The COVID-19 pandemic has made us realize that uncertainty is the new normal. Presently, there are parts of the world where some semblance of normalcy has returned. Even in these parts, manufacturing and commerce has not come back to pre-Covid-19 levels. The global supply chain is yet to recover fully from the pandemic induced shocks.
According to a McKinsey article, a survey of manufacturers in Asia revealed that sudden material shortages have become common-place: 41 percent of respondents revealed alarming drops in demand and 30 percent highlighted labor shortage problems.
To cope with the persistent uncertainty and other conditions enforced by the new normal, manufacturing and supply chains would need to undergo a paradigm shift. So what technologies are businesses focusing on to build resilience?
Leveraging Industry 4.0
There is a conscious focus on being more digital. Accelerating technological adoption has become pivotal in the new normal. There has been a quick implementation of industry 4.0 solutions to enable a more holistic approach to manufacturing and the supply chain. 39 percent of businesses have implemented control towers, a centralized hub of information, which increases end-to-end supply chain transparency. Such an approach lets organizations leverage analytics and AI driven insights to respond to supply chain shocks better.
Due to labour shortfalls, many businesses have implemented automation programs at an expedited pace.
Industry 4.0 technologies like advanced analytics, connectivity, and automation and newer manufacturing technologies had already acquired momentum prior to the pandemic. Currently, the new normal has acted as a catalyst for the adoption of these technologies at an unprecedented pace. The focus on organizations is to bring new levels of efficiency to their lead-times, time-to-market, and business innovation.
McKinsey highlights some of the key technologies that are driving Industry 4.0 are as follows:
- Connectivity and Data Focused Tech: Sensors, Internet of Things, Blockchain, and Cloud Technology.
- Analytics Focused Tech: Advanced analytics, machine learning, and artificial intelligence.
- Human-Machine Interaction: Robotics and Automation, Augmented and Virtual Reality, RPA, and chatbots.
- Advanced Engineering: Renewable energy, additive manufacturing, and nanoparticles.
Organizations that can leverage these technologies would be better equipped to not only wade through the current crisis but also future challenges that can lead to manufacturing or supply chain disruptions.
These technologies would give organizations a competitive edge as they would be able to bring new levels of efficiency and efficacy into their business operations. However, organizations that have a shortage of funding would have to hold off adoption until later.
According to a McKinsey report, 94 percent of those surveyed stated that the adoption of Industry 4.0 technologies had enabled them to keep their operations going. Early adopters can position themselves in a market reeling from COVID-19 shocks better.
However, many companies have also been forced to take a more cautious approach towards digital transformation; many are still grappling with cash constraints and other factors that have disrupted their operations.
Remote-working conditions have led to certain digital tools becoming more commonplace. Many organizations too have been using cloud based services as they are more affordable than on-site data infrastructure. The silver lining is that a third of respondents in the McKinsey survey indicated that their operations have recovered since the pandemic struck.
According to insights by Deloitte, workforce dynamics may see a seismic shift and attitudes towards gig workers shall change for the better. The implementation of technology would be based on protecting business interests in the long-run.