The global manufacturing sector is facing a crisis on a scale not seen before. At one point, according to BCG1, more than 90% of manufacturing plants in Europe and 65% in the U.S. were closed because of COVID-19. Plant closures were initially due to part shortages from China, but as the virus moved globally, the focus shifted to protecting workers and reducing the spread of infection.
Amidst this pandemic, the manufacturing industry is demonstrating great resilience. Companies across many sectors are repurposing their production lines to create different products when asked by governments, or to look at how they could use their capacity in innovative ways to help in the current crisis.
As the sector works to get through this crisis, there are a few changes that are becoming apparent regarding the future of the manufacturing industry and how it operates.
Remote work and virtual meetings will become the norm
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 work-from-home experience. Refining roles and putting secure technology in place to allow this to happen is an ongoing challenge.
One complication of sending the workforce remote is that some functions, like product development and certain aspects of manufacturing, require high-performance computing that can be difficult to perform remotely. OpenText™ customer TDK-Micronas deployed OpenText Exceed™ TurboX to allow its engineering teams in Germany, China, Serbia, Austria, and the United States to collaborate on a centralized platform vs. through a local data center. When facility closures began, workers simply moved their desktop computers home and were able to continue working together without any reduction in security or performance.
According to the Manufacturing Leadership Council’s February 2020 Factories of the Future survey, most manufacturers are in the early stages of implementing M4.0 (Manufacturing 4.0) technologies for their processes and functions. While nearly half of respondents said they were in the intermediate stage of M4.0 technology adoption for production/assembly and equipment maintenance/installation, only 24.2% said they were at that same stage for R&D.
All this is to say that manufacturers may be getting more digitized for tackling fundamentals in the factory that will keep production lines running, but they aren’t necessarily advancing on things that drive business growth.
Digital transformation in manufacturing will accelerate
The current crisis has highlighted the areas of weakness in digitization for many plants and supply chains. Just two years ago, 84% of manufacturers were telling SAP that digital transformation was crucial, but only 2% had completed any company-wide effort.
Many analysts and management consultants are predicting the acceleration of digital transformation because of this pandemic.
In truth, change is coming 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.
Market researcher Gartner recommends several short- and long-term actions that CIOs can take to help them deal with the crisis.
- Source interim digital collaboration tools to enable employees to work remotely, ensuring security controls and network support are in place.
- Work with business leaders to conduct workforce planning to assess risk and address staffing gaps. Reprioritize demand and balance staff by shifting personnel from areas of lower priority.
- Engage customers and partners via digital channels to maintain relations. Repackage product offerings and sell them through digital channels.
- Establish a single source of truth and communicate it to employees.
- Develop a digital workplace strategy that includes collaboration applications, security controls, bring-your-own-device (BYOD) programs and network support.
- Identify alternative employment modes and digital technologies that can empower employees and automate tasks.
- Develop digital product extensions, expanding to new channels and enabling new business models to increase business resilience and prepare for growth.
- Contribute to data-for-good programs to improve data literacy and increase the adoption of a wider range of data and analytics.
Now that the industry has moved past the initial crisis response phase, it’s time to consider longer-term strategies for recovery and possibly creating a new plan for technology investment. It’s a good time to make sure your organization builds its digital resilience, whether it’s for recovering from this crisis or preparing for the next.
This is an excerpt from a recent article in the journal of the Manufacturing Leadership Council. Read the full article here.