Believe it or not, the manufacturing industry has now notched 15 consecutive months of overall growth, according to the August Manufacturing ISM Report on Business. Supply chain executives surveyed for the report said consumer demand is as strong as ever.
Still, the pandemic has caused—and continues to cause—a number of challenges impacting manufacturers everywhere. Some examples include:
- Record-long lead times on raw materials
- Continued shortages of critical base materials
- Rising prices of commodities
- Difficulties in transporting products
- Worker absenteeism and challenges filling open positions
- Exposing of technological deficiencies
In short, the pandemic has created a number of issues for manufacturers, but it hasn’t really slowed down business.
So, how can they respond — and keep up? Let’s focus on three key areas.
Facing Down the Supply Chain
There’s rarely been a harder time to work in supply planning than right now.
Semi-conductor parts are still trickling in at a glacial pace (or not at all). Typical supply for traditional parts and products is still often months away from balancing out. And, as mentioned, consumer demand is only strengthening.
As SAP Industry Executive Advisor Bill Newman put it, “We’ve all learned how integrated everything is — it only takes one mega-freighter choking the Suez Canal for things to be completely upended everywhere from Bombay to Boston.”
Combine that with an incredibly taxing, seemingly unending pandemic, and the stakes are higher than ever when it comes to building an agile supply chain. That’s why executives must invest in related technology and efforts so they can be built to break, whatever might come along next.
For instance, look at visibility. By implementing supply planning solutions focused on integrated business planning and inventory management, leaders can more ably build clear and highly descriptive ecosystems that spotlight everything happening in the supply chain — from one end to the other. Helping to anticipate impacts and problems can foster overall ease and efficiency by enabling planning to occur weeks or even months in advance.
Bridging the Knowledge Gap
The rock that is COVID-19 is rapidly approaching the hard place that is the skills gap in the manufacturing industry.
Just think of the reality on the ground: Younger generations already view manufacturing as an “old-fashioned” trade and often pursue work in fields perceived to be more technologically evolved. Now, due to the pandemic, a full quarter of the manufacturing workforce is 55 or older. Worse, the virus is driving many into retirement, leaving America’s fifth-largest industry with an abundance of knowledge set to simply waste away.
“There’s no doubt about it,” said Newman. “These older generations are rapidly dropping out of the workforce, and companies are being left with no clear path toward transitioning jobs and mentoring young professionals.”
As of August, in fact, a report from Deloitte and The Manufacturing Institute found only 63 percent of manufacturing jobs lost due to the pandemic have been refilled.
So, for manufacturers who want to get up off the mat and get ahead, investing in and innovating on digital technologies — whether via supply chain solutions, workforce collaboration tools or mobile productivity tools — will be vital going forward. Otherwise, the widening gap between the current skills in the labor market and the more technically sophisticated skills the industry now requires will make it impossible to keep up.
Aligning Digital Operations
Even today, factories the world over find themselves running on spreadsheets and clipboards, largely because their antiquated systems just can’t keep up.
“Many have no ability to talk across platforms, campuses or plants,” said Newman, our industry executive advisor. “That can make for a really rough 14-16-hour day.”
More so, COVID-19 continues to accelerate the need to evolve, as the ongoing inability of human operators to work near each other requires additional investment in an automated infrastructure, one that helps build a digitally enabled, touch-free future.
All in all, countless factors point toward digital acceleration. Now, it’s on the companies — many who already have the requisite human intelligence and competitive drive — to iterate on their original operating systems and models and keep up with whatever comes next. Are there challenges? Sure. But many positive signposts mark the path forward. And, ironically, when it comes to manufacturing’s digital future, there is one simple truth that will rule the day: Those who build it best will survive.
And, well, that’s exactly how it’s always been.
Workforce statistics per the United States Census Bureau.