Helping Manufacturers And Distributors
Improve Sales Performance And Profitability
Published by the Industrial
Performance Group, Inc.
No. 25

Operating in the Dark.

We have entered an era of constant and unpredictable change. A sluggish economy combined with the emergence of never-satisfied customers, has created an environment that challenges manufacturers and distributors alike.

One can easily conclude that most manufacturers and distributors are operating in the dark when it comes to how to navigate their way through this new environment.
Surviving and thriving in this new environment requires a constant flow of high-quality information. It also requires that an organization have the ability to act on this information. Information has no value until it results in action. Yet we discovered from our research during the past year, 2002, that the majority, 81% of over 550 manufacturers and distributors who participated in one of our surveys, do not have access to high-quality information about their industries and/or the markets in which they operate.

Based on this finding, one can easily conclude that most manufacturers and distributors are operating in the dark when it comes to how to navigate their way through this new environment. In other words, they are dealing with a higher level of uncertainty than they have ever experienced in the past yet they lack the information they need to make informed business decisions.

Uncertainty is a condition that exists when manufacturers and distributors do not have access to the information they need to make informed decisions about what action they should take. In the absence of industry/market information, decisions are often based on what has happen in the past. This approach to decision-making assumes that the future can be predicted based on what has happened in the past. Guess again. A lack of information can also lead to decisions based on what an organization would like the future to hold -- wishful thinking. Either way, the net result is the same, bad decisions or no decisions at all.

Uncertainty can also result from the inability to process or interpret the information an organization does have. Organizations that suffer from this affliction are slow to recognize and respond to changes in their industry.

What's interesting is that uncertainty created by an absence of high-quality information does not lead to a lack of action on the part of manufacturers and distributors. Quite the contrary. Despite the fact that they don't know how to respond, manufacturers and distributors tend to turn it up a notch in terms of activity. However, without information and/or good decision-making, they just do the more of the "old stuff" hoping that it will produce results in this new environment.

To determine if this is happening to your organization, ask yourself the following questions:
1) How have you changed your approach to the market (strategy, tactics, etc.) during the past 3-5 years, and
2) What information lead to these changes?
3) How well have these changes been implemented?

Thriving in this New Environment

From our work with manufacturers and distributors in a wide variety of industries we have identified two attributes that are present in organizations that thrive in this new environment. These organizations are flexible and responsive.

Flexibility is about how an organization deals with and adjusts to uncertainty and change.

They understand that knowing what to do is not enough -- it must result in action.
Organizations that thrive in this new environment embrace, analyze, and seek to understand the uncertainty they face. They accept that things will never return to normal. They understand that the only thing they can count on in the future is constant and unpredictable change. However, where others see confusion, turbulence, and risk, these organizations see opportunity.

Flexible organizations refuse to operate in the dark. They maintain very close working relationships with customers, suppliers, and channel intermediaries. The primary purpose of these relationships is to collect and share information up and down their supply chains and distribution channels. They realize that information has a greater value when it is shared than when it is kept secret.

The second attribute of organizations that thrive in this new environment is that they are responsive.

Responsiveness is the speed at which an organization can turn information into action. Responsive organizations have developed the ability to turn the information they have into action that produces results. In other words, they can make decisions, allocate resources, and take action faster then their competitors.

They understand that knowing what to do is not enough -- it must result in action. They realize that talking about an issue or an opportunity is no substitute for action. These organizations are not paralyzed by the fear that they will make the wrong decision. They accept the fact that they will make mistakes along they way and that they will learn from these mistakes. They know that doing nothing poses a much greater threat.

In order to survive and thrive in this new environment an organization must understand, adapt, and evolve as the world around them changes. This requires access to high-quality industry/market information.

Information promotes understanding of the events that are occurring in an industry and are likely to occur in the future. Information helps an organization identify opportunities, make good decisions, and take the appropriate action.

However, information is the one thing that manufacturers and distributors appear to be lacking.

To help us better understand this key issue, we invite you to participate in our current E-survey on the industry/market information needs of manufacturers and distributors. The results of this survey will be published in a future issue of Channel Focus. Click here to participate in our current E-survey

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