Selling to the Manufacturing Vertical: Issues, Opportunities and the COVID-19 Effect
The decision to target one, three or five verticals is personal, and likely will bring up many questions. Which vertical aligns with my business philosophy? Which vertical interests me? Which vertical has lasting power? That last one carries special weight right now as businesses deal with the consequences of COVID-19. Although direction is changing rapidly, health care orders are still booming. Travel and hospitality orders, on the other hand, have come to a grinding halt with trips, trade shows and other events temporarily postponed or canceled altogether.
There is so much gray area to explore, but what we do know is distributors who position their companies as true marketing value-adds, selling on the merits of creativity and resourcefulness, will fare well. To help you along in the decision-making process, Print+Promo consulted with leading suppliers and distributors in three key verticals. Below, they expand on end-user needs, common pitfalls and the effects of COVID-19 in the manufacturing vertical.
On the surface, the goal of the manufacturing vertical is straightforward: use components to make a finished good. Those who specialize in this area say it’s a little more complicated than that. Manufacturing can cover a broad scope of industries—from companies that produce equipment, components and electrical supplies to televisions or vacuum cleaners. Though many acknowledgements are now electronic, opportunities for paper-based forms remain across departments. So, where is a distributor to turn? A knowledgeable supplier.
Royal is one trade printer keenly aware of the unique needs of sales, production, shipping and marketing departments. As Kim Suchy, sales and marketing manager for the Brooklyn Park, Minnesota-based supplier noted, the required breadth of documentation is a key focal point that ties everything together.
“There are many print solutions that may be used during the manufacturing process, such as request for quote forms or purchase order forms to buy the necessary components, inventory labels or documents to keep track of the components, and work order forms, time sheets, quality control labels or documents to be used during the production process,” she explained. “Upon completion, shipping documents, such as a bill of lading, pick/pack list or shipping label may be used, along with packaging labels, such as a warning or promotional label.
“And, of course, payroll checks for the employees and accounts payable checks for the component suppliers, along with invoices and return labels that go out with the product,” she added. “There are also marketing opportunities, such as flyers, brochures, booklets and letterhead.”
A large aerospace manufacturer was preparing to open a new facility, complete with a massive production floor with more than 20 different manufacturing lines. It’s the kind of job Jake Chanson, new business development for Meridian, loves. So, when the client approached the distributor for signage that would identify stations for both facility tours and employee training, Chanson jumped at the chance to help.
“We supplied hanging textile signage rings, like you see on a trade show floor, that were color-coded for different processes and branded to their guidelines,” he said.
Manufacturers are the No. 1 targeted vertical for Meridian. In addition to aerospace, the Loves Park, Illinois-headquartered firm serves government, automotive, military, trade and OEMs. Because manufacturers have a lot of vendor options, stock safety catalogs, online print vendors and larger safety distributors, like Cintas and Aramark, it is important for Meridian to offer a consolidated experience, on-site consultation and cost savings, Chanson said. Some of these full-service, end-to-end solutions include business cards, environmental graphics, company stores and safety programs. Then 2020 came and changed normal ways of doing business.
As the COVID-19 crisis stretches into its fourth month, businesses are adjusting their operations as consumer buying habits continue to shift. Manufacturers have not been affected quite like the travel and hospitality vertical, but they are still up against major challenges. According to the U.S. Census Bureau, new orders for manufactured durable goods fell 17.2 percent, or by $35.4 billion, to $170 billion in April from March. This prolongs the downward trend of three of the past four months, with a 16.6 percent decrease in March as well. Takeaways from a recent Census Bureau report on durable goods manufacturers’ shipments, and inventories and orders for April 2020 showed the following:
- Excluding transportation, new orders declined 7.4 percent. Excluding defense, new orders fell 16.2 percent. Transportation equipment orders decreased 47.3 percent.
- Shipments of manufactured durable goods declined 17.7 percent. Again, transportation took the largest hit, falling 42.7 percent.
