2021 = Optimism

Art Koch’s Profit Chain® Series
Volume 1 | Number 1 | January 2021

As we exited 2020, I stepped back and reflected on the past year, looking forward with optimism for 2021.

Even though 2020 was a troubled year, I’m not going to rehash the details.  I believe there are multiple bright spots of hope ahead and an excellent reason to have confidence in humanity.

1. Historically, pandemics have lasted approximately two years. We are now one year into the COVID pandemic.  I’m hopeful we will see the light at the end of the tunnel with this pandemic very soon.
2. I’m utterly amazed at how swift the world’s pharma industry and regulatory agencies developed and approved a new vaccine for COVID. I’m optimistic about how industry and government regulators can unite with a common goal, which offers hope for solving other world-wide issues such as AIDS, malnutrition, malaria, and climate change.
3. Again, I’m astounded by the confidence that investors have demonstrated in the worldwide financial markets. They have barely missed a beat.
4. The December, Institute of Supply Management (ISM) Purchasing Managers Index increased to 60.7 (anything above 50 indicates growth) brings hope that our economic cycle has shifted toward growth, representing six continuous months of growth and is the highest since August 2018. Please see ycharts.com/indicators/us_pmi for a complete history.
5. Finally, democracy has prevailed, which brings hope that the democratic model of the United States will continue to be the one that the world emulates.

As we enter 2021, I am optimistic that the manufacturing sector is moving in the right direction. We are aware that the COVID pandemic of 2020 caused a seismic disruption to the world’s supply chains that sent a tidal wave through the industrial and retail sectors. Depending on the survey used, 76% to 84% of executives said they needed to rethink their manufacturing footprint and supply chain strategy. They signaled confidence in their organization’s ability to compress lead-times by reshoring and insourcing operation-critical parts to regain control of their supply base.

The December ISM Purchasing Managers Index increase brings hope that the NA Industrial sector continues expansion.

I am pausing here to draw attention to the fact that private equity has $1.5 trillion, yes, TRILLION, of dry powder on the sidelines, ready to invest. I’m hopeful that the smart money will heavily invest in the North American industrial sector since executives have signaled a desire to compress lead-times by nearshoring, reshoring, and insourcing.

I have great confidence that we will experience three to five years of strong growth in NA industrials. There will be a similar parallel in demand for operations, supply chain, and skilled professionals to support the resurgence.

Here are three of the many areas to be addressed to get ahead of the growth cycle:

1. Invest in supply chain professionals.
2. Address broken processes, inaccurate inventory, and data integrity.
3. Process sustainability
4. …
5. …

How are you preparing for the next wave of expansion?  How are you demonstrating and communicating your hope, confidence, and optimism for the next 3-5 years to the organization?