2020’s pandemic has delivered the electronics manufacturing industry one blow after another. First, the industry saw supply disrupted as the issue impacted suppliers in China at the end of their traditional Chinese New Year celebrations. Second, demand was disrupted as the virus spread around the world, forcing both industry and retail to slow and in many cases, stop. Third and finally, the pandemic has impacted the working practices in factories all over the world, in many cases resulting in partial or complete closures.
Even the disruption to demand is less than straightforward. Some industries, like aviation and automotive, have suffered huge drops in demand, while others like healthcare are booming. All in all, it’s as volatile a market as any of us have seen in our working lives. From what we have seen so far, there has been real variability in how manufacturers have been able to manage their business through the crisis, exposing real shortcomings and stressing the importance of digitally transforming the supply chain from quotation to completion.
Following are four of the key reasons COVID-19 has not only underlined the need to transform but has actually accelerated the transformation.
1: Without Real-Time Visibility, We Might As Well Be Guessing
From the very start of the crisis, there were data-haves and data-have-nots. Those with access to real-time data and the ability to dive into that data to pull availability suffered the least. Those without data were unable to see what the disruption looked like and what the impact might be. They were unable to take the necessary steps to correct course, mitigate disruption and ensure as much continuity as possible. In previous disruptions, lack of visibility created similarly debilitating challenges. The so-called “tech-wreck” of 2001 was amplified by poor inventory visibility. The cost of overstocked components, often redundant, ran into the billions of dollars and slowed the subsequent recovery.
2: Supply Chains are More Complex Than Ever
When supply chains are disrupted, it quickly becomes apparent that they are substantially more complex than often realized. Supply chains are, after all, chains. They are a combination of interconnected links and, like any chain, when you move one link you disrupt the others. Also like a chain, they fail when a single link breaks down. For that reason, supply chain modeling software that can see the impact of any change has proved to be very valuable, if not essential. The ability to model what-if scenarios for any single part disruption is the only way to ensure continuity. If 99% percent of the parts are available in the right place at the right time, the 1% that is missing will cause 100% of the product to not be shipped or completed.
3: The Need for Speed
COVID-19 was not the first supply chain disruption, and it certainly won’t be the last. The truth is, we have no idea when this disruption will be completely over or what to expect from the next one. But, we do have to plan for the remainder of this crisis and recovery, and we do need to do all we can to be ready for the next disruption. As is often said, “it is not the big that eat the small, it is the fast that eats the slow.” Nowadays, the ability to adapt to changing circumstances is essential, and speed and agility are the keys to success. Those that have digitally enabled supply chains are ready for change, they are ready for disruption. They are the companies that quickly ramped up ventilator production and knew exactly where the materials they needed were. These faster, more agile manufacturers are the most likely to survive, and even thrive, in the current crisis and will lead the way out.
4: The Future is Digital
The writing has been on the wall for some time, and those that have embraced smart manufacturing, smart supply chains, and smart procurement are already reaping the benefits. They have the aforementioned agility and speed, the required visibility, and the ability to manage complexity. They also have greater efficiency, which in turn makes them more competitive. They get their quotes out first, they win more business, they efficiently place orders and get new products into production and ramped to volume. They respond to disruption fast and they keep their customers informed, which means they keep their customers!
OEMs are increasingly looking to digitally transformed manufacturers. If we are to see reshoring, it is those digital-first companies that will be most competitive and prosper as a result.
In the future, digitally transformed manufacturing and supply chain management will be essential. Right now, it’s what gives the winner their edge!