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COVID-19 and the Future of Manufacturing

Rene Wolf, Senior Vice President Manufacturing Operations Management Software at Siemens Digital Industries Software
By Rene Wolf Senior Vice President Manufacturing Operations Management Software, Siemens Digital Industries Software

The current COVID-19 experience is changing our collective mindset, and that will have a lasting impact on all industries, likely resulting in more collaborative frameworks and more flexibility. In manufacturing, collaborative trends such as crowdsourcing will change how we build, how we design, and how we cross-pollinate specialist ideas, blurring our functional boundaries. While catalyzed in this most challenging environment, these are positive outcomes that will accelerate innovation in the future.

Creating a digital manufacturing infrastructure helps manufacturing enterprises respond to market changes with more speed and flexibility.

The immediate impact on the manufacturing industry depends on the sector. Overall, the odd effects we’ve seen in buying behavior and consumer reactions are profoundly disrupting manufacturing planning. Production is either shutting down or rapidly accelerating – there’s little in between. That has a ripple effect across the supply chain.

Generally, and in our own factories, we are seeing an obvious reduction in demand. In Germany, for instance, where the auto industry is a major player, car manufacturers are shutting down factories for weeks.

In contrast, production has ramped up in the Medical Device industry, where manufacturers are struggling to keep pace not only with the increased volume, but also with changes to the mix of products they need to deliver. In the strictly regulated Medical Device industry, you can’t change course and deploy things overnight. Even where we have manufacturing systems in use, with high visibility and digitalized processes, switching from producing surgical gloves to a different product is highly complex. Production facilities are highly optimized for the set of products they manufacture. Now manufacturers are looking at products that are completely different than what their production lines are optimized for.

Other shifts we are seeing include customers in the alcoholic beverage industry mass-producing hand sanitizers, requiring rapid adjustments to recipes and new use of existing mixers and blenders. Manufacturers with 3D printing capabilities are filling the supply gap for critical PPE items.

But retooling for a completely different product is hard. It takes time – not only to actually produce the product, but to produce it efficiently, and with the right quality standards.

One of the biggest elements impacting manufacturers’ ability to perform under these circumstances is size. Small to medium-sized manufacturers with predominantly local supply chains have been the least equipped to deal with this. Their supply chain was in many cases cut off overnight, and they had no plans or alternatives in place. Larger companies have a different level of preparedness and alternatives from a supply chain perspective. They also have the resources to create disaster plans.

How will this impact the future of the industry? Well, nobody was prepared for this. The abruptness and the ubiquity of this pandemic have created a perfect storm. The bottom has fallen out of market demand globally, while supply chains are being disrupted worldwide.

As we ramp back up, manufacturers will rethink how they have organized their processes, their supply chains, the critical gaps they have in their digital infrastructure. There will be a lasting urgency around cost and margin pressure. Digital transformation efforts will drastically accelerate to create a nimbler manufacturing enterprise that can respond to market changes with more speed and flexibility.  

Manufacturers can use this downtime to reflect on strategic priorities without the normal tactical pressure of market demand. While we are in a terrible situation, we must look at available opportunities and leverage the time to our advantage.

Taking the time to prepare not only for the ramp-up, but for the future of their enterprises, is time well spent. The reality is – now even more obvious than before – manufacturers must digitalize their processes. Evidenced by our current situation, digital transformation is not only a competitive imperative, but at times, an existential imperative.

Gaining visibility and transparency is often what we suggest as a first step for a manufacturer charting their digital transformation roadmap. From there, they can begin to prioritize the automation of processes, including supply chain constraints, traceability and quality management, shop-floor control and enforcement, and finally, a complete digital manufacturing infrastructure that connects design and planning to production.

Manufacturers should be looking at modernizing tools, technologies, and processes that motivate the next generation of workforce, new business models that include technology partnerships, and a digital infrastructure that supports increased ability and business efficiency.

Even though things are hard, we have to look for hidden opportunities, unexpected gifts. You have to make the best out of the situation, embrace what it has to offer and creatively look at how to get the most value out of it, so we can come out of this situation faster and stronger than before.

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