By Santu Mandal, Business Head – Manufacturing & Utilities, Germany at Tata Consultancy Services
When the coronavirus pandemic first hit China, it was thought disruptions to manufacturing supply chains would be temporary. But we now know the truth: the sector – like many others – is facing a long recovery cycle.
In an industry survey from July 2020, for example, just over a fifth (22%) of manufacturers expected a return to “normal” in the six months. 27% were looking at a six to 12 month timeframe. But the largest group, 42%, predicted it would take more than a year. The remaining 9% didn’t know or thought it would never return to normal. Europe’s most badly affected industries, such as aviation and automotive sector, could be in for an even longer haul.
As businesses reset, manufacturers will progress from building resilience to increasing adaptability, and a purpose-driven, customer-centric model will ultimately replace the linear sales-driven world of old.
As they embark on this new beginning, manufacturing organizations will be looking beyond their products to the purpose behind their very existence to guide their transformation. Aiding them in this process will be a new concept, enabled by advanced connectivity, collaboration, cognitive and built-in data-driven intelligence: ‘neural manufacturing’. Neural manufacturing turns the traditional, factory-centric approach to manufacturing into a distributed one where the factory is only one of many touchpoints within a much larger collaborative ecosystem.
As a result of COVID-19, global manufacturing faces some tough challenges, ranging from health and safety for employees and customers to managing liquidity, and from improving in-plant operations to restoring and strengthening supply chains.
The main short-term driver for manufacturers will be building resilience in the face of significant drops in revenue, with measures to optimize costs and create operational efficiencies. Alongside this will be a renewed focus on customers and core strengths.
As plants prepare to reopen, those working there need to be kept safe. Therefore, businesses will invest in new health and safety innovations, including thermal scanners to check staff and avoid any infection spreading, and wearable technology that ensures users stay safe distances apart.
And automation and remote management – supercharged by the recent lockdowns – will increase. Not only will this build resilience, but it will also future-proof factories as they continue to move towards the new digital reality of Industry 4.0.
This digitalization will also be vital as companies look to mitigate future crises or changing market conditions by becoming not just more resilient but more agile, too.
A flexible supply chain is central to achieving this. If one supplier drops out, manufacturers have to plug the gap rapidly so as not to jeopardize customer deliveries.
This means knowing the supply ecosystem in-depth, being well-connected with suppliers and having a high level of visibility so any glitches or changes in demand can be quickly addressed.
Supply chain management, therefore, must become more collaborative and cognitive, which means building intelligence – AI, data analytics – into the system. Ideally, the result of this should be a 360-degree view of the manufacturer’s supplier network, and feature learning capabilities that will avert any problems well before they occur.
The same visibility needs to be applied in the factory environment, not least to keep employees safe. Many manufacturers are looking at automating COVID-related measures such as temperature monitoring, social distancing alerts, and contact tracing. Combined with data from Enterprise Resource Planning, Product Lifecycle Management and Human Resource Management and other plant automation, this will feed into new risk assessment processes.
Again, this will enable a more agile response not only to ad-hoc challenges such as a virus outbreak but also to changes in the marketplace.
Purpose-driven delivery models
Having a high degree of visibility will become increasingly important as the linearity of the traditional manufacturing value chain transforms. Increasingly, we will see modern value chains emerge which are built around the end-customer. Lines between B2B and B2C will increasingly blur to give rise to new “B2B2C” delivery models.
To provide customer-centric, personalized services, manufacturers will work with an ecosystem of partners, which will need to be able to flex in unison. As a result, the industry will transform as “neural manufacturing” comes to the fore.
This concept revolves around an intricate web of partners pursuing a common purpose – serving the customer’s needs – with responsive, adaptive and personalized value chains. It will rely on a high level of digitalization, hyper-connectivity and collaborative business approaches.
The new ecosystems will comprise both more typical ‘suppliers’ as well as other enablers, such as third-party services providers, lenders, insurers and regulators.
Given the speed of technology uptake in recent months, manufacturing can be expected to move more decidedly towards the cloud, wider shop floor automation, distributed manufacturing, and the use of cognitive computing to support decisions or enable autonomous operations.
An industry reset
Uber, Airbnb and Tesla have all shown what the transition to purpose-driven, neural businesses with a focus on the customer experience can look like. Efforts by Amazon and Facebook to encircle users with third-party content, products and services all available off their platforms show what the future may hold for the customer experience.
Similarly, traditional ‘product’ companies are increasingly turning to the ‘as a service’ model to provide an ongoing solution for the end-customer rather than a one-off commodity sale. Examples include utility companies selling smart-home technology, energy management and electric car charging services – on top of gas and electricity.
The pandemic has allowed manufacturers to step back and reset. Rather than just making incremental advances, there’s a chance to build stronger, more resilient, agile and sustainable businesses for the future. It’s a unique opportunity that manufacturing needs to grasp.