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Covid-19 has led global manufacturing companies to adapt business strategies to not only keep their business going, but also ensuring employee health and safety in the current uncertain environment.
By Vincent Rutgers
With there being no sign of Covid-19 pandemic subsiding and rising cases, global economy has been sitting on a ticking bombshell. Internal Monetary Fund (IMF) has predicted that impact of COVID-19 on global economy being worse than that incurred durin
g the Great Depression of 1929 (Singh, Kumar and Panchal). The global manufacturing sector has been one of the worst hit with the risk deep-rooted in the global supply chains more evident now. The lockdown imposed in major parts of the world has already given a blow to businesses worldwide. So, instead of waiting for the business operations to resume as before, global manufacturing companies are adapting business strategies aimed at running operations; and ensuring human health and safety as a way to thrive in the current Covid-19 induced situation.
I have been watching how the pandemic has played across the manufacturing segment across boundaries, with emphasis being on safety of the workforce, encouraging agile production, and inventory management, mitigation of the risks invoked, revamping the supply chain etc (Deloitte).
The major challenge has been for the manufacturers of high-demand and essential goods like hand sanitisers. According to Paul and Chowdhury, under pandemics, though demand for essential goods tend to increase rapidly, the supply of raw materials decreases significantly due to production capacity constraints. These two situations cause a sudden disruption in the production processes, which results in the process collapsing immediately before remedial actions can be taken. Lockdowns imposed during Covid-19 have caused shortage of labour force and logistics disturbances leading to supply chain disruptions in the food chain. According to the study by Singh, Kumar and Panchal - In India, where for its approximately 500 million people, agriculture and its sector are the main source of livelihood which contribute to around 15% GDP of India. However, the lockdown imposed affected the food distribution system badly due to scarcity of labour and truck operators causing severe hardship to the Indian population. Likewise, the MSME sector in India, which employs around 111 million people working in 63.2 million units got severely impacted during Covid-19 due to manufacturing activities being completely suspended for few months. Similarly, in Germany, the pandemic disrupted workings of 90% of manufacturing companies mostly relating to order cuts from their global clients from China, US and Europe (Deloitte). Covid-19 impact will also be felt more severely for low-cost manufacturing hubs in the Asian region, especially China. The electronic segment has been severely affected as China accounts for nearly 85% of the total value of components exported globally (Researcg and Markets). China would face lot of issues in spite of its plan to deviate to higher value items and concentrate on its domestic consumption pattern (Mint).
The unfavourable situations created by Covid-19 pandemic has made global manufacturing units become more agile in their strategic framework and continue working in the new normal situation. One such strategy proposed is to bring in a more resilient supply chain network. For instance, Italy was one of the foremost European country to be severely affected by the pandemic, so companies started focussing on educating employees about the Covid-19 systems and preventions. They invested in digital technologies for remote working purpose and used sensors to check on production processes (Deloitte).There is the need to identify supplier risk which would help build resilient supply chains.
In UK, where the manufacturing sector is re-opening in phases, companies are working towards implementing digital technologies for safeguarding health and safety of employees. They are proposing to use phone apps and wearables sending real time alerts and recording symptoms. Also, they are discussing about remote working methods to help their businesses thrive in the current pandemic. By going in for simplification and lesser product range, the companies intend to make their production process simpler to respond to the challenges relating to the supply chain (Deloitte).
In the US, manufacturers have shifted their production processes to make things considered more important in the current pandemic like ventilators and personal protective equipment to get their businesses going on under the new Covid-19 normal. Manufacturers are continually thinking on making structural changes to their global supply chain networks thrive in the ongoing pandemic.
The Covid-19 pandemic has caused severe disruptions to life and economy worldwide but all is not lost. With governments working hard to rebuild the economy and safeguard health and safety of people, global industries should learn to adapt to the current situation and continue to work out strategies to thrive in the current pandemic.
Digital investments are the need of the hour. To reduce the challenges to their manufacturing processes and supply chains, companies globally should learn to be agile and resilient.
Vincent Rutgers is Global Industrial Products & Construction (IP&C) Leader
Deloitte. www2.deloitte.com. 2020. Online. 4 October 2020.
Mint. www.livemint.com. 13 April 2020. Online. 4 October 2020.
Paul, Kumar Sanjoy and Priyabrata Chowdhury. “A production recovery plan in manufacturing supply chains for a high-demand item during COVID-19.” International Journal of Physical Distribution & Lgistics Management (2020). Online.
Research and Markets. Impact of COVID-19 on the Global Manufacturing Industry, 2020. Dublin: Cision PR Newswire, 2020. Online.
Singh, Sube, et al. “Impact of COVID-19 on logistics systems and disruptions in food supply chain.” International Journal of Production Research (2020). Online.
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