The recovery from COVID-19 in manufacturing will not be one uniform push. Rather, just as the virus worked its way across the globe, the recovery will be uneven as disparate regions and sectors move toward the next normal.
This won’t make things easy for manufacturers. But the one advantage of a staggered recovery is that it allows you to draw on the insights of regions and sectors that are ahead of you in the cycle. And based on several podcasts I recently recorded with colleagues who advise on manufacturing across the globe, everyone seems to be facing the same key challenges.
Supply and demand
No doubt the biggest disruption that manufacturers have experienced in this crisis are interruptions to their supply chain. When China closed down early on in the pandemic, there was a short spell where manufacturing around the world continued as usual. But then the last container ship left China—and that was that. Manufacturers knew just when supplies would run out. And if you are manufacturing a car, even just one missing part means no car.
So what’s the lesson manufacturers can learn here? That supply chains going forward must be more agile and resilient. Manufacturers now and in the future must have the flexibility to adjust their supply chains in terms of geography, sourcing, and complexity when a crisis hits. This means cost may no longer be the most critical factor when it comes to supply chains. Keeping costs down has its advantages—but not when it means closing a factory down due to a lack of parts.
Being flexible also means having the ability to retrofit production to accommodate changing market demands. The ability to simplify and reduce their product range and cut down on the complexity around the production process was what allowed many manufacturers to keep operating in this crisis. This is especially important given that demand for certain products practically dried up during the early stages of the pandemic while demand for others soared. No one knows when demand as we knew it will bounce back—especially with many economies now in recession.
Health & safety
The well-being of workers is top of mind for all manufacturers right now. While the shift to remote work was highly challenging, figuring out how to keep workers safe who could not work remotely was even more so.
Manufacturers have worked hard to provide PPE for employees who remained on the factory floor. But some manufacturers are being more creative about worker health, coming together to privately fund consortiums that provide a range of health needs, including regular testing. Others have reworked their floor layouts to increase distance between workers. And as more workers return, temperature checks and other personal health safeguards are being deployed.
Digital will be connected to every aspect of the recovery from COVID-19, from worker safety to reorganizing supply chains. As such, any digital plans and investments in the works pre-pandemic will undoubtedly need to be sped up. And manufacturers who haven’t embarked on the smart factory journey or invested in the connectivity to make it happen will need to start playing catch up.
But digital is playing an important role in the here and now. Digital has not only enabled remote work, but also the work that has had to stay within a factory. Using technologies such as apps and wearables, employees can be warned if they are straying too close to other workers. Advanced tools for taking temperatures are also helping employers monitor health and keep their staff safe.
Digital technologies—AI, IoT, analytics—are also critical in the near term. With the trajectory of the virus still unknown, businesses will need to rely heavily on forecasting and scenario planning to inform their business strategies. The more data they can gather and analyze, the more complete the picture will be. These technologies can also help manufacturers illuminate supply chains and address complexity.
It’s becoming abundantly clear that the workplace will be a much different place post-pandemic. Even as the virus comes under control, it won’t be business as usual. With virtual work now an accepted—or at least expected—mode of working, leaders will need to rethink their workplace strategies. And the changing and uncertain environment will require new skills and roles—especially as the need for forecasting and scenario planning increases.
As operations begin to ramp up, manufacturers need to think about some key questions sooner rather than later. How do you get virtual teams to work together effectively and productively? How does remote work impact your talent and HR policies? How will manufacturers need to reimagine and redesign roles to accommodate changing needs and markets post-crisis? Flexibility will be key in order to optimize productivity and thrive in the new normal.
Recovery is about more than bringing workers back and ramping up production. For many manufacturers, it’s also about finding opportunities. Opportunities to scale innovative processes that worked well at the start of the crisis. Opportunities to leverage digital tools to greater effect—such as the use of scenario planning and remote work. And even opportunities to merge or acquire new entities.
It’s not insensitive to understand the opportunities a crisis presents. As seen in the past, all crises will have their winners and losers. Manufacturers that see how this is an opportunity to assess the future of customer value, their business models, and their capabilities and assets are more likely to be the winners.
No one, of course, knows when COVID-19 will abate and how markets will react. For right now, uncertainty is the only certainty. That means scenario planning is the mantra of most manufacturers as they prepare for the current and future business cycles.
But overall, there’s consensus that resiliency is more important than anyone realized. Resiliency in this context means the ability to reconfigure your processes and operations and strategies to meet whatever comes next. Because if there’s one thing manufacturers definitely agree on, it’s that this crisis is far from over.
Vincent Rutgers is the Global Industrial Products & Construction (IP&C) Sector leader with Deloitte Touche Tohmatsu Limited (Deloitte Global) and a Consulting partner with Deloitte Northwest Europe based in The Netherlands. The IP&C sector is among the largest in Deloitte’s global portfolio in terms of revenues and covers six segments, including: Aerospace and Defense, Construction companies, Industrial Conglomerates, Industry Products, Heavy Machinery and Equipment, and (Japanese) Trading House clients. Vincent directs a global network of partners and professionals to grow Deloitte’s relationship with strategic clients, delivering the full suite of business solutions and capabilities that Deloitte has to offer.
Prior to joining Deloitte, Vincent worked in various consulting roles for other professional services firms. His distinguished 30+ years of experience includes roles within industry focused on production process optimization for global manufacturing and telecommunications companies including Texas Instruments, Philips and AT&T Network Systems.
Vincent holds an MBA in Marketing from TiasNimbas Business School and a Bachelor in Commerical Engineering from Twente university, both in The Netherlands. He also completed post-graduate courses in marketing management and strategic thinking from Wharton Business School in the United States.