How Manufacturers Can Thrive Post-COVID-19
As governments announce plans to end the COVID-19 lockdown, the return to work does not mean manufacturing operations will revert back to normal, pre-COVID-19 days. How companies react to loosening restrictions, as plants slowly begin to open up, must be handled delicately. Companies are currently assessing and forecasting what demand will look like, and trying to determine the appropriate labor mix.
Manufacturing is measured in throughput and yield, and the industry is doubling down on the saying, “do more with less.” This is the mantra in many industries, but especially in heavy manufacturing.
Disruptions will continue, and companies will have to adapt to a new way of working. However, where will the skilled employees come from that will support the resurgence in advanced supply chains?
COVID-19 has disrupted global supply chains. As companies restart operations post-COVID-19, they must move with deliberate and decisive actions in order to increase their resilience.
The pandemic has moved through this ecosystem like a tidal wave, affecting all industries. For example, the U.S. agriculture supply chain is quite efficient, and one of the best in the world. Our meat production facilities are streamlined to provide just-in-time (JIT) custom cuts to hotels, restaurants and grocery stores. Yet according to CoBank, an agricultural lender, COVID-19 has shrunk U.S. pork and beef production by 40% at the end of April. Production is not down because of consumer demand, but due to production facilities shut down because of COVID-19-related worker health and safety incidents.
Manufacturer of Tomorrow
What does the manufacturer of tomorrow look like? The call to action is long past. We are not a first-market mover anymore; the World Economic Forum Lighthouse Network indicates there are many companies and leaders around the world driving initiatives and changes. But, on a global scale, only 44 factories achieved the lighthouse status; we are in a market of fast followers.
The value created by the most seasoned factory employees was highlighted when furloughed employees left their jobs with years of experience and tacit knowledge.
If we look into the future of manufacturing after COVID-19, the fact is that the human element IS our most valuable resource.
The human workforce has to be enabled to work more efficiently in a quickly advancing ecosystem full of emerging technologies. Manufacturers have to take a holistic approach in developing real and scalable solutions that connect industrial workers with all of the capabilities required for human-and-machine hybrid activities in a transforming digital ecosystem.
Company boards need to be asking these pivotal questions. Is the company leadership doing enough to not only guide the organization through the pending changes, but adopting an attitude of leaning into change? Or are they pretending with the neverending pilot? The time for pilots and indecision is over. Companies should be expanding and adapting to scale today with collaborative digital tools that drive digital transformation.
What happens when companies don’t adjust to change? Operations will be challenged again. And in the next wave, leadership will be responsible for the missed orders, shutdowns and pending layoffs. There is a crisis on the horizon and it’s imperative that organizations adapt and adopt technology in order to be more resilient.
Over the last three years, manufacturers that adopted a forward-thinking mindset began transforming their operations using modern digital tools focused on productivity, quality and safety.
As companies navigate these complex times during the outbreak, we have witnessed that those manufacturers who embraced Industry 4.0 technology have been able to weather the effects of COVID-19.
The level of commitment to digital transformation that previously led to recognition and awards should become the norm for ALL manufacturers, not the exception.
Supply Chain Success Post-COVID-19
Companies will certainly evaluate their supply chains to identify opportunities to shorten the distance between supplier and company. However, it is unlikely the majority supply chains will actually move from overseas to region-based networks. The cost to rebuild and re-tool elsewhere is too great in many circumstances. The past two decades of inventory management investment (i.e., just-in-time) would be thrown out.
Instead, the best script for success, given the current economic climate, is that companies require their suppliers invest in and adopt Industry 4.0 strategies. The digitization of work has an enormous impact on operational efficiency. It also allows for shared data between suppliers and customers. Sharing operational data enables processes to be measured, evaluated and transformed. This has been the case for several of our clients, including Sealed Air, Georgia-Pacific and Heineken; had they not adopted Industry 4.0 technologies, their customers like Amazon, Target, and Walmart would have faced serious supply shortages.
COVID-19 will have long-lasting effects on manufacturing organizations and supply chains, forcing companies to restructure their operations. The coming months will remain challenging and will call into question the way work has typically been done in the past. Leaders need to move with purpose and move with speed. By adopting new digital technologies, companies have the opportunity to emerge from this crisis with operations that are more resilient, productive and safer.