Five ways to future-proof your go-to-market strategy ahead of a recession
The global economy is facing a potential downturn. In fact, economists are claiming there’s a 50% chance of a recession in the next 12 months. It goes without saying that companies who design, develop and manufacture consumer products need to take proactive measures to come out on top. But how?
As any innovative company will know, there are a whole host of elements to juggle as they strive to reduce costs and maintain profitability. These include product design, innovation, supply chain strategy, and manufacturing services. On top of that, IP strategy is also important – it helps companies future-proof their business by identifying future revenue opportunities and securing intellectual property for future post-recession investment.
But managing all of this in-house is a big ask at best. For many, it’s simply not feasible. This is where end-to-end innovation partners can take care of the heavy lifting and accelerate time to market, all while reducing cost.
Let’s take a look at five key ways innovation partners are helping companies prepare for a potential decline without compromising on product quality.
1. Implementing a cost-down design strategy
One of the most effective ways to reduce product costs is to conduct cost-down design exercises. This involves reassessing the need for product functionalities, redesigning components to lower costs, and selecting lower-cost materials.
By eliminating unnecessary features and reducing the number of components, companies can significantly lower the cost of their products without impacting its usability, effectiveness or the product experience. Additionally, by streamlining and improving the design for manufacture and assembly, they can lower the cost of manufacturing, as well as reduce labor costs.
2. Optimizing geography of manufacture
Another strategy to reduce costs is to consider the geography of manufacture. However, it can be a complex task evaluating which locations may or may not be more cost effective for your particular product development needs.
By partnering with experts who have deep knowledge in the manufacturing industry, companies can be confident they are sourcing components and manufacturing products in regions with lower labor costs. Additionally, by manufacturing products closer to the point of consumption, they also reduce transport costs (with the added benefit of minimizing the carbon footprint) and minimize supply chain disruptions.
3. Preventing component shortages and supply chain issues
Recessions often result in a shortage of certain components, which can disrupt the supply chain and delay production. Companies can mitigate this risk by
- Diversifying suppliers,
- Sourcing components from multiple regions
- Creating diversified product design strategies to allow seamless swap-outs (to utilize alternative components and suppliers where necessary)
- Building up inventory in advance.
4. Avoiding landing taxes
Companies can also reduce costs by avoiding the need to pay landing taxes (fees imposed on imported goods). This can be achieved by manufacturing products in regions with lower taxes or by sourcing components from regions with free trade agreements.
5. Implementing a future revenue-focused IP strategy
Building an IP strategy can help companies identify future revenue opportunities and secure intellectual property for future investment in more stable economic times. This includes identifying untapped markets and technologies, and securing the IP rights necessary to enter those markets at the right time.
The prospect of a recession presents significant challenges for companies that make consumer products. However, by leveraging the deep experience and breadth of capabilities of an end-to-end innovation partner across these five core services – cost-down design exercises, optimizing the geography of manufacture, preventing component shortages, avoiding landing taxes, and IP strategy – companies can proactively reduce costs and maintain profitability throughout the recession and beyond.
At CDP, we’re already starting to see companies build out a strong roadmap for success, embracing the additional support, and efficiencies, that an innovation partnership can afford. The economic future may be uncertain, but the potential for building a profitable product is there, waiting to be untapped.
Neil Campbell is Head of Consumer Technology and Global Head of New Business at Cambridge Design Partnership, where he is the resident expert in helping innovative companies get their products robustly to market faster.
Head of Consumer Technology and Global Head of New Business