Rethink your manufacturing future with key business strategies
- Posted on June 11, 2020
- Estimated reading time 3 minutes
“Organizations have been judged on their response [to COVID-19] – and that judgement will far outlast the virus itself.”
The COVID-19 challenge is very different
The manufacturing industry is used to market challenges and uncertainty, but the scale, severity and suddenness of the COVID-19 crisis is unprecedented. Manufacturers must face this challenge head on, displaying the same speed and tenacity as the virus itself. This blog post explores what manufacturers can do to respond and ensure survival, reset how they think about their business and ultimately renew their corporate culture.
Respond: Focus first on people
Manufacturers must immediately respond by evaluating their cost structure and focusing on sustainably reducing cost and ensuring cash availability. Manufacturers need to confirm that security and business continuity systems and procedures are adequate and fully functional. Most importantly, you must focus on your people: Ensure you have a safe, secure work environment, enable remote working capabilities, and establish programs to retain and develop your most talented employees. From what I can see, most manufacturers have already completed many of these respond actions, but those who haven’t need to make them the top priority.
Reset: Technology is a critical component
The next step is to evaluate and potentially reset your approach to your business. From my experience, you should look at how you might be able to pivot to creating products that have immediate value in addressing the COVID-19 crisis. Examine how you might implement solutions or practices to increase the resiliency of your supply chain, and consider localizing your supply chain. Explore how you can leverage digital technologies to provide a quick, agile, personalized and potentially contactless engagement with your customers and partners. Technology is a critical component of a successful reset, and time is of the essence. As Microsoft CEO Satya Nadella recently noted, their clients have been undertaking “two years of digital transformation in two months.”
Renew: A commitment to corporate citizenship will be key
As the opening quote of this blog post indicates, I find it interesting that companies will be judged on how they respond to this crisis, and rightfully so, in my opinion. The products and services for tomorrow will have to be sustainable, have a focus on a positive human impact and have a minimal negative impact on society.
This crisis has created an obligation for all manufacturers to renew their commitment to corporate citizenship. This means more than providing a safe and secure working environment – that’s the baseline. It means creating a culture that enables and rewards your people for helping in the community. It means reducing or offsetting any negative impact your company has environmentally. And it means making social responsibility a fundamental value of how you do business. The workforce of the future is going to demand this from their employers; customers are going to demand this from the organizations they do business with. And not getting it right will have serious, if not fatal consequences for some manufacturers.
Rethink your manufacturing future
Being able to successfully address dramatic market changes quickly isn’t easy, and the path won’t be linear. However, that doesn’t mean there isn’t the possibility of a bright future for manufacturers. In fact, I was pleased to find that the MIT Sloan Center for Information Systems Research sees “these challenging times as an opportunity to rethink how we do business.”
To embrace this opportunity, we recommend you focus on five priority areas:
- Cost containment and optimization – Manufacturers need to have a clear definition of the value they hope to achieve for the business. Now is the time to rethink business growth models for efficient end-to-end services. For example, Avanade worked with global power tool manufacturer Husqvarna to implement a solution to boost efficiencies for both service and sales across 28 countries.
- Talent agility – The workplace for tomorrow will be optimized with digitally skilled workers in harmony with the latest technologies. Manufacturers like ABB Turbocharging are already using immersive mixed reality devices that combine cloud and AI services to help employees learn, communicate and collaborate more effectively, wherever they’re located.
- The resilient core – Tomorrow’s manufacturers should protect the core operations of their business and build a resilient and scalable operation fit for a flexible future. By the end of 2020, according to IDC, one-third of all manufacturing supply chains will be using analytics-driven cognitive capabilities, thus increasing cost efficiency by 10% and service performance by 5%.
- Customer care and operations – Tomorrow’s manufacturers will have adopted agile digital solutions to support changing customer needs. An interesting trend is partnering with totally new companies. According to IDC, by 2022, driven by rising customer expectations, 25% of manufacturers will be engaged in cross-industry collaboration, resulting in a 10% revenue increase.
- Products and services – Manufacturers should aim to introduce solutions that help anticipate how products and services will evolve in the near and longer term. The VentilatorChallengeUK is a recent example of manufacturers partnering, innovating and embracing technology for new product development and supply chain resiliency.
One certainty is that this won’t be the last global challenge manufacturers will face. The world is now a different place and successful manufacturing companies will be judged on their positive impact on both society and the environment.
Will you rethink how to successfully respond, reset and renew?