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As the world currently grapples with the COVID-19 pandemic, future-gazing discussions of digital transformation journeys may feel out of place. But what if digital transformation offers the key to success in the ‘new normal’?
The global supply chain is experiencing a level of disruption that has never been seen before. Many businesses are scrambling to either meet sudden influxes of demand, or stay afloat in markets that have collapsed without warning. In this climate, global conversations have focused on sustaining ‘necessary’ activities; so investments in digital technology that promise long-term ROI may fall by the wayside in the bid to survive.
To look at the implications of this, it’s important to consider how COVID-19 has effectively split manufacturing into three main groups:
- Industries experiencing increased demand: Many pharmaceuticals, food and beverages, and consumer goods manufacturers are struggling to meet sudden spikes in demand for products that are either essential to tackling the virus, or an important part of stay-at-home life.
- Industries that will form part of recovery from the virus: Mining, chemicals, metals and many heavy industries are starting to gear up again, especially in APAC countries, which are recovering from the first wave of the pandemic.
- Industries that have experienced a rapid drop in demand: Automotive, oil and gas, and other industries that have been hit by travel restrictions are fighting to survive in rapidly contracted markets.
No matter the category a business falls into, the one thing they all have in common is a need to be more adaptable and customer-focused. Digital transformation, and looking to the future, offers the most effective route towards these outcomes.
The Fight to Adapt
Firstly, for industries facing extreme (but often short-term) peaks in demand, it’s important to be able to adapt to this new and rapidly-changing environment. Many manufacturers have found their supply chains hampered by travel restrictions and closed borders, as well as supply bottlenecks. A greater oversight of these chains through technology such as IoT will be crucial to overcoming future challenges. Moreover, the current spike in demand won’t last forever, so it’s vital to prepare for a scenario where scaled-up assembly lines can be put to new uses.
Secondly, manufacturers whose products will be crucial for recovery will also face uneven demand patterns as countries return to normal. Technology that helps them gain a more complete command of their assembly lines will be fundamental to increasing efficiency to meet increased demand, and adapting rapidly as those demands change.
Why Digitally Transformed Businesses are Best Positioned to React to the Challenges of Coronavirus – Read the blog.
As for those manufacturers who are struggling with decreased demand, focus will undoubtedly be on restricting expenditure as tightly as possible. But it’s uncertain how long this will go on, and it may be more a case of sink-or-swim than simply bunkering down to weather the storm. Those with an appetite to take the risk should re-invest in technology that will help them pivot to produce high-demand products.
No End to the Future
Of course, not all manufacturers are putting digital transformation on hold. In fact many customers are coming to us with urgent requests to help accelerate multi-skilling of their teams, or bring in expertise remotely. In these cases, digital transformation is becoming an urgent matter of the immediate, rather than a long-term journey.
Some technologies, such as augmented reality (AR), are immensely valuable for enabling rapid technological change in these scenarios. But it’s also important not to lose sight of the bigger, long-term picture.
Digital transformation is about much more than technology. Truly disruptive leaders, such as Amazon, Netflix and Uber, have shown that long-term success lies not in simply having better tech, but in adapting more closely to customer needs. This is just as true in manufacturing. Even before the crisis, we’ve seen manufacturers focus on more bespoke offerings for their customers: shorter runs, smaller orders and more customised products. For example, to meet its customers’ appetite for product lines that are refreshed frequently, one consumer goods manufacturer has begun updating its cleaning products every three to six months. This kind of adaptability is now more important than ever.
In this time of rapid change, it can be difficult to reach the long-term view implied by ‘future-gazing’. But long-term digital transformation is all about adapting quickly to changes. This crisis might be a new beginning that highlights the need for flexibility and greater oversight of assembly lines and supply chains. This is anything but the end of future-gazing.
If you want to discover more about how the future of manufacturing is being shaped by current events, visit the Management Perspectives hub, for blogs, podcasts, webinars and videos.
Published July 6, 2020