Reflecting on the recent ACD (Alliance for Chemical Distribution) Annual Meeting at the picturesque Amelia Island in Florida, I am excited to expand on insights from a compelling economic forecast session by ITR Economics, which unveiled their prediction of a mild recession in 2024.
According to ITR, the US economy is anticipated to enter a period of slowdown that will last throughout the year, however, amid the challenges, “there are plenty of smart and strategic business decisions you can make now that will pay dividends once economic growth returns.”
Let’s delve into the must-make moves for 2024!
Talent Development: Nurturing Growth Amidst Recession
One critical move in 2024 is talent development – not just hiring but upskilling new and existing talent.
Despite ongoing hiring challenges, targeting 2024 presents a unique window to bring fresh talent into your team. We can expect a notable increase in the pool of available candidates due to workforce reduction during the anticipated mild recession, and while labor costs may not experience a significant downturn, this is likely to present a favorable opportunity to secure and upskill new team members to take advantage of a projected economic upturn in 2025.
When bringing new talent on board, it’s essential to invest in them early for three key reasons:
- It will immediately make them feel appreciated and “part of the team,” launching them with extra motivation to make your investment in them pay off.
- Providing them with new skills will make them feel like they are “leveling up” from their previous job to their new role with you, putting them on a different growth trajectory.
- Proper training will help instill greater confidence in their ability to undertake complex projects involving interactions with adjacent teams with whom it might take longer to develop credibility and trust.
In addition to onboarding and training new employees, it’s critical to use 2024 to train and develop existing employees – emerging leaders and functional specialists (inventory management, pricing optimization, and sales management), particularly those that will be involved in projects requiring cross-department collaboration.
Identify professional development opportunities for key personnel and invest in their professional and personal growth. ACTvantage offers pricing optimization and inventory management certification programs in collaboration with industry associations such as ACD, ISA, and HARDI. These programs focus on building cross-department, win-win solutions.
Technology Investment: Elevating Workforce Effectiveness
The second critical move in 2024 is technology investment – not just upgrading your IT systems, which is essential but insufficient for achieving above-average growth goals.
ITR proposes leveraging the lull for making core investments in technology and analytics to elevate your workforce effectiveness. While the likelihood of interest rates dropping to the levels observed in 2020 or 2016 is low, a lull in 2024 presents a unique opportunity for strategic investments. This is particularly noteworthy considering ITR’s projection of uncomfortably high interest rates in the latter half of the 2020s.
For instance, if your company is grappling with annual wage increases of 3-5%, and there’s an opportunity to borrow funds at a reasonably favorable interest rate, investing in IT or new analytics capable of reducing labor needs by 8-10% could position your business exceptionally well.
To illustrate, a salesperson may traditionally make decisions without critical customer insights derived from your sales transactional data. In recession periods (as well as growing times), data-driven customer insights will give you the confidence to reduce cost-to-serve (for example, by establishing optimal minimum order sizes), hold your ground on pricing, and refocus efforts on key customers that represent hidden risks or opportunities.
Similarly, an inventory manager may be overwhelmed with managing a vast number of SKUs, suppliers, and customers, leading to an unintentional increase in slow-moving or non-moving inventory. This ultimately becomes a blind spot and increases pressure on working capital required for growth. A manager can make better inventory investment decisions with the help of inventory analytics that provide guidance on holding inventory for your best customers while preventing the build-up of less profitable, slow- or non-moving inventory.
Leveraging the Low for Future Success
To summarize, ITR used the phrase “leverage the low,” implying the key moves distributors must make during the expected mild recession in 2024. Are you planning for these critical moves in your budget and growth planning? Share these upskilling and insight-driven decision-making resources with your team and start investing to future-proof your business in 2024 and beyond.
