Manufacturing’s response to Covid-19 and what to do next
Challenges and demands are unique to every manufacturing business depending on what they make. During Covid-19, some will have seen a dramatic increase in demand, while others a dwindling customer consumption. But what aligns all these companies in their pandemic experience is the pressure to adapt in order to survive.
In this blog I’ll outline the changes I’ve seen across the industry, having gained insights from working with our manufacturing clients. I’ll also discuss what manufacturers should be preparing themselves for in order to grasp success as we move forward.
Mitigating risk and reducing costs
Whether experiencing an increase or decline in demand, all manufacturers have had to deal with staff reductions due to the pandemic. This could be through redundancies, furlough, or absences due to an employee’s need to self-isolate. In total, this equates to a loss of around 25% of the workforce. Of course, a smaller headcount means a reduction in costs, but it also means fewer resources.
Meanwhile, manufacturers producing essentials such as food, toiletries and health products are also contending with rising customer demands from anywhere between 30-50%. It’s the kind of demand increase they only anticipate at Christmas time – if ever. These manufacturers have had to reinvent their operations in order to produce more.
Part of re-imagining the process with limited staff is to introduce more automation into processes, which has reduced the risk to employees and the businesses’ health. What it means is that if they’re required to remove 50% of staff from their warehouse to avoid infection, production can still continue in the most efficient way possible.
Another change I’ve seen is the pace of projects and financial engineering. Projects that would usually take 18 months to achieve have had to be delivered in weeks, if not days. This has also increase the need for technology as these inclines in pace are hard to achieve through human effort alone.
Manufacturers have also changed how they pay for these projects. They’re looking for small investments with big changes. And they’re asking questions such as:
- How can I mitigate paying for things up front?
- How can I reduce my outgoings and keep as much money in the bank to safeguard my business?
- Can I pay for the project after it’s successful?
What sits at the heart of these changes is efficiency. Manufacturers are wanting to cut costs, increase production, and retain higher quality, and automation is enabling them to do this. Being able to achieve this also has a knock-on effect on other operations – they’re able to reduce complaints, retain customers, and further future-proof themselves.
Incorporating agility into business models
Business models are changing significantly in order to bend to rising and falling demand levels. Satellite operations have grown in popularity to replace bigger production plants which require greater employee contact.
It’s an approach commonly known as the ‘man and dog’ approach. An employee will oversee a small manufacturing plant and technology will ensure they don’t need to touch anything within the production process.
Operations look like this:
- An employee oversees the plant
- The plant is run from hybrid cloud based platforms and ideally powered by the Fujitsu G2 cloud based manufacturing platform
- The tech links the plant to suppliers and customer stock take databases
- The plant will know when customer stocks are running low and anticipate an order
- The plant automatically reviews the supplier’s stock and places an order for the anticipated demand, using secure communications and ideally blockchain transact
Essentially, this approach adjusts to demand and reduces the cost of surplus.
The technology used within this operation is also helpful in protecting people during outbreaks. Sensors can be placed on high-vis jackets to track staff and shop floor worker movements. If an employee gets too close to someone, an alarm sounds and it‘s logged. This makes it easy to conduct contact tracing.
It also adds agility to the process because if something like an outbreak happens within the plant, the system can be redirected and operations can resume at another plant all. This is enabled by hosting manufacturing platforms in the cloud.
The winners and losers of brand reputation
Some manufacturers have suffered big reputational damages over the course of the pandemic. It could be due to poor treatment of staff or abuse of the government furlough scheme for profit. This will be difficult to repair, and these businesses must consider how they can reinvent themselves in the coming months.
We’ve started to see some businesses pledge to pay back the money they received through furloughing staff. And this may be something we see more of as manufacturers try to build on the good reputation they’ve developed – or salvage the one they’ve lost.
The manufacturers supplying supermarkets and hospitals have seen potential gains in customer support and brand reputation, having been given a near-public-service status. And these businesses will be the ones starting off the post-pandemic market in a strong position.
A future-proofed attitude
Some areas of manufacturing have taking a hard hit, but businesses must stay confident in its products and how it goes to market. If you lack confidence, investors and customers will too and you will lose their support, which will have even worst consequences.
It will be the businesses that embrace the future and work towards a digitally transformed environment that will be able to keep up with turbulent market demands because they will have agility within their operations.
So for manufacturers looking to futureproof their business now, my advice is automate as much as you can, reduce your risk, increase your efficiency, and look after your people.