COVID-19 has forced manufacturing businesses to re-think how they run their operations, transforming them forever
2020 is a year in which many manufacturing businesses have had to show resilience and agility, just to survive. Although the COVID-19 pandemic has exposed some significant weaknesses, this is giving manufacturers an opportunity to transform their factories for the better. McKinsey maintains that “successful companies will redesign their operations and their supply chains to protect their business against a wider and more acute range of potential shocks and disruptive events.”
If we let it, this pandemic will help manufacturers to redefine their standards: how products are supplied, how improvements are implemented and how manufacturing floors are digitised. We owe it to all of those who kept manufacturing plants open throughout this pandemic; those who learned to adapt in the face of adversity and uncertainty.
Here are three important lessons that the pandemic has thought us in 2020 and how these lessons are turning into opportunities to create more robust and dynamic manufacturing companies:
1. Supply chains don’t have to be so rigid
Covid-19 has shown companies that they need to move to more flexible manufacturing and supply chain models to avoid raw material stockouts and shortfalls in giving customers what they need, when they need it. Diverse sourcing and digitization will be key to building more robust and smarter supply chains. Here are some developing trends…
Less reliance on one major supplier: Manufacturers are identifying which suppliers are at risk of experiencing production slowdowns and are looking for alternative suppliers
Increased visibility on parts: Implementing technologies such as cargo-tracking, GPS and RFID are helping to increase visibility into nearly every part of the supply chain
Less concentration in one country or region: Many manufacturers are starting to diversify the physical locations of their supplier base. Some sectors, such as medical devices, electronics and automotive, are even considering moving parts of their supply chains out of China to the U.S. or EU. Although this increases costs, it reduces exposure to running out of stock
Bulk-buying and stockpiling: As bulk-buying and stockpiling become more common, some manufacturers are considering a change from just-in-time inventory to a just-in-case strategies. Although this is “anti-lean” manufacturing and ties up revenue, some businesses are seeing this as the lesser of two evils, to avoid the risk of running out of a product
2. Manufacturing businesses can pivot how they work very quickly
Covid-19 has shown that it is possible to significantly accelerate the pace at which improvement activity or change is implemented. A “just do it” and “can do” attitude goes a long way. There are some impressive examples of manufacturing companies pulling out all the stops to keep their doors open during the pandemic…
Rapid production floor re-layouts: Although many businesses had to close their doors or adopt a “work from home” policy to keep their staff safe, manufacturing businesses had to figure out how to keep their manufacturing operators a safe distance apart, yet still work together as a team. Many switched from a 1 shift to a 2 shift pattern almost overnight in order to ensure that employees could be positioned far enough apart on the manufacturing floor. Others erected perspex screens between workstations, staggered shift start and end times and implemented face masks and gloves long before they were the norm
Rapid kaizen events: Manufacturing work practices and processes had to be adjusted in order to ensure that they could be carried out safely in the new work environment. Kaizen events are a powerful tool for identifying and implementing improvements quickly. Many businesses realised how quickly and effectively they could implement change when there was an urgent need…and a will to do so
Short-term product pivot: There are numerous examples of companies pivoting their business in a matter of weeks to produce PPE gear and ventilators for the healthcare industry. It highlights the potential of human ingenuity when the shackles are off and the bureaucracy is removed.
3. Digital transformation can be implemented one step at a time
In less than 12 months, the COVID-19 crisis has brought about years of change in the way companies in all sectors and regions do business. According to a new McKinsey Global Survey of executives1, their companies have “accelerated the digitization of their customer and supply-chain interactions and of their internal operations by three to four years”. COVID-19 has helped manufacturing companies to realise that digital transformation strategies are nothing to be scared of and will form a critical part of their future growth…
Digital transformation strategies can be implemented quickly: Most businesses implemented digital solutions during the pandemic to help them to run their business more effectively. The Mcinsey Global survey demonstrated that the pace of change was much quicker than businesses ever thought possible before the crisis.
Digital transformation is here to stay: The level of investment in digital initiatives has increased significantly and most businesses are realising the economic and operational benefits. Focus is now switching to how they can scaleup these digital solutions and embed them into how they run the business permanently
Digital transformation is of strategic importance: Businesses are realising that digital transformation goes beyond the question “how much will it reduce our costs?”. From a manufacturing perspective, the cost savings are quickly realised in the labour and material cost savings alone. But manufacturing businesses are discovering other benefits from implementing digital solutions. Take Kyzentree’s software Kt-Pulse for example. Kt-Pulse monitors any manual or semi-automated manufacturing process in real time. The analytics are helping remote workers to keep up to date with the manufacturing floor, increasing team collaboration on addressing issues, standardising how processes are monitored and identifying new ways to reduce downtime and scrap that are just not possible with the traditional paper-based systems.
1 The online survey was in the field from July 7 to July 31, 2020, and garnered responses from 899 C-level executives and senior managers representing the full range of regions, industries, company sizes, and functional specialties
It’s the companies with a positive and agile attitude that will rise above the current challenges. Manufacturers now have a chance to embrace new ways of working that COVID-19 has forced upon us.
According to the McKinsey survey, digital transformation initiatives are helping manufacturers to increase output by 10% to 200%, reduce costs by 5% to 40% and decrease time to market for new products by 30% to 90%. To succeed in scaling digital manufacturing in this way, manufacturers must have a robust digital strategy with clearly defined financial and performance goals that are linked to real business needs. Manufacturers that can move quickly to digitally transform will be better placed to respond to the changes in the operating environment that COVID-19 has triggered and give them a massive lead over slow-moving competitors.
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Anthony Cahill has over twenty years’ experience in various roles within the manufacturing sector. He has primarily worked in manufacturing operations that rely on people working with their hands, fixtures and semi-automated equipment to produce discrete goods across a range of industry types. With a background in lean manufacturing and six sigma principles, he has a passion for looking at challenging manufacturing environments and working with cross-functional teams to transform them into safer and more efficient work spaces for all concerned.