The manufacturing industry is an interesting case among the many sectors that face new ways of working as we open up after the global pandemic.
There are reasons for this and we’ll go into detail in this article.
But first, one obvious issue. “Business as usual” is a generic term that has a different meaning according to which sector you’re talking about. All sectors carried out work in many different ways, even before the pandemic.
This difference of meaning results in this situation. Some sectors are keen to get their workers back to their traditional office settings for a number of perfectly understandable reasons, such as
- communication,
- mentoring, and
- de-isolation.
Other firms, however, have different but equally valid reasons. For example, Apple and JPMorgan Chase apparently wish to lure more people back to their desks in a bid to preserve their culture and boost collaboration.
When Looked at in This Light, the Situation for the Manufacturing Industry Seems to Be in a Different League
That’s because, in addition to using factories and shop floors more than offices, as a whole, globally, the manufacturing industry is not one single thing.
Many manufacturers assemble parts to a certain stage. They then sell those partial assemblies on to their clients. These clients may well assemble things further before a completed article for sale exists. Their “business as usual” (BAU) needs will therefore differ according to the size and complexity of their operations, and how many people are involved.
And then there’s the fact that there’s little similarity between, for example, manufacturing a car, manufacturing cloth for the clothing industry, or manufacturing circuit boards.
These factors affect how we’ll try to answer the question posed at the top. Will it be business as usual for manufacturing, or more like a new-world environment?
But let’s backtrack to the initial problem immediately post Covid-19.
Can Manufacturing Businesses Open Up Safely?
Despite the almost mythical lure of gathering around the water cooler (ours, of course!), key questions arise. After all, BAU hasn’t normally meant asking ourselves these questions:
- How will we keep staff safe from a dangerous virus?
- Do we demand vaccinations for all who can have them?
- Do we demand daily coronavirus testing before coming in?
- How do we deal with employees’ increased demand to work part time from home?
- Is it necessary to have office staff come in, as well as shop floor workers?
- Can we keep up profitability with a hybrid home-office workforce?
Questions like these mean that business as usual is not going to be “as usual” for quite a while – if ever. It will depend on how things pan out with the virus.
Yet, despite a general acceptance that Covid-19 will become endemic rather than pandemic, the experiences of lockdown and improved work-life balance when working from home (WFH), mean that for some people who were able to do so, remote working is what’s normal now. And they feel safer at home. Opening up is irrelevant for them.
Acknowledging this fact, and the lived experience of home working, Slack (recently acquired by Salesforce), Microsoft (Teams), and Zoom continue their competition for control of the hybrid/homeworking crown. And Slack, at least, is introducing asynchronous, prerecorded videos to limit the end-to-end schedule of online meetings – plus audio chat rooms for staff to tune in to as a simulation of office working.
Nevertheless, Two Things Are Quickly Emerging From This Situation
1 Any continued working from home is going to affect middle managers long term, even when a proportion of employees are able to be safely back in the workplace.
Middle managers will become dispensable because employees now have the means to pass on, collate, and monitor information themselves – via all these channels. They don’t need someone strolling over to check on the state of the team! This will mean job losses.
2 Over time, and with safety issues sorted, it’s still the case that firms who don’t allow an element of home working or hybrid working will probably lose staff. And they’ll struggle to hire new ones, however safe the office or factory floor when they open up.
This “do we, don’t we” problem is what organizational psychologist Professor Anthony Klotz has famously dubbed “the great resignation.” Businesses will have to resign themselves to what comes next. That’s because, he says: “No CEO gets to decide. We’ll collectively figure it out, and employees will vote with their feet.”
In the light of those two emerging facts, the question of whether we can open up safely “as normal” is somewhat distorted!
So, let’s turn to the challenges the manufacturing industry faces when opening up again, and whether that will be
- business as usual or
- a variant that started embryonically before Covid-19 was even heard of!
What Does Opening Back Up Mean For the Manufacturing Industry?
According to Deloitte, quoting IMD, there will be winners and losers, plus “inbetweeners”. While some sectors can clearly continue to work from home in some form of new normal, others like tourism, oil and gas, and professional sports, to name only a few, will not be able to do so.
Manufacturing ranks as an “inbetweener” in IMD’s classification. This status implies that its future is in its own hands, depending on how it responds to the current challenges affecting traditional BAU.
So what are these challenges? And how must the manufacturing industry respond?
1 Look to Longer-Term Survival in Manufacturing by Adjusting to Trends
The first challenge is to respond with a view to longer-term survival. Some of these longer-term challenges in the manufacturing industry will of course result from changes such as – but not limited to – the pandemic.
But there have been previous challenges that altered how people thought and acted. Manufacturers who perceive what’s changed in people’s buying habits will be able to follow this thought through. They’ll see where a cascade effect leads to an opportunity to adjust direction and keep profit margins up.
