How midsize manufacturing and distribution companies use tech to compete with the big guys

Fortune 500 companies may dominate financial headlines and cable business shows, but midsize companies are moving the economy forward and fueling job creation. Technology and globalization have opened up new growth opportunities for midsize industrial distribution companies.

Companies with between $10 million and $1 billion in sales saw 6.3 percent revenue growth in first quarter 2016, compared to just 1.1 percent for the economy as a whole, according to the National Center for the Middle Market.

And industrial manufacturers project revenue to grow from 3.6 percent in 2016 to 4.6 percent, this year, according to PWC.

For the growth to continue, executives in these companies will need to leverage technology smartly to target new markets and give customers a satisfying, frictionless experience. “There are tremendous opportunities for midmarket customers to compete on a global scale if they know how to do so,” said Michael Cannizzo, vice president for Enterprise Network Customer Solutions at UPS.

 

The power of data

Manufacturing and distribution companies can also leverage analytics to better compete with their larger rivals and operate as efficiently as possible. ”For example, operational data can show whether it’s better to carry redundant inventory, an expensive proposition, in multiple drop centers that are closer to the customer, or serve markets from fewer, regional centers even if it means incurring higher transit costs,” Cannizzo said.

“Digitization is extremely important to these companies,” said Tom Stewart, executive director for the National Center for the Middle Market. Stewart added that about 20 percent of technology spending by midsize companies goes toward innovative areas like data analysis. Cloud technology, meanwhile, gives companies in this sector access to affordable computing power on par with what’s used by multi-billion dollar corporations.

Analytics can also lend decision support to international expansion plans. For example, a manufacturer or distributor looking to move into Canada should decide if it’s better to open a delivery center north of the border or ship merchandise to customers in the country.

 

Now is the time to explore the potential of Industrial IoT  

And companies are just beginning to realize the potential offered by the Industrial Internet of Things (IoT.) A recent UPS and IDC study on smart operations explained how real-time control and predictive analytics, enabled by connected assets and products can help companies compete and offer superior service. For example, smart sensors on machines can call for corrective action before a costly breakdown occurs.

As Charlie Covert, Vice President of Customer Solutions, UPS, notes “a lot of people think IoT is the purview of the big companies. But I think it’s actually the opposite the information available to small companies now somewhat levels the playing field with large companies.”

These and other innovations add up to more efficient operations that can benefit customers through cost reductions and improved service levels. But a recent study by MIT Sloan found that only 36% of companies were actively using IoT. 

Covert notes the urgency of getting familiar with IoT before adoption accelerates: “if you’re not diving in and really figuring out how you can use this wave of technology to your benefit now, you’re getting further and further behind every day.”

 

Learn more about how manufacturers and distributors can stay competitive by investing in Smart Operations.