Manufacturers are at the forefront of the unprecedented, drastic change in global economics caused by the COVID-19 pandemic.
Primarily driven by the issue of workforce and community health and safety, the pandemic will cause lasting impacts across business operations, human behavior, supply chains, and governmental policy. To stay ahead of competitors during this time of uncertainty, manufacturers must rethink their short-term, medium-term and long-term plans to address their new reality. We believe this is determined based on the essential or non-essential products sold and the manufacturer’s level of digital maturity. When looking specifically at manufacturers, it’s clear that COVID-19 has disrupted global supply chains and created an uncertain future for many manufacturers.
With uncertainty, volatility, complexity, and ambiguity still surrounding the COVID-19 situation, how can manufacturers respond?
Let’s first dive into the macro issues the coronavirus has created for manufacturers.
The core issue and priority at hand — global and community health and safety — is creating broader impacts on the manufacturing world. The priority of decreasing the spread of COVID-19 has resulted in stay-at-home orders and social distancing guidelines, which changes how we do business today. This will leave a lasting impact for years to come as consumers and businesses continue to evolve operations post-coronavirus.
We believe manufacturers must capitalize on the moment to create sustainable advantage or they will become obsolete. While the concept of a digitally-enabled business is not new in manufacturing--which has seen strong strides in Industry 4.0 capabilities over the last few years--the concept of shifting toward one is becoming an immediate, rapid, and unanticipated expectation with the reduction of human interaction across suppliers, customers, operations, and employees.
Broadly, each business’s response to COVID-19 will vary based on each business and its level of preparedness. Preparedness is defined by the presence of digitally-enabled business models, geographically diverse supply chains, and strong balance sheet positions. Those best positioned to thrive are essential and highly prepared manufacturers with the capabilities in place to accelerate their teams to immediate execution. Companies that are non-essential but highly prepared are positioned to succeed during this time because they are still digitally connected with their customers and can enable a remote workforce. Companies that are non-essential and unprepared are positioned to fail during this time because they do not have the means to operate with the shutdown occurring. However, there are ways for companies that are non-essential and not prepared to quickly pivot their business strategy to position themselves to survive. A response plan should be developed, regardless of position.
Building a plan of action can be difficult, especially in times of uncertainty where each day feels like a week and businesses are still overcoming the initial shock of COVID-19 to daily operations. Right now, manufacturers should focus on triaging their businesses over the next 60 to 90 days to not only stabilize their business but also to inform their long-term strategies or they risk falling behind competitors. From there, they can move into recovery and transformation phases.
There are 3 key focus areas for essential and non-essential manufacturers to set up their long-term response plan for success.
STABILIZE BUSINESS OPERATIONS
Manufacturers must first assess current operations and supply chain to respond to demand shifts.
CUSTOMER SEGMENTATION & ENGAGEMENT PLAN
With an increase in demand, manufacturers should ensure they are equipped to service customers effectively and be able to prioritize strategic customers.
Manufacturers should prioritize safeguarding their employees on the shop floor and establishing strong IT capabilities to manage virtual workforce when possible to maintain continuity in operations.
Non-essential manufacturers must focus on responding to the downturn in business through cost-cutting and analysis of current business position to determine if they should stay, sell, or liquidate as a result of the unanticipated downturn.
SEIZE MARKET OPPORTUNITIES
To stay afloat, non-essential manufacturers must evaluate opportunities in the marketplace to pivot their existing products and customers to more favorable outlooks.
Like essential manufacturers, non-essential manufacturers should prioritize safeguarding their employees on the shop floor and establishing strong IT capabilities to manage a virtual workforce when possible, to maintain continuity in operations.
Marketing and Sales
Health & Safety
By acting now, companies can stay ahead of competitors and get back to business.