, even with the severity of the COVID-19 crisis, nearly all leaders emphasized that recruiting and maintaining sales talent continues to be a top priority.

Looking Forward

The pandemic’s impact on manufacturers and distributors has been severe, especially in the most affected customer sub-segments including transportation, lodging and food services. However, industry leaders responded in force to minimize both operational and commercial disruptions. While great uncertainty remains, most executives are optimistic about the future and see three essential trends:

  1. Digital channel investment will accelerate from already rapid growth as both sellers and customers have become much more accustomed to interacting virtually.
  2. Face-to-face selling will continue to be the norm for complex, long cycle sales. However, companies will expect sellers to be more productive by reducing travel and mandating that more work be done virtually.
  3. Pre-COVID-19 emphasis on talent acquisition and management will again be a top priority as companies continue to drive growth from increasingly innovative and technical products, solutions and services.

For more information on this topic or to participate in Alexander Group’s Manufacturing and Distribution Industry Trends Research, please contact a manufacturing or distribution practice leader. All participants will receive a full, complementary report. You can also sign up online on our website at the following link: Manufacturing and Distribution Industry Trends Research.

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