Aras’ Mark Reisig says that manufacturers must invest in resiliency—the flexibility to adapt quickly to achieve sustainable business outcomes in the face of disruption, and offers practical tips on how to get there.
The rapid spread of the novel coronavirus (COVID-19) continues to wreak havoc upon manufacturers across the world. Many are focused on near-term survival, scrambling to piece together broken supply chains while attempting to operate their businesses remotely. Other more resilient businesses are coping with near-term challenges while simultaneously redirecting their efforts to adapt to the long-term and prepare for a post-COVID-19 economy.
If COVID-19 has taught manufacturers one lesson, it is that they must become resilient—to be able to quickly adapt to changing conditions while achieving sustainable business outcomes. Manufacturers can no longer compete using rigid organizational structures, inflexible processes, legacy infrastructures and fragile supply chains built for low price and scale. Few companies were prepared for a global pandemic, but those that had previously developed a greater degree of dexterity and resilience are better positioned in this climate of uncertainty.
Here are 4 lessons for manufacturers to consider and leverage when it comes to succeeding in the new normal
1. Adapting to the Near-Term
Every manufacturer’s top priority should be keeping their people safe. After taking care of their employees, businesses need to remain viable—reassess their direction and redirect to invest in initiatives that result in a more resilient business while preserving cash. For instance, if your organization was involved in large-scale IT projects that weren’t leading toward enhanced flexibility with speed to value, then they need to be halted in favor of those that increase adaptability to future disruptions.
For some manufacturers, the goal in the near-term is to survive—preserve cash and keep the business safe. Others will use this time to improve their operational efficiency, modernize and reinvent. But the hard truth is that, for many, the only survival is reinvention. Now is the time to rethink priorities and redirect efforts to make your company more resilient for less cost. According to a recent IDC report, the post-COVID-19 economic recovery will be similar to The Great Recession, but now companies will “move to leverage digital technologies and a digital platform approach to become more predictive, flexible and resilient.â€
The endgame is not consolidating technology into one inflexible suite of products from one vendor or even combining many best-of-breed applications with costly integrations. The world has changed, forcing a transformation where processes and data need to digitally flow across a connected enterprise in a secure, flexible, collaborative and cost-effective manner. In the past, you may have survived with inefficient, disconnected organizational and technological silos, thinking data that is 90% correct is good enough. Now, pristine data quality across the lifecycle is a necessity and will be the norm in a post-COVID-19 world.
Learn More: Navigating Supply Chain Disruptions in a COVID-19 World: 4 Best PracticesOpens a new window
2. Establishing a Flexible Digital Supply Chain
Prior to the COVID-19 pandemic, supply chain resiliency had become an important issue due to disruptive natural disasters and geopolitical disputes, especially tariffs and trade wars. Despite the growing likelihood and severity of supply chain disruption, the primary metric companies traditionally used to evaluate suppliers is lower cost, not the impact of disruption on both cost and revenue.
Although it’s easy to see that supply chain resiliency is critical now, until recently this was largely ignored by most companies. Supply chain experts and analysts have been warning for the past five years that resiliency is the most important characteristic of the modern supply chain[1]Opens a new window but very few manufacturers took decisive action. In fact,a survey conducted by Resilinc in late January and early February[2]Opens a new window , immediately following the Covid-19 outbreak in China, 70% of 300 respondents said they were still in data collection and assessment mode, manually trying to identify which of their suppliers had a site in the specific locked-down regions of China.
Many companies already knew that their supply chains were too dependent on single suppliers for given components. They understood that flexible and digital supply chains should have been a clear priority. But they were also bogged down by legacy infrastructure issues with the lion’s share of their IT spend going toward sustainment.
Manufacturers now need to build out digital and flexible supply chain capabilities to ensure they proactively pivot to future disruptions. Secure platform-based supply chains need to guarantee the continuity of product supply and collaboration to meet their customers’ expectations.
3. Leveraging a Resilient Digital Thread
The Digital Thread is the connection of the data flow of the manufacturer’s assets and related data across the product lifecycle. Regardless of where you are in a globally distributed company, including working from home, you should have access to the right information when you need it. To be clear, it shouldn’t involve Excel, email, Google Docs or other workarounds. On the day companies moved to remote work, if they didn’t have functioning Digital Threads, they felt it instantly, unable to find and access data remotely.
By contrast, those companies focused on wing-to-wing resilient Digital Threads will continue to accelerate through the COVID-19 crisis and beyond. The ability to connect processes like new product introduction with product innovation, development, manufacturing, supply chain and service is more critical than ever.
While the immediate challenges caused by the pandemic seem to be more supply chain-oriented, a key element of a successful supply chain is that it must be digitally connected in a closed loop back to design, product development, manufacturing and operations.
This leads to a data-driven approach that provides manufacturers with the ability to rapidly and dynamically make better decisions when responding to disruptions.
Learn More: Top 5 Supply Chain Challenges in 2020 and BeyondOpens a new window
4. The Need for Closed-Loop Product Lifecycle Management
In March 2020, when many manufacturers shifted their people from offices to begin working remotely, some continued using their Product Lifecycle Management (PLM) systems uninterrupted[2]. They did this securely, collaborating across their end-to-end product lifecycle with platforms federating critical data to and from other pillar systems, such as Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP). Many used secure visual collaboration tools embedded in PLM to collaborate with their peers in new product introduction, development, engineering, manufacturing and services, as well as other groups.
But many more manufacturers didn’t have end-to-end PLM. In fact, prior to the pandemic, most manufacturers weren’t focused on PLM as part of their digital transformation initiatives. Working remotely has exposed weaknesses in how data travels across the value chain, elevating PLM to a C-suite priority. According to CIMdata[3]Opens a new window , the issue is that most large enterprise solution providers in the ERP and PLM marketplace have grown through acquisition and often have to stitch their acquisitions together with integration technology. When each technology has its own architecture, often with differing technology stack elements, all of operations become inherently disjointed.
Manufacturers will no longer be able to get by with a myriad of different technology stacks and product data siloed in different organizations. Manufacturers require an end-to-end, connected and more autonomous experience based on an open, flexible and resilient PLM platform that enables traceability across a digital thread alongside secure collaboration with its supply chain.
We don’t know the future. We like to believe major disasters are black swans no one would have planned for, but the hard truth is we often could have. Some trends are clear. The world is becoming more globally connected and the need for smart, connected products based on digital technologies, and the associated data, will continue to accelerate at faster and faster rates.
There will always be existential threats to business, whether they be technological, geopolitical, economic, regulatory, natural disasters or pandemics. To be prepared for the future, manufacturers must invest in resiliency—the flexibility to adapt quickly to achieve sustainable business outcomes in the face of disruption. That is the new normal.
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1Jeffrey Hojlo, Kevin Prouty, Simon Ellis, Remy Glaisner, and Aly Pinder “Manufacturing Resiliency in the Age of COVID-19,†IDC, March, 2020, doc # US46160920
2Thomas Y. Choi , Dale Rogers, and Bindiya Vakil, “Coronavirus is a Wake-Up Call for Supply Chain Management,†Harvard Business Review, March 2020
3“Platform Architecture: A Core Digital Transformation Enabler,†CIMdata Commentary, July, 2019