Amid the earlier legacy of trade policy turbulence, economic uncertainty and slowdown in growth, COVID-19 has created new challenges for the global manufacturing industry. Customer demand is down across sectors, supply chains have been disrupted and most factories are understaffed or shut down due to worker unavailability. According to a recent survey conducted in the U.S., nearly 80 percent of manufacturers anticipate a financial impact on their business due to the COVID-19 outbreak.
Even as these grim expectations are proving to be true, it is time for the industry to evaluate alternatives to minimize business disruptions and regain stability post this crisis. Manufacturers should re-look some of their strategies to function effectively in a new normal.
Optimizing Cash Flow & Maintaining Profitability
In the current scenario, reducing non-essential spending and investments is an imperative. Businesses will need to review their assets and capabilities, and decide on what to retain, let go or outsource. They will need to re-negotiate payment terms with suppliers, re-finance their loans to ensure liquidity, and re-evaluate discretionary capital investments and marketing expenses.
De-risking Supply Chains
Manufacturers will need to re-evaluate and re-balance their supply chains to mitigate geographical risks. Companies are now focusing on agile packaging that can be sent straight-to-consumer – to avoid supply chain bottlenecks and enhance safety. Now will be a good time to focus on autonomous movement of materials, automation of repetitive tasks and predictive maintenance. For both the immediate and long-term, it may be worthwhile to look at opportunities in public-private collaboration while investing in and re-strategizing supply chain best practices.
Investing in Automation
To stem the rapid spread of COVID-19 while prioritizing the safety of workers, manufacturing plants have been partially or fully shut down. This situation is likely to go on for a longer period of time, especially in hard-hit locations – giving companies the opportunity to proactively explore investments in automation. For example, remote maintenance of plants and equipment, deployment of augmented and virtual reality to drive training and customer service, robotic process automation in plant and office activities, and more. Besides reducing worker density in operations for the present and future, manufacturers should upgrade their capabilities to explore newer business opportunities.
Leveraging Data
Data will continue to remain central to decision-making. Companies will need to leverage historical data and combine it with the current scenario to generate accurate forecasts. Predictive analytics will be key as it will enable companies to understand the rapid changes in customer demand patterns as the crisis evolves, and these can be effectively mapped to production and supply chain decisions.
Overall, I do believe that digital will be the key to overcoming this crisis while being fully prepared for the future. As the world emerges from COVID-19, companies will have to re-imagine their supply chains and operations, and work towards a more agile, flexible model underpinned by technology.