The impact of COVID-19 on manufacturing operations

Manufacturers continuously face uncertainty, risk and volatility in their everyday operations, which ultimately impact their business performance and bottom line. Take, for example, interruptions to upstream supply chains, volatility in demand from consumer markets, competitor activities, political or economic influences and all the “relatively minor” operational events such as machinery failure or quality compliance breaches. All have varying degrees of impact on manufacturing operations.

But, while uncertainty, risk and volatility are simply givens in manufacturing, the impact of COVID-19 — commonly referred to as “novel coronavirus” — on manufacturing could eclipse all the things mentioned. Quite frankly, in some manufacturing sectors, the COVID-19 pandemic could have the worst impact of any single event in living memory.

This is certainly a topic worth discussing. While it will impact manufacturers across their entire business, I want to focus more on their production operations.

Impact 

What amplifies the COVID-19 pandemic is the sheer breadth and scale of the potential impact. For example, for manufacturers that rely even modestly on manual labor within the production process, the availability of that workforce could be severely limited as workers become ill or are requested to “self-isolate” for extended periods — or through government interventions such as travel or work restrictions.

This is compounded by the impact in similar proportions across the supply chains on which manufacturers rely, affecting the availability of critical raw materials, ingredients or components used throughout the manufacturing process and packaging. Hit especially hard will be those companies who rely on supplies from critically impacted countries such as China, Italy and South Korea.

Downstream impact 

The metaphor is apt: whatever happens “upstream” directly affects everything and everybody “downstream.” Downstream companies — like shippers and packagers — are expected to be hit hard, too. It will be a challenge to get manufactured goods to consumers due to significant disruptions to global, regional and local logistics.

Going global 

But beyond the supply/demand chain and the manufacturing process itself, economists and governments are predicting severe (but short-term) economic implications. This will have severe ramifications on demand profiles, on which manufacturers rely to predict supply and demand to meet consumer needs. And, of course, there is the impact on cost and pricing, on margins and, of course, on profitability. It truly is a global economy, and everyone is going to feel this.

Across the world, we are seeing the stockpiling of products — such as food, medicines, cleaning supplies and sanitary and hygiene items. There’s no way around it: this will also disrupt future short- and medium-term demand profiles — making production and inventory planning particularly challenging.

The burden on manufacturers 

Manufacturing companies have the added burden of needing to take rigorous steps to safeguard and protect the health and well-being of their employees, contractors and onsite visitors. Just because things are chaotic now may not stop the audits, regulatory inspections and safety inspections that can happen unannounced.

Products 

While there is currently no evidence of a direct infection route through contaminated products, manufacturers will increasingly have to navigate the risks of potential product contamination from infected production line workers.

The future 

The picture is changing daily, and at this stage of the COVID-19 pandemic, no one really knows the depth of these impacts, how long they will persist or how long the recovery phase will take. From a manufacturing perspective, there is no avoiding these impacts and there are certainly no quick fixes.

I think we can all agree that this virus will impact different manufacturers in different ways and to varied extents. The same goes for the many different manufacturing sectors. Even sectors that may not be directly impacted will experience significant secondary effects.

This will force thousands of manufacturers to throttle down or even suspend manufacturing operations. Overall, it is not a pretty picture.

Technology can offer a helping hand

While manufacturers fight the daily impacts of COVID-19 on operations, they must also be cognizant of other opportunities to limit or mitigate the risks. Technology can play a vital role.

Technology and digital transformation of manufacturing operations can significantly help to create a more flexible, agile and responsive manufacturing environment — enabling manufacturers to better respond to uncertainty, volatility and risk. Further automating manufacturing operations and replacing manual processes with automated alternatives can help to mitigate workforce availability challenges.

While automation does, indeed, have inherent limitations, manufacturers can also explore technology solutions to make workers more efficient and productive, helping manufacturers to achieve the same or more output with a smaller workforce.

The challenge of time

Finally, production downtime should not mean unproductive time, especially for management levels and above. One of the typical challenges in digital transformation projects, for example, is time. As we are often so busy managing our day-to-day operations, these projects often struggle to have significant resources available to them. Yet many of these projects can be researched, explored, planned and cultivated remotely.

So, as key members of the workforce are no longer on-site, or simply working remotely, then perhaps that is the right time to work on these projects, which could have significant, beneficial, long-term impacts.

Working remotely

Having remote workers offers the opportunity to answer key questions your organization might not otherwise address:

What do we need to know about how to improve our production processes that we don’t know at the moment? (Discovery)

How can we better understand the variables that affect the quality of our processes? (Lean Six Sigma)

What data do we need to be able to do that? (Data Collection Planning)

What solutions exist that could help? (Research — don’t just assume that “this is the way it is.”)

All the above can be addressed remotely. All you need is an internet connection. I guess we can think of it as an opportunity to provide some value while we are out of the office or plant.

We all face some interesting and tumultuous times ahead. But we face them together.

Jason Chester is responsible for the implementation, management and overall success of the InfinityQS Global Channel Partner Program. With more than 25 years of experience working directly within the Enterprise IT industry, he has gained a deep understanding of how information technology capabilities can deliver significant and sustainable business value to end-user organizations. Currently, Chester’s main area of interest is the business impact of next-generation information technologies on industrial and manufacturing sectors.