The global manufacturing sector is in the midst of a crisis on a scale not seen before. At one point, according to BCG, more than 90% of manufacturing plants in Europe and 65% in the US were closed due to COVID-19. Plant closures were initially due to part shortages from China, but as the virus moved globally, closures were to protect workers and reduce the spread of infection.
In the midst of this, governments asked manufacturers across many sectors to look at how they could use their production capacity innovatively to help in the current crisis.
A great example of this is Project Pitlane in the UK. Seven Formula One (F1) teams – Mercedes, Red Bull, McLaren, Renault, Racing Point, Haas and Williams – have come together to provide assistance with the manufacture of medical equipment such as ventilators. These manufacturers’ capabilities to take a product rapidly from concept to production have become crucial to this effort. For example, working with University College London, Mercedes F1 was able to redesign an obsolete patent and produce a new and improved CPAP (Continuous Positive Airway Pressure) breathing device, have it approved and into production in around 100 hours.
Think fast, act fast, pivot and innovate
It’s not just new collaborative product development that manufacturers have been able to spin up on the fly. Producing much-needed ventilators to the scale that the health services around the world require means creating new supply chains in real time.
We’ve seen the problems that have arisen with supply chain disruption caused by COVID-19 halting production in China. Initiatives like Project Pitlane show that manufacturers can quickly build new partnerships and new supply relationships at a speed that we would have previously been labeled impossible.
This hasn’t been easy. During previous epidemics, such as SARS, the localized nature of the virus’ impact meant that manufacturers could look to suppliers in different regions. The global effect of COVID-19 is forcing companies to re-assess their supply chain models.
Being able to quickly identify and onboard alternate sources of supply and spin up entire new supply chains to meet new product developments is likely to be one lesson we learn about the shape of tomorrow’s global supply chains.
COVID-19: Accelerating digital transformation in manufacturing
At OpenText™, we estimate that there are now more than 300 million remote workers. The sudden requirement for manufacturing companies to have employees work from home has been a wake-up call for many. A recent survey showed that 53% of manufacturing respondents admitted having no home-working experience. Refining roles and putting in place the secure technology to allow this to happen is an ongoing challenge.
In addition, the current pandemic has highlighted how poorly digitized many plants and supply chains still are. We have long discussed the evolution of digital transformation within the manufacturing sector. Only two years ago, 84% of manufacturers were telling SAP that digital transformation was crucial, but only 2% had actually completed any company-wide effort.
All that is now changing and it’s changing fast. Manufacturers have little choice but to become data-driven to build the resilience, agility and scalability they need to react rapidly to the uncertain and chaotic trading environment they face. The good news seems to be that manufacturers are up for the challenge. Just look at how quickly a premium car company like Mercedes can turn itself into a medical device supplier.