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COVID-19 has changed the business landscape: how will manufacturers adapt?

Main visual : COVID-19 has changed the business landscape: how will manufacturers adapt?

COVID-19 has made digital transformation imperative – with human creativity at the center of change.

The manufacturing industry is constantly reacting to external forces but rarely do we see disruption on the scale we’ve experienced in 2020.

The global COVID-19 pandemic has pushed some manufacturers to the limits of productivity while bringing others’ production lines to a standstill. And it’s forced every organization to look again at how, why, and with whom they do business.

As economic green shoots emerge, we’re quickly learning that the manufacturing ‘winners’ and ‘losers’ aren’t those who continued production versus those who scaled back. The strongest recoveries will come from manufacturers that learned valuable lessons from this pandemic, and who are using the events of 2020 to perform a factory restart – with human creativity at the center of change.

 

A tale of two fortunes… but the story isn’t finished

The initial phase of the COVID-19 crisis has been a tale of two fortunes for manufacturing. For organizations in sectors like food production and FMCG, international lockdown measures sent demand skyrocketing. Many of these companies couldn’t produce goods fast enough, battling to make improvements to processes and productivity, to meet insatiable customer appetite. In contrast, manufacturers in other sectors experienced a huge slump in demand. According to Gartner,

“Some businesses have experienced a dramatic drop-off, with a 50% to 95% reduction in order volume compared to the same period last year,6 while others have completely shut down operations to curtail costs.”*Faced with lower production demands, the urgent priority for these organizations has been streamlining costs; furloughing staff and moving towards an outsourced model for key elements of their operations.

But this is only chapter one. As manufacturers emerge from the initial shockwave, the strength of their reaction to global disruption will define future performance – not whether they were one of the ‘lucky ones’ during initial consumer demand surges.

Many of the manufacturers experiencing production decline have used this time to work on their house, making tactical decisions that put them in a stronger position as they reopen, and lay the foundations for deeper transformative change.

Fujitsu is already talking to manufacturers that want to increase their investment in automation as a direct impact of the COVID-19 pandemic, so they can optimize productivity in the face of future disruption.

These innovators understand that now is the time to dig deep, and a smart technology roadmap will allow them to accelerate ahead of the competition in the post-coronavirus economy.

*Gartner, Coronavirus (COVID-19) Outbreak: Short- and Long-Term Actions for CIOs, March 2020[CM1] 

Adapting to a new, distanced working environment

COVID-19 has shuffled the deck for manufacturers, not just in terms of demand. The health, safety, and wellbeing of front-line workers is now more important than ever, and manufacturing businesses are actively seeking ways to help their makers adapt to an environment where close physical collaboration is not currently possible – while empowering them to be productive and creative.

In the short-term, as plants reopen, this means implementing new protocols that enable people to social distance. 70% of organizations are confident they can provide a safe working environment for employees, according to PwC. But while it’s relatively straightforward to space people out on the production line, there are wider threats that companies must consider, to fully protect their workforce.

For example, manufacturers need to develop safe systems for peak periods such as shift changeovers, to avoid overcrowding. Leading organizations are already investing in smart solutions like RFID and facial recognition technology to enhance checking-in processes – but not all technologies work when people are wearing face masks.

Other manufacturers are putting resources behind advanced remote working solutions, to facilitate development and production from home. A powerful example of this is the pharmaceutical sector, where digital twin technologies are enabling researchers to undertake experiments without having to physically work in the lab. Equally, system maintenance and configuration can be performed off-site, to ensure that all machinery is in optimal condition to support makers’ needs.

 

Digital transformation is no longer nirvana

To support true economic recovery, however, manufacturers need to look beyond the short-term challenges COVID-19 has created and focus on how they will accelerate this journey to unite human ingenuity and technical automation.

We’ve been talking about digital transformation for years, but the post-coronavirus ‘factory restart’ has catapulted it to the top of manufacturers’ priority lists. It’s not a nirvana; it’s a reality that needs to be acted on now.

And, in a climate where every manufacturer has access to the same smart factory solutions, the strongest resurgence will come from organizations that use technology to leverage the power of people, giving them automation tools and data insights to enhance their performance. This change cannot be superficial; it needs to drive deep human value.

The critical difference between pre- and post-coronavirus business models is that consumers are waiting to hold manufacturers accountable. Edelman Trust Barometer research reveals that 65% of people will change who they buy from based on how brands managed staff safety, wellbeing, and security during the COVID-19 pandemic. Empowerment, ethics, and sustainability are now priority in manufacturing.

 

The next disruption is just around the corner

Just as the human value chain will evolve post-coronavirus, so will the physical value chain – and 1 in 4 manufacturers are already worried about how the supply chain interruption caused by COVID-19 will impact their business going forward.

Many manufacturers have realized how exposed their supply chain is to disruption, as they rely on one source for acquiring raw materials, transportation, and getting goods to market. For some, it has also highlighted a lack of awareness around how and where their supplier's source materials, leading them to depend on partners with a suboptimal business model.

If one thing has become crystal clear in 2020, it’s that manufacturers need end-to-end insights. This will empower their makers to gain complete visibility over the supply chain, making intelligent decisions that drive better customer service. It’s a principle Boston Consulting Group calls the supply chain control tower.

The COVID-19 pandemic has highlighted the need for manufacturers to embrace flexible, adaptable supply chain operations because a new disruption will always be just around the corner. Leading organizations are looking not only at how they must evolve supplier relationships, but how they can limit operational interruption through digital transformation. And automation and robotics will prove central solutions in the movement to enable radical supply chain transparency.

 

Human creativity at the center of change

As Albert Einstein said, in the middle of difficulty lies opportunity. As manufacturers ramp up their operations to embrace a new normal, those that have used COVID-19’s unprecedented disruption as an opportunity to learn, metamorphosize, and re-prioritize will be in the best position to recover and accelerate growth.

COVID-19 has shone a light on where human ingenuity is being utilized to full effect, and where there’s room for improvement. And the smartest manufacturers have realized that innovation needs to start today, mapping the transformative technologies needed to deliver immediate, tangible improvements to the way people are able to design, create and make.

We are entering a new era for the manufacturing industry, which involves more pragmatism and less hubris for technology initiatives. Manufacturers need to take back control over market forces and respond effectively to customer demand, and this means investing in solutions that deliver immediate bottom-line value.

But critically, technology investment needs to deliver scalable, sustainable manufacturing change, technology needs to empower manufacturers’ most unique and important asset: their people. Coronavirus has made digital transformation imperative, with human creativity at the center of change.

 

Transform your makers into changemakers: visit Fujitsu’s manufacturing microsite to discover the core pillars your business must put in place to enable smart factory transformation.