Uncertainty is dominating the economic discussion in the U.S. and around the globe. There are several factors contributing to this uncertainty, according to Chad Moutray, chief economist for the National Association of Manufacturers and a board member for the National Association for Business Economics. Moutray recently spoke with MDM about the factors behind the uncertainty.
Download a Free Chapter: The Little Black Book of Strategic Planning for Distributors Submit your email address below to receive a chapter of Brent Grover's new book. When you submit your email you will be signed up to receive weekly distribution news updates.
While the U.S. has technically been in recovery since 2009, “most Americans wouldn’t know it,” he says. “There really has been a sitting-on-the-hands mentality both on the part of consumers and businesses.” This disinclination to move forward, coupled with near-stagnant growth, has led to an economy that appears to be “stuck in neutral.”
Manufacturers tend to have a long time horizon, but unknown future conditions, especially in the political realm, make it difficult to form long-term plans. With “politics what they are” right now, businesses don’t know what their tax rates will be in January. And Moutray says many manufacturers are worried about the impact of defense sequestration – a $500 billion cut to the defense budget over the next nine years.
But according to Brent Grover, author of The Little Black Book of Strategic Planning for Distributors, uncertainty isn’t a valid reason to discount the planning process. Grover knows uncertainty can depress strategic planning efforts, but he encourages leaders to form long-term goals regardless. Grover recommends distributors conduct a thorough strategic planning exercise every third year, and that the business plans for intervening years be tied into the plan.
Grover realizes that an obvious objection to a three-year horizon is that “our world is changing so fast that the plan will become obsolete. Indeed, all plans become obsolete the day they are completed. No battle plan survives contact with the enemy, and no business plan is intact after engagement with the marketplace.”
The logical conclusion is to plan, and then adjust when needed. Grover says leaders and employees “must expect that like a ship on a long voyage, the company’s course will be adjusted according to sea conditions and weather, but the destination will not change.”
Please do not reprint MDM's content on your website without MDM's express permission as it is copyrighted material. To gain permission, email us, or call 1-888-742-5060. For information on PDF or print reprints, visit www.mdm.com/reprints. MDM welcomes inbound links from your site. Please cite Modern Distribution Management.
Download the Top 40 Industrial Distributor List
Get the Top 40 Industrial Distributors list in PDF, and you will be signed up to receive MDM Update, your free daily distribution news update by email.