How Physical Operations Companies Can Navigate the Challenges of Economic Uncertainty

March 22, 2023

Dana Chery
Dana Chery

VP, Content Marketing & Analyst Relations


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Every business leader knows that economic highs and lows come in cycles, but that doesn't make periodic downturns any less disruptive or painful to deal with. Today, economic uncertainty around the world remains high, and while no forecast can be 100% certain, a majority of leading economists are now predicting further turbulence ahead in 2023. 

For physical operations companies, this news should come as no surprise. The industry is in the midst of significant change. Sparked by the COVID-19 pandemic, a series of events—including inflation and supply chain disruptions—have significantly increased demand for vehicles, equipment, and labor. For example, according to a leading equipment auction company, the price for truck tractors has increased 52% year-over-year, while the average cost of losing one skilled operations worker has jumped to as much as $45,000. 

Physical operations companies are being squeezed on all sides, and an economic slowdown will only increase the pressure. However, there are steps you can take now to navigate ongoing economic uncertainty. Read on to learn about the top challenges that physical operations companies face in a downturn, and how technology like the Samsara Connected Operations™ Cloud can help you manage uncertainty and do more with less.

Common trends that come with economic uncertainty 

Market volatility is often felt widely across the entire economy. However, different industries are often impacted in different ways. Here's what companies in the physical operations sector can expect:

1. Budgets will face higher scrutiny

When revenue starts to decline, every dollar of spend is closely examined to make sure it is being used most effectively. Organizations will look to cut costs wherever they can, so every asset, program, technology solution, or other investment needs to pay for itself and deliver fast time to ROI.

2. New assets will be more costly 

Persistent supply chain disruptions and the rising cost of goods and services mean that the cost of vehicles, heavy equipment, and other material assets has gone up significantly. In a downturn, funds for purchasing new assets may be scarce—and wait times for new equipment will likely be long—so companies will need to focus on maintaining and getting the most out of their existing equipment.

Another factor that’s driving up the cost of assets is theft. As the value of raw materials has skyrocketed over the past few years, theft rates have increased drastically. In just two examples, fleet catalytic converter thefts have risen 1,215% in only two years, while fleet managers have had to contend with a 20% increase in “theft with keys” incidents where trucks are stolen while a vehicle is idling. Safeguarding assets after purchase will be critical to managing costs. 

3. The labor market will remain tight

Employees are often the group that feels the effects of downturns most acutely. As physical operations companies continue to grapple with high turnover, a slowdown may hit them with a one-two punch: layoffs in the front office can lead to low morale while the struggle to retain frontline team members will persist. Operations companies will need to keep morale high and create a positive workplace experience despite job uncertainty. 

4. Leaner teams will need to keep productivity high with fewer resources

With fewer people and resources, organizations will need to find ways to be more efficient and do more with less. The ability to quickly identify issues and use remaining resources effectively while maintaining output will be critical to weathering a downturn. 

Using data and connected operations to make your business more resilient 

Downturns are inevitable, but that doesn't mean companies can't take control of how a slowdown impacts their operations. Increasingly, savvy business leaders are turning to technology to help manage economic uncertainty. According to a recent report from Samsara, 95% of surveyed leaders believe digitization improves an organization’s ability to weather disruptions, while 91% agree that investments in digital technology have increased their net profits. 

Samsara is a global leader in helping physical operations companies harness data to develop actionable insights to improve their operations. With the Samsara Connected Operations Cloud, companies can capture data from across their organizations and find innovative ways to be more efficient and lower costs. Samsara can support companies through economic uncertainty in a number of ways, but here are three strategies that should be top of mind:

1. Maximize the value of your existing assets and protect them

With Samsara Equipment Monitoring solutions, you can get insights across your entire equipment fleet. For example, asset utilization reporting allows you to understand which pieces of equipment are underutilized so you can reallocate before buying or renting additional assets.

One company that is using Samsara to get the most out of their assets is Artera, a leading provider of integrated infrastructure services based in Atlanta, Georgia. Using Samsara, the company was able to right-size their fleet and save more than $1 million. In addition, Artera sold $10 million in underutilized equipment, allowing them to invest in other areas of the business.

Part of maximizing the value of assets is also protecting them from theft. Organizations like the County of Santa Barbara are turning to Samsara to deter theft. The County's Public Works Department uses Samsara Site Visibility to increase their team's access to video and data that has allowed them to decrease the likelihood of theft by 50%.

2. Use one system of record for data across all physical operations

The Samsara Connected Operations Cloud allows companies to streamline data collection organization-wide, helping them to bridge data gaps and gain deep and extensive visibility into their physical operations. Moreover, Samsara offers the industry's largest open ecosystem of third-party providers and easy integration to mission-critical applications. 

A company that has experienced the benefit of using one platform to aggregate their data is Univar Solutions, North America’s largest chemical and ingredient distributor. With Samsara, the company has been able to integrate all their systems from warehouse to delivery, allowing them to operate more safely and nimbly. “The Samsara platform is a critical component of our supply chain. It has provided us with a single source of truth on our transportation,” Nathan Slemmons, Senior IT Analyst at Univar, said. 

3. Engage your workforce with better training and increased safety

Research has proven that a poor safety culture is directly linked to higher accident rates and higher worker turnover. This is why effective training is so critical: It not only makes employees and the communities they serve safer, but also helps companies retain workers. 

With Samsara Safety Scores, companies can create data-driven safety programs that empower managers to deliver more meaningful coaching. Foundation Building Materials (FBM), one of North America's leading distributors of building materials, is using Safety Scores to do just that. As Tom Fischbeck, ​​Regional VP, Pacific South Region, at the company said: "Now, dispatchers and managers can see events and they're much more likely to go to a driver and coach them through an incident.” 

His colleague, Jeff Mendenhall, System Administrator at the company, added: “Nobody in today's environment can afford to lose drivers, so the ability to coach them and help them get better at what they do is really valuable."

Samsara can help you tackle uncertainty now

Experts will continue to watch for the warning signs of a slowdown. Regardless of what the indicators say, however, there are steps you can take now to significantly reduce the impact of economic uncertainty. Samsara’s technology can help your organization streamline operations, maximize the value of your existing assets, and accelerate ROI across your organization. 

Learn more about how Samsara can help make your business more resilient.


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