This year promises to be better than 2002, according to economists and industry observers. In its latest economic report last month, the Institute for Supply Management said purchasing and supply executives are optimistic about revenues this year.

And that couldn't be better news after a 30-month recession in the manufacturing sector that has led to nearly two million workers being terminated.

You couldn't find much good news to talk about last year. True, there were some distributors in various sections of the country that were happy with their sales figures. Certainly, there weren't many.

But the downturn in business led companies to re-examine their internal operations. Many distributors found they could do more with less. One distributor told me he finally realized that he had been overstaffed and the downturn forced him to "right-size" his business.

The real problem for distributors and other small businessmen is coming to grips with the strong possibility that business may not come back the way it did following previous re-cesssions. In the past, as business rebounded from downturns, companies built up inventories and hired new personnel.

No one thinks that's going to happen this time. Too many customers have moved their manufacturing facilities to other countries, such as China. Sky-high health insurance costs mean that few manufacturers will be ad-ding to their payrolls. And now there are many companies engaged in "lights out" manufacturing where unattended machines churn out flawless parts.

We are entering a new period of manufacturing and distribution. Anyone employed in those sectors will be trained in more than one job function. No longer can the inside sales and outside sales staff or marketing departments be viewed as separate entities. Successful distributors will be those who adopt a team approach to satisfy the needs of the customer, something many distributors have done in the past few years.

Each employee within a company must learn how his or her job impacts the total operational process. Employees can no longer say, "that's not my job."

Training and education will be the keys to the success of small businesses. Distributors need to establish and promote job and skills training, making their employees more adaptable to a changing business environment. The challenges are enormous in 2003 but so are the opportunities.

Jack Keough Editor/Associate Publisher jkeough@reedbusiness.com