The current COVID-19 pandemic has had a significant impact on business. Emerging out of this crisis will be a journey and we will have to continuously observe, process new information and improvise to be relevant to our customers. It’s hard to attach a timeline to this journey - but suffice to say that we are talking months and years, and not days and weeks.
While the journey begins with ensuring survival and continuity, companies that will emerge stronger from the crisis would use it as an opportunity to optimize and Re-invent.
While all industries are combating the challenge in different ways, from a Manufacturing perspective, what we have seen up until now is a focus on survival and an attempt to ensure business continuity as defined by the nature and priorities of the business.
Specifically, from a survival perspective, it has been about ensuring employee safety (which is paramount) and managing cash flow to ensure that companies have longer runways for surviving as revenue streams continue to dry-up. Companies have to manage working capital and cash flows much more efficiently and free up capital.
The next frontier after survival is business continuity, which includes enabling employees to work remotely, and in cases where the plants are still operating or beginning to operate, ensuring a safe working environment for the plant workers
Supply chain is an important link in business continuity, especially because it has a high level of dependency. There are companies that are overstocked - because they indulged in the ‘toilet paper hoarding syndrome’, where like consumers hoarded toilet paper, they hoarded supplier components thinking that they might struggle to get those parts when operations restart. As a result, they have blocked a lot of capital in inventory when demand is drying. Then there are companies that are out or will be very quickly out of supplier parts and have no visibility in terms of where parts are stuck in the supply chain.
As factories start to re-open, there will be a massive focus on planning. Demand and Supply will be tough to predict and they will be operating in an environment where cost and cash constraints will be higher than ever.
Finally, reinventing the business on the back of technology will no longer remain an aspiration and a 5-year-plan. It perhaps will soon be seen as a compulsion in response to market needs and the battle for survival – leading to an acceleration of the Digital transformation roadmap.
Fixing the demand-supply equilibrium breakdown
The demand patterns are breaking and the supply chain is crumbling, leading to a breakdown of the demand-supply equilibrium. Companies will have to reboot their planning process and supply chain, and technology will be a key enabler in that process.
Connected Planning is going to be very important as both demand and supply continue to be unpredictable. According to a recent HBR survey, 9 out of 10 planners still use Excel to plan and that is going to break down in the current context. Quick adoption of technology solutions that help to integrate planning b/w Finance, Supply chain, Sales and Production will provide the ability to conduct “what-if” scenario planning in a rapidly shifting environment.
Demand forecasting models will have to be rewritten to ensure that they include the variables of varied opening schedules and patterns, shifting customer purchasing power, factoring in demand patterns of the end consumption sectors in case of B2B businesses etc., all done at a regional level to enable forecasting with a fair degree of confidence.
Quick supplier onboarding will become important as manufacturers look to onboard suppliers either to reduce reliance on global suppliers and onboard more domestic suppliers, and also look upon new suppliers because the old suppliers might not be able to cater to the demand.
Additive Manufacturing could be very powerful to enable New Product Introduction. It is a pure Digital 3D manufacturing process and eliminates the dependency on shop-floor workers for re-tooling, which is challenging in current times. It can also be looked upon as a strategy to fabricate critical components and products locally (at a location close to the place of consumption) and eliminate the dependency on logistics.
Visibility of raw material or component inventory - what is sitting in the factory, what is in the warehouses and what’s in transit. Powerful visualization tools can help aggregate information from various systems where this information resides and present the insights on Inventory in a holistic manner.
Extending this further would be solutions and technology based on RFID/NFC that help undertake physical inventory tracking, both at rest in factories and warehouses, and also in-transit inventory. This helps get a much faster and accurate view of the inventory in hand, and the ability to predict the delivery timelines of in-transit inventory, which will become very important in the current context.
Social distancing and health norms on the shop floor will require rethinking of Manufacturing
A massive technology intervention will be required to ensure that volume and productivity levels reach pre-crisis level as the number of workers on the shop-floor reduces to accommodate social distancing and health norms.
Ensure worker health safety – Solutions such as:
…are some examples of non-intrusively leveraging to ensure a work environment adhering to the safety norms from a COVID-19 perspective.
From a connected employee perspective - Remote expert assistance which helps people on the shop floor gain access to remote experts for any problem solving will become an effective tool. This becomes important especially in the context of the shop floor expertise residing mainly with the aging demographic, who are potentially at high risk based on the initial research, and could potentially stay away from shop floors for a longer period of time. Hence, this is a good way to tap into their expertise without having them come to the shop floor.
Remote monitoring of plants will have to be enabled to ensure business continuity, and also ensure that diagnostics can be conducted offsite, thereby reducing the number of people in the plant. It will also enable data capture, which can be analyzed to discover inefficiencies at a plant and line level.
Leveraging AI to improve OEE will help in ensuring that the availability, productivity and quality levels are improved to offset the impact of fewer workers on the floor. Examples include:
Robotics and automation will help address the challenge of having fewer workers on the shop floor. Manufacturers will selectively adopt Cobots depending on the nature of the manufacturing process and the volume requirements. Robots can also be effective in managing warehouse operations.
Aftermarket services and customer experience re-imagination
The field services and the inbound repair requests will potentially experience a surge as the world re-opens. Manufacturers with legacy systems will struggle to manage these loads with a smaller work force. Field services management solutions that have strong capabilities in scheduling, knowledge management, and AR/VR support will be key to ensuring superior customer experience.
Automation of customer and field services enquiries using Chatbots will help manage volumes without compromising on customer experience.
Warranty claims could potentially go up, either because of issues related to “re-starting” machine components, or in case of household products, just because of the increase in utilization. If manufacturers don’t have powerful systems, the process could potentially break down.
Ankur Pawa
General Manager and Global Head – Digital and Consulting, Manufacturing.
Ankur provides leadership for the Digital business in Manufacturing globally, and serves as a trusted partner to executives on their Digital transformation journey. He is an avid believer in the power of Digital and its profound impact on the business. He brings a deep understanding of IoT, Cloud, Design Thinking and AI/ML in the Manufacturing context to help customers tap into the full potential of Digital.
Ankur has a long-standing global career spanning across P&L roles, VC investment and Management consulting with Fortune 500 companies and high growth mid-sized companies, with a strong focus on business transformation driven by emerging technologies.