Manufacturers continue their great wait for growth as the second half of 2025 moves along. The July reading of the Consumer Price Index (2.7%) inched up from the Federal Reserve’s target of 2%, fueling speculation that inflation from tariffs may finally be winding its way through the economy and into consumers’ pocketbooks.
Adding fuel to the fire, the July Producer Price Index reading accelerated to 3.3% year-over-year, driven by a massive month-over-month increase of 0.9%. The Federal Reserve held interest rates flat during its July 29 session, but current projections indicate a rate cut of .5% to .75% points is probable by the end of 2025.
Economic whiplash like this can be paralyzing. The Federal Reserve’s rate hikes have curbed post-pandemic inflation, but they’ve also left capital investment in limbo by making borrowing more expensive. Geopolitical tensions and shifting tariff policies have injected greater uncertainty into the supply side of the economy.
Manufacturers are now caught between conflicting signals: softening demand, unpredictable input prices and a cost of capital that remains stubbornly high.
For executives, the temptation is to wait for inflation to stabilize, wait for the Fed to make its move and/or wait for customers to return in force. But companies that thrive won’t be those who sit on the sidelines. They’ll be the ones who use the moment to sharpen pricing, optimize commercial processes and make themselves more agile, even as uncertainty reigns.
Here are three practical moves to make now to improve margins, reduce risk and ensure you are positioned for growth when conditions turn favorable.
1. Use AI to find hidden clusters of revenue and margin growth
Using AI-powered optimization and clustering, algorithms are able to sift through millions of transactions to find patterns that were previously hidden in the noise. In today’s economy, where broad-based price increases aren’t viable, surgical price improvements within adaptable customer segments can make a meaningful difference to margin performance.
For example, one manufacturer recently used machine learning to identify a group of mid-sized industrial distributors in the Southeast who consistently paid below-average prices for a core product family despite receiving high service levels. That cluster hadn’t been flagged in traditional reporting because they were spread across multiple sales territories. Once isolated, the commercial team realigned prices. This brought pricing closer to the value those customers were receiving (considering willingness to pay, of course). The result was a lift of over 2% on margins.
2. Streamline workflows to improve market responsiveness
Many manufacturers still rely on slow, fragmented commercial processes that weren’t designed for today’s volatile environments. In particular, pricing and quoting workflows often get stuck in spreadsheet purgatory. Deals are delayed, margins eroded and both customers and sales teams frustrated.
Centralize your pricing structure so you’re not reinventing the wheel every time a customer asks for a discount. A streamlined workflow gives the sales team guardrails to make more confident decisions, offering real-time visibility into cost changes, competitive shifts and inventory positions.
One global manufacturer I spoke with recently implemented a unified CPQ and pricing platform to address these exact challenges. Before the project, it took weeks to issue a quote for a configured product. Now, that quote can be generated in under 30 minutes, and optimized pricing is embedded directly into the tool. They’ve not only improved speed-to-quote but have also captured over $5 million in additional margin through higher-quality pricing.
Customer timelines are tightening, and procurement teams are laser-focused on cost justification. Streamlining commercial agility isn’t a luxury; it’s a competitive necessity today.
3. Check and adjust with fast analytics to navigate turbulent conditions
The market rarely stands still. High-performing manufacturers do not limit their continuous improvement mindset to manufacturing. Rather, they apply those principles to the “pricing factory” by regularly checking their price and margin results and adjusting course based on real-time insights.
One of the most powerful tools for this is price-volume-mix (PVM) analysis. It breaks down changes in revenue or margin into three (or more) drivers, including how much was due to:
- Changes in price
- Changes in volume
- Shifts in product or customer mix
For example, imagine your quarterly margin has decreased by 2%. Without PVM, it’s just a number in a spreadsheet, and executives are left guessing at the cause. With PVM, you might discover that pricing improved slightly, but volume dropped due to one key customer reducing orders due to a cancelled project, combined with product mix shifted toward lower-margin SKUs. That level of clarity helps leaders focus on what to fix and what to let slide.
PVM is especially useful in today’s environment, where macroeconomic forces (like tariffs or FX swings) impact some products or customers more than others. With the right tools, companies can run PVM on a monthly or weekly basis to understand how pricing actions, demand patterns, and mix changes truly affect profitability.
More importantly, PVM allows manufacturers to separate signal from noise. Rather than chasing every drop in revenue or blaming the market, teams can diagnose exactly where performance is changing, why, and determine what they will do about it.
Standing Still is Not a Strategy
As Nobel laureate Niels Bohr said, “Prediction is very difficult, especially if it is about the future!” The Fed may hold rates steady this month or they could surprise the market with a cut. Tariffs may or may not materialize. The global economy may continue to find its footing, or it may stumble into stagnation. These are all things manufacturers can’t control.
What they can control is their commercial discipline. They can modernize their pricing infrastructure, make faster quoting and smarter segmentation a priority, and stand-up dynamic analytics that respond to real-world changes. The great wait may continue, but that is not an excuse to stand still. Manufacturers who win in this environment will be those that act while others wait. Margin, like fortune, favors the bold.
