The global COVID-19 pandemic created multiple disruptions for manufacturing leaders. Material flow was impeded and assembly lines curtailed operations due to workforce and parts constraints. Innovative adjacencies and health imperatives like personal protective equipment have driven product mix changes. Employee health is a serious concern, and physical interaction is risky. To make matters worse, there is great uncertainty on future business demand and regulatory protocols as governments and enterprises look to recovery and growth.
These disruptions demand immediate attention, but with a forward-looking mindset that seeks new opportunities, not a return to a world that no longer exists. The workforce needs to be trained and reskilled to make new products and to follow updated standard operating procedures for health and hygiene. Alternate and local sources of parts supply need to be developed, with local geography a relevant criteria once more. Digital technologies used in collaboration with other industries and partners have attempted to cover the demand-supply gap and, more importantly support development of new products and offers. Ventilators made with 3D printing are one example. But in the long term, COVID-19 presents opportunities for growth and development for those willing to adapt.
COVID-19 is different than previous challenges. Transmission modes and rate of spread have been unpredictable and faster in a global connected world, compared to earlier outbreaks like SARS. The pandemic has had secondary and tertiary effects, beyond those infected and on the overall social fabric. Existing business continuity and supply chain programs were designed to address focused, regional disasters like the Fukushima meltdown, and were unsufficient to contain the global nature of the pandemic. In additional to going through this for my firm’s 200,000 workforce, we have also studied dozens of manfuacturers who are clients and partners. As manufacturers stabilize for the short term and seek to thrive in the longer-term, based on our research here are five recommended actions for manufacturing leaders to adopt:
Implement an ongoing response team for agile decision making
Manufacturers should evaluate their ability to know what is happening across the enterprise and externally, and to act upon it quickly. The sense-analyze-decide-respond function is a core capability in a connected, interdependent world. A persistent nerve center with long-term perspective enables information to be collected from diverse sources and consolidated with experts to determine recommendations. While a central team in a single location is ideal, the realities of distributed expertise and mandated isolation require use of collaboration tools and adaptation to individual circumstances.
When this crisis passes, the nerve center concept can be extended as a digital brain for the entire enterprise and the ecosystem in which it operates. Manufacturers have been on this path for some time in the form of war rooms and supply chain network centers, but the pandemic has accelerated this trend.
Invest in digitization for interconnected systems and resilience
The COVID-19 pandemic has clearly emphasized the role of technology in business continuity. Digital technology has enabled businesses to retain a sense of normalcy by substituting the bits of online collaboration for the atoms of physical offices and interaction.
Our research has shown that digitally mature companies have greater resilience, and the pandemic has provided further evidence, particularly in employee engagement and supply chain operations. Manufacturers that have moved critical applications to the cloud have functioned more smoothly as employees access what they need from their homes. Concerns about data security and performance have been either overcome or outweighed by the flexibility that cloud applications provide.
Not only has the pandemic changed norms for the remote workforce, but it will also accelerate the shift to digital manufacturing in an interconnected world. Technologies like 3D printing will be pursued more aggressively now that additional use cases have emerged.
Groom local suppliers with deep capability for risk mitigation
Manufacturers can no longer depend upon price as a primary criterion to source components globally. To mitigate supply risk, regional supply sources need to be developed. Beyond price, selected materials will be considered national security priorities, creating yet another layer in the patchwork quilt of global trade compliance requirements.
For existing supply chain partners, accelerate development of local suppliers of critical parts. Assist suppliers to move up the value chain by delegating work of increasing value — for example, early involvement in design and transfer of proprietary or complex capabilities.
Practice stakeholder capitalism for the benefit of the broader society
COVID-19 is an opportunity for fresh thinking on stakeholder capitalism, a sense of higher purpose for the benefit of broader society. This was evidenced by medical-device firm Medtronic, which produces the popular PB 560 ventilator. Instead of protecting its intellectual property rights for competitive differentiation, Medtronic shared the specifications and let anyone use its design to make this critical product that was in acutely short supply. According to Medtronic CEO Omar Ishrak, “An unprecedented human challenge requires an unprecedented response. ”
Prepare for new sales cycles with low-touch consumer behavior
Consumer buying behavior has shifted because of the pandemic, along with industrial buying decisions. Well after the stay-in-place orders are lifted, effects of social-distanced commerce will linger. Sales and marketing organizations need to scramble to adapt to new buying behaviors. Awareness and behavioral triggers will change as customers voice different concerns and needs.
Each product line should be reviewed in the new context for affordability, relevance and potential new uses. Many products are traditionally sold face to face because they are high-touch (and high price), like automobiles. Marketers need to create rich, interactive online experiences that give prospective buyers compelling reasons to purchase.
With more people working remotely and digital becoming the primary mode of transaction and interaction, it is essential to cultivate a new operating environment that ensures workforce health and productivity. The COVID-19 pandemic highlights the importance of supply chain management and remote work. It is also an opportunity for manufacturers to take a fresh look at their operations and take bold steps to convert these challenges into opportunities for diversification and growth.