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How NetSuite Helps Manufacturing Businesses When Markets Dip

April 1, 2023

News of three large bank failures has dominated headlines and contributed to a level of anxiety for both investors and business owners. 

It can be an unsettling time for your manufacturing business, to say the least. And the Fed continues to project increased rates and an overall slowing in economic growth well into 2023.

In manufacturing especially, demand fluctuations are expected as interest rate hikes are announced, causing buyers to reconsider large purchases.

When uncertainty strikes in business, your number one line of defense is in your systems. This is where NetSuite proves its ultimate worth.

Do I Need to Be Worried?

While these are among the largest bank failures in U.S. history, you don’t need to hit the panic button yet. Unlike the Great Recession of 2008, the government is taking a proactive approach to mitigating the situation. The U.S. Treasury announced measures to protect depositors and ensure funds are available to support banks under stress. This quick and efficient action is a major differentiator from 2008.

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Compared to 2008, three main factors indicate a healthier financial system:

  1. Transparency around value assets allows U.S. banks to generally hold very liquid assets.
  2. Banks have considerably more sufficient capital to weather financial hardships.
  3. More credit is available to support the banks until liquidity returns, though banks may still need to rebuild their capital bases.

These factors will not necessarily shield the markets from turbulence. But having a stronger financial foundation is paramount to avoiding a devastating financial crisis.

Market fluctuations are a natural part of the business cycle. While the ripple effect of these institutional breakdowns is unavoidable, there are ways that StratusGreen and NetSuite can help recession-proof your manufacturing business as soon as today. 

Set a solid foundation for your business today with several of NetSuite’s key features and benefits.

Problem #1: Rising Costs of Large Purchases

Large boxes representing large purchases in manufacturing

Manufacturers who produce and sell large equipment, vehicles, or other expensive goods may experience demand fluctuations quickly after interest rate hikes are announced.

Increased costs of financing may cause buyers like you to reconsider large purchases. This is especially true in times of inflation since both the costs of goods and financing are increasing.

NetSuite Solution: Data Consolidation

Data consolidation

NetSuite has a host of functions that allow you to complete insight and end-to-end traceability for raw materials. These also predict how quickly you can process them into your workflow. This lets you see your data in one place, allowing for quick decision-making, speedy processing, and faster production.

Having an accurate read on your inventory allows for quick and efficient order fulfillment. The more efficient you can be in your processes, the more likely you will stay ahead of distribution issues and maintain a satisfied customer base.

You can’t control the cost of labor or inflation, but you can control how fast you get things processed with NetSuite.

NetSuite Solution: Financial Reporting

Financial data

There’s never been a more critical time to have airtight financial reporting regarding lending. If you find yourself in a position where you need to borrow money, you’ll need to be able to report accurately on your finances. This could make the difference between a bank approving your loan.

NetSuite Financials creates detailed financial reports with just one click of a button. This reduces the likelihood of human error and eliminates the time and money needed for hiring a financial expert or taking days with your finance person.

If you’re considering a liquidity event, you can use NetSuite's accurate financial reporting to get the most value for what you’re actually worth.

Problem #2: Supply Chain Woes Affecting “Just-in-time” Shipping

Shipping vehicles

Inventory and supply chain issues have continued to linger due to the pandemic. If you’re utilizing just-in-time shipping, you might not receive your raw materials on time.

This lag in delivery can fail to hit your monthly production number and, subsequently, your target revenue. 

NetSuite Solution: Demand Planning & Reportable Indicators

NetSuite has demand planning to solve this for manufacturing companies. One feature is multi-location inventory management, which allows you to analyze your inventory across all distribution centers.

Knowing your inventory ensures you’re not overpaying for systems or running into a bind if you don’t have enough inventory in a particular distribution center to fulfill an order.

This is also an invaluable method to determine what raw materials you have on hand that might be customized to fulfill your order.

Incorporating reportable indicators into your system ensures a running database of items on hand that can be retrofitted into the part necessary to complete your production run.

Problem #3: Wage-Price Spiral

Abstract representation of wage price spiral

The current economic climate has made manufacturing businesses susceptible to what’s known as the “wage-price spiral.”

The wage-price spiral means:

  • increasing employee wages to meet economic demands
  • then increasing product pricing to compensate for higher wages
  • Then ultimately leading to a demand for higher wages to provide a livable wage to meet price increases

This “spiraling out” of sorts is a great concern as there is no foreseeable end to increased wages.

NetSuite Solution: Report on Labor Production Rates

It’s difficult to determine when you’ll see an influx of cheap labor, so you can use NetSuite to make the labor you're paying more effective. By reporting on production rates, you can make informed decisions on labor cuts.

Key Takeaways for Manufacturing Businesses

Manufacturing business owner looking satisfied

It might feel like an unsettling time to be running a manufacturing business. But this doesn’t mean you are powerless to act.

You can’t control inflation and interest rates but you can control your processes and efficiency. With the data consolidation, financials, inventory management, and powerful reporting systems in NetSuite’s toolbox, you are one step closer to recession-proofing your business.

It all boils down to accuracy — accuracy in your inventory management and accuracy in your financials.

Illustration of an operations manager scheduling tasks through NetSuite

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