An example will help. If the WFH habit sets in for years, and people continue to move to larger houses with room for a home study, for instance, there will be more call for home furnishings, DIY materials, construction materials, and garden equipment. All of which affect manufacturing.
Obviously, we’re talking about more permanent changes than a sudden surge in demand for toilet paper or disinfectant! On the other hand, e-commerce had taken off long before the pandemic, and has now accelerated.
Noticing any trends that followed previous crises (2003 SARS, banking 2008, 9/11 terrorism etc.) while keeping an eye on the current ones, means that manufacturers will not be financing investment that fails to bring a return. In one sense, this is BAU – all manufacturers follow trends and adjust – but perhaps the catalyst of the pandemic has forced things to speed up.
2 Look to Innovate in the Manufacturing Industry With Automation to Cut Costs
The second challenge the manufacturing industry faces is this one: the need to innovate with robots where possible to cut costs. All industries look at what their competitors are doing to cut their costs.
And the most obvious thing that the manufacturing industry will have noticed is the move to automation.
Automation can be thought of as a threat to jobs. But the Bank of America – in its Global Research report – sees automation as creating millions of new jobs and freeing workers to be more productive.
The report says that “by 2025, the global robot population could hit 5 million.” Far from being the substance of a Sci-Fi novel, this seems like a win-win situation for manufacturing. Robots do the tasks they’re suited for, faster, and humans innovate to improve ideas and revenue. And since automation has been coming into effect for a few years, this is actually BAU for manufacturing.
The move to automation will not, therefore, be “new world” stuff but certainly the way forward in the future to cut your costs. You can call this “tech disruption” – or you can welcome it as an ideal solution in today’s competitive market place.
3 Become Digitally Agile in Manufacturing to Minimize Supply Chain Disruptions
The third challenge is about agility and data. Clearly when workers have to stay at home, or work with only half the employed staff on site, output is affected. If your manufacturing business requires new supplies, your inward supply chain is delayed and your end customer (whether B2B or B2C) is equally frustrated.
On the other hand, if demand for your product has fallen – permanently or temporarily – you have a financial consideration to deal with instead. Sales will be sluggish to non-existent and your inventory will be irrelevant to your current needs.
How can you avoid the danger of not knowing what the supply and demand will be like two months, a year, from now?
The route out of sluggishness and irrelevance and into agility is data.
In the future, those firms who manage real-time data collection and data analysis will prosper because they’ll be able to
- forecast supply and demand and thus their prospective revenues;
- get real-time visibility of trends as they evolve; and
- adjust their range of suppliers to forestall as much disruption as possible when politics and economics collide globally.
We talked previously in detail about these global supply chain challenges and also about the importance of sales forecasting. By using data to become agile, your manufacturing business will become resourceful.
Data will also become valuable in the maintenance of your newly roboticized factory. Via an Internet of Things (IoT) in your manufacturing premises, sensors will be able to read real-time state of the robots’ physical deterioration over time and flag up maintenance before a costly breakdown occurs.
This, in turn, avoids relying too greatly on the supply chain producing a replacement part at a critical moment in your processes.
4 Ensure a Supply of Suitably Trained Workers for the Manufacturing Industry
Workers trained in the more automated manufacturing industry of the future will need different skills to today’s workers.
According to a study by Deloitte and The Manufacturing Institute, the manufacturing skills gap in the U.S. could result in 2.1 million unfilled jobs by 2030.
There are two causes at work here:
- Entry level personnel: sourcing, finding, and keeping the talent at stage 1.
- Middle level personnel: sourcing those who have technical skills, digital skills, and (quite often) licensing and certification.
These employees are essential to operating a so-called smart factory. The manufacturing industry of the future will not be a simple business-as-usual proposition.
There is therefore a need to have various trainings available – perhaps online more than in person – for those who are working their way up the firm, or have left school and want those specific jobs. Plus maybe a change in school curricula to accommodate the changes foreseen in manufacturing?
In Conclusion
It’s becoming obvious that the manufacturing industry fits under IMD’s “inbetweener” tag – because it has the ability to succeed or fail by its own actions.
On the other hand, there are three ways to ensure success in the next normal as the “new-world” manufacturing environment shapes up. Faster than envisaged, yes, but still not entirely an unknown.
1 Start gathering data about all aspects of your manufacturing operation.
There is no alternative but to become agile, adaptable, and willing to change in response to the global disruptions that happen every few years. Your whole team from the CEO down has to embrace digital first and work from the same playbook.
2 Set up attractive training programs for the manufacturing industry.
Specifically ones that will appeal to a new generation of technically savvy younger people who want to involve themselves with automation and data and are willing to stay the course within manufacturing.
3 Innovate to cut your costs while keeping a close eye on the supply chain and current trends that look to last for a while.
That means avoiding an excessive emphasis on Covid-19 while not ignoring temporary limitations.
Ultimately, it’s a balancing act between investment and holding back. But that’s always been business as usual in any sector. Manufacturing included.
We Can Help You Think This Through.
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