- Unfulfilled orders for manufactured durable goods fell 1.6 percent. Transportation equipment declined 2 percent.
- Inventories of manufactured durable goods rose 0.2 percent. Transportation had the largest increase, rising 0.3 percent.
- Nondefense new orders for capital goods increased 8.2 percent. Shipments fell 12.6 percent. Unfilled orders declined 2.2 percent. Inventories rose 0.1 percent.
- Defense new orders for capital goods declined 30.8 percent. Shipments rose 3.9 percent. Unfilled orders declined 0.8 percent. Inventories rose 1.4 percent.
On May 28, the National Association of Manufacturers released findings from its Manufacturers Outlook Survey for the second quarter of 2020. Optimism declined to a historic level of almost 34 percent, but manufacturers are innovating to keep their businesses running, with nearly 22 percent retooling to PPE, a trend that is in line with Chanson’s observations of which also include safety signage.
Although the numbers are grim, Suchy remains hopeful. She has seen growth in the medical manufacturing market as more products are needed to battle COVID-19. Proposition 65 warning regulations requiring manufacturers and businesses to alert California residents about exposure to certain chemicals has provided new opportunities as well. For Suchy, safety items and labels and packaging, especially on goods that are used by consumers, such as food and beverage, have proven to be big growth areas.
“We’ve seen manufacturing companies be creative with adding new products during the COVID-19 pandemic,” she shared. “For example, we recently worked with a distributor on an opportunity to produce five million instruction sheets and labels that were part of a new face shield production package. ... As another example [in the food industry], we recently received a large reorder on some shipping order forms for a food manufacturing company. Their reorder came sooner than anticipated due to increased volume they have been experiencing.”
The Selling Process
Efficiency is crucial in the manufacturing market; therefore, distributors must be able to offer ideas that reduce cost and increase productivity. Supply chain partnerships built on trust and transparency are critical to achieving these goals. In a nod to its tagline “your success is our business,” Royal has found that some of its greatest victories in the manufacturing vertical come from working with distributors to solve production inefficiencies and other pain points. Doing so oftentimes turns prospects into clients, and Suchy gave an example to prove it.
Royal teamed up with a distributor on a machine-applied label item that was being produced elsewhere with several quality problems. The labels were periodically falling off or ripping during the auto application process, and the ink was periodically blocking the eye of the machine as it read for application. There were also die-cutting issues causing the liner to break.
“We developed a customized checklist and quality control process specific to this item to solve the issues, and provided a test run at no charge,” Suchy said. “We were awarded the business and have been producing the order for several years now without issue.”
As a trade printer, Suchy said it is important for Royal to continually invest in technology, add new capabilities and collaborate with its distributor partners to create solutions that are vital to the long-term success of the independent print market. Approximately seven years ago, Royal was researching new products and equipment that would best fill a need for distributors. Its efforts led to flexo printing, a process commonly used to produce labels. At that time, Royal purchased a brand-new generation of equipment from Mark Andy, and hired an experienced flexo product specialist.
“Labels have been our fastest-growing product ever since, and we purchased a second press a couple of years ago to maintain our service and delivery standards,” Suchy said. “We have also made investments in technology and equipment to help our distributor partners land specific projects. For example, in order to help our distributor earn a large piece of business from a local company, we invested in new digital equipment to produce a higher quality bar code on the end product.”
As for the distributor perspective, Chanson needs expertise on technical manufacturing processes, samples, prototypes and manufacturing flexibility from supplier partners.
“A lot of it comes down to a partnership, lead times, commitment and cost,” he said of the selling process. “Most of our products are essential to [the client’s] business, so we can’t run out of instruction sheets or we can’t ship a welcome kit to a new employee that arrives late. Allowing flexibility in access and a variety of manufacturing options is key to our success (e.g., digital printing, decoration on demand and in-stock fulfillment).