Warehouse worker with facemask

Global Manufacturers Fine-Tune Strategies

Jan. 13, 2021
COVID-19’s impact on the supply chain will impart lessons long after the pandemic.

Editors Note: Over the course of this week, Machine Design will be sharing a series of articles addressing the development and distribution of the COVID-19 vaccineand the obstacles surmounted along the way. Be sure to check out the other installments below:

Like many manufacturers worldwide, those located in the Europe, Middle East and Africa (EMEA) region have seen their business processes significantly affected by the COVID-19 pandemic. Even as we move into 2021, many are focused on managing the supply chain disruptions it has caused, according to a new survey from Information Services Group (ISG).

Conducted this fall, the survey found that hygiene guidelines, lockdowns, border closures and remote-work requirements imposed during the crisis have all had a major impact on business processes for nearly 90% of EMEA manufacturers.

In addition, ISG says nearly all respondents expect consumer needs to change permanently as a result of the pandemic. “These changes come as the global auto industry simultaneously grapples with historic transitions to electric drivetrains and new use concepts,” the company noted in a press release.

Trying New Approaches

While COVID-19 has accelerated the need for digital transformation for manufacturers, ISG says manufacturers are having varying degrees of success, and many are not sure how to proceed. “In many places, there is considerable caution about how much to adjust business capabilities to more safely manage the impact of the pandemic,” says ISG’s Christian Decker in the press release. “Only a minority of respondents to our survey have decided to try a new approach.”

Other key findings from ISG’s survey include:

  • For 68% of respondents, managing supply chain disruptions will be a key priority over the next 18 months.
  • Many of these companies do not yet know how they will adapt their ecosystems in response to the crisis, whether through mergers and acquisitions, industry consortia or a return to internal sourcing.
  • Nearly nine out of 10 manufacturers see customers demanding more digital engagement with them, especially additional opportunities to design the products they ask for.
  • Two-thirds also see their customers seeking more choices in how to communicate with them.
  • Nearly half of the companies (45%) say they are well-prepared or very well-prepared to meet emerging customer needs.
  • However, 39% of companies say internal resistance and slow change processes are holding them back from this goal.

“Now, more than ever, enterprises need to understand the customers’ changing needs and be able to respond to them quickly,” Decker said in the press release. “Achieving the necessary level of customer orientation requires cross-functional collaboration between all areas of the value chain, which calls for a new operating model.”

Learning from Challenges

KPMG has also been tracking companies’ renewed interest in digital transformation and says much of that interest is tied directly to the events taking place during the pandemic.

“A company’s performance and response to COVID-19 has become a litmus test for understanding the potential pitfalls associated with their current strategy and approach to risk management in times of global crises,” KPMG reports in its white paper on supply chain digital transformation. 

“Learning from challenges experienced over the course of the pandemic, executive leadership teams are now highly motivated to implement supply chain risk mitigation strategies that will alleviate the impacts of current and future global crises,” KPMG adds, “including global warming, tackling decarbonization, and leveraging digital capabilities and emerging technologies.”

3 Steps to Take Now

To manufacturers around the globe that are looking for help with their digital transformation journeys, ISG says these three pieces of advice should serve as good starting points:

  • Develop a holistic understanding of the customer
  • Institute cross-functional collaboration among business and IT teams
  • Transform traditional supplier relationships into partnerships

“Virtually all manufacturers in EMEA have begun the digitization of supply chains, customer engagement, and other aspects of the manufacturing business, but the changes wrought by the pandemic have heightened the need and opportunity for change,” ISG adds. “The crisis has exposed how vulnerable manufacturers and automakers are to global shocks, which have imposed large-scale limitations on their businesses.

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