As seen in South Florida Business Journal

June 5, 2025 - Seventy-seven percent of manufacturers and distributors grew their revenue this past year according to Citrin Cooperman’s annual survey of 500 leaders. However, it appears that growth has now slowed through 2024 and into the beginning of 2025. Just 17% of the leaders surveyed reported significant revenue growth, down from 49% in our 2024 report. It now appears as if the heady post-pandemic surge of e-commerce-led demand is over, and the headwinds have returned. This article shares three ways manufacturing and distribution leaders are adapting to maintain their margins.

Flexing Their Supply Chains to Maintain Buyer Trust

For the second time in five years, U.S. companies are stocking up on materials, finished and unfinished. Some bought well in advance of normal needs, in order to beat the tariff deadline. Yet no matter how prepared, some may encounter supply, demand, and inventory issues. Newly price-conscious consumers and business buyers are nervous, and manufacturers and distributors must not give them any reason to hesitate — such as being out of stock.

According to our survey, buyers care about these factors:

• Product availability (35%)
• Customer service (34%)
• Pricing (29%)
• Technical knowledge (29%)

Manufacturing and distribution companies we talk to are flexing their supply chains to maintain high inventory and customer service levels. Fifty percent say their top response is to start manufacturing in-house. Fifty-two percent say they would reshore more if there were better tax incentives — though there are other ways to mitigate tariff impact, such as Foreign Trade Zones. Whatever their approach, companies must ensure they have enough product on hand without overpaying.

Upgrading Their Business Intelligence

Manufacturing and distribution companies need to know what is coming, minute-to-minute, SKU by SKU. It’s no surprise then that the number one way companies say they are applying new technology in our survey is to predict supply chain delays, cost changes, and to analyze customer data to better predict behavior.

“In today’s volatile market, the phrase, ‘Be quick or be dead’ resonates,” says Partner of the Digital Services Practice at Citrin Cooperman, Jory Weissman. “For manufacturing and distribution companies, agility is not just a competitive edge — it is a matter of survival.”

Artificial intelligence (AI) looms large on the list of business intelligence initiatives for its ability to improve data collection and automatically generate reports. However, data and AI alone do not produce intelligence. It is a many-sided problem. One aspect is that most companies’ aging ERP systems lack integration, which is why nearly two-thirds say they are currently upgrading. Another is that companies lack employees with the necessary digital skills to help them reach a state of ad-hoc business intelligence where stakeholders can ask questions and get quick answers without asking IT.

Manufacturing companies are increasingly looking outside their walls for that digital talent. Eighteen percent of manufacturing and distribution companies surveyed reported that they do not have the appropriate skills to maximize the software currently in place. For companies exploring upskilling their tech talent, this will be a major investment area over the next few years if they want to remain competitive.

Labor, Inflation, Tariffs, and Other Rising Costs

Forty percent of manufacturing and distribution companies have seen employee costs rise over the past year, and this is just one cost of many. Seventy-one percent say tariffs will affect them and 68% say they will pass inflation costs along to consumers.

To pass along costs, companies will need an advanced pricing strategy. Consumers and business buyers are highly cost sensitive right now, so companies must carefully weigh the impact and type of rate increase, whether a simple cost hike or a “temporary fee” to make clear they are not raising their rates voluntarily. Otherwise, buyers may assume price-gouging.

Over the past year, companies in our survey say they have:

• Seen employee costs rise (40%)
• Opened a new warehouse or facility (35%)
• Implemented a new ERP system (31%) <p.>Applied new fees to products and services (29%) </p.>
• Sold or considered selling a business division (27%)
• Suffered a cyber incident or breach (26%)

Compared to last year, this one is more challenging, and developments are moving at a quicker pace. Whatever happens next with tariffs and inflation, it is clear that manufacturing and distribution companies should look to their margins, and that upgrading technology is a path to better information and proactive planning. Better supply chain software, business intelligence, and ERP systems may be key to navigating what is next.

Citrin Cooperman’s Manufacturing and Distribution Industry Practice leverages specialized knowledge to provide a full range of professional services and industry insights, helping companies achieve their strategic objectives. Access our 2025 Manufacturing and Distribution Pulse Survey Report for greater insights into current industry issues and solutions successful business leaders are implementing.