Many signs point to continued positive momentum for manufacturing and distribution industries in 2022. Despite labor shortages and distribution woes, businesses are starting to define what a new normal might look like. While supply chain challenges threaten this progress, forward-thinking leadership teams are creating opportunities for growth by working one step ahead.

Integration is becoming a key part of the M&A playbook.

Cost synergies and scale are the primary drivers of M&A activity in the middle market; however, many high-value integration initiatives often fall short of expectations. Add that to the fact that valuations are at an all-time high and the importance of a strong post-merger integration plan becomes a critical success factor rather than a nice to have.

Labor – at all levels – is increasingly scarce.

Decreased labor availability coupled with increased demand on distribution centers is forcing management teams to reevaluate the way work gets done. Back offices are feeling the pain too. There is no short-term solution – the challenge for businesses will be to optimize the resources they have on hand. In 2022 and beyond, expect to see more companies get serious about talent development, employment brand, and employee engagement.

The Amazon Effect is changing the reality in which we live.

Whether it’s the demand for 2-day shipping or order progress visibility, businesses are evolving to localize supply, implement track-and-trace applications, and decrease new product development times to keep up with retail giants. Nearshoring efforts should increase as global supply chain troubles remain static.

Automation is moving up the adoption curve.

Digital transformation remains a driving force behind Industry 4.0. Businesses can unlock potential by automating key processes and leveraging data analytics for continuous improvement. A connected factory ensures that corrective actions are addressed immediately – reducing waste and improving performance.

Embrace new operating conditions in 2022

2021 has taught us the value of evolving with persisting challenges. Embracing operational changes to compete with in a landscape with these new operating conditions will help drive gains in market share and productivity.

About the Author

Tim Ristoff, TriVista’s Founder and CEO works with private equity investors, boards and executive leadership teams to assess and improve middle-market businesses.