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The Diversification Crisis in Manufacturing

By Claudia Jarrett United States Country Manager, EU Automation

U.S. in need of product and supply chain diversification amid the COVID-19 pandemic

According to a survey conducted by ISM, 75 percent of U.S. manufacturing companies experienced delayed resources and materials due to the COVID-19 pandemic. The outbreak has forced manufacturers to rethink supply chains to allow for product diversification.

For the first time in recent manufacturing history, demand, supply and workforce availability have been affected globally at the same time. Heavily dependent on offshore production and foreign suppliers for raw materials, manufacturers have been forced to come up with creative ways to continue operations.

Whether it is producing essential products for the nation’s fight against the pandemic or adapting output to continue their regular product lines, manufacturers are switching from the status quo in order to keep operations running.

While some businesses have developed supply diversification strategies as an emergency response to weather the economic storm — like food and beverage manufacturers producing hand sanitizer — others have struggled to adapt. Some manufacturers have failed to compete for alternative suppliers, forcing them to reduce or stop production entirely.

Many industries have felt the burden of the shortage of supply and as such, manufacturers are now reconstructing supply chains to rely less heavily on a single geographical location or one core supplier.

Plant operators are realizing the detrimental effect of “putting all your eggs in one basket.” Manufacturers have often used individual key suppliers to drive the entire supply, however coronavirus has highlighted the risks that can occur when single sourcing. Naturally, manufacturers have taken advantage of the domestic resources during the pandemic, which has increased the recognition and desire for onshore core supply chains.

Despite the global limitations caused by the pandemic, domestic supply chains can also be extended to diversifying the plant machinery, therefore helping the creation of new products outside of manufacturers’ industrial standard.

Manufacturers that have adopted a diversified strategy were seen to be in a far better position to mitigate the effects of the pandemic; using this opportunity not only for increased production value but also help combat the virus.

The automotive sector, for example, has begun producing urgently needed medical devices such as ventilators and the technology sector is using 3D printers to make PPE and other safety equipment.

The ability to diversify has helped companies to keep production lines up and running in times of low demand, generate moderate revenues and improve their reputation.

Again, for a multitude of benefits, diversifying products often requires changes to plant equipment. For example, EU Automation specializes in providing new, used and obsolete industrial parts for applications around the world. Providing products from manufacturers such as Schneider, ABB and Mitsubishi, EU Automation’s products helps facilitate changes to manufacturing production.

The pandemic will have a long-lasting effect for the future of manufacturing. It has highlighted that there is an urgent need for industries to build greater agility, responsiveness and resilience. The present challenge is an opportunity to learn, adapt and reshape manufacturing to be as diverse as possible for the future.

About the author: Claudia Jarrett is United States Country Manager for EU Automation.

For more information on EU Automation, which stocks and sells new, used, refurbished and obsolete industrial automation spares, visit www.euautomation.com/us.

 

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