With the majority of events that have taken place in 2020 such as bush fires in two opposite ends of the globe, the explosion in Beirut, COVID-19, and on a happier note the return of US astronauts to space via their own rockets, it is evident that the world is filled with booms and downturns in 2020. In some instances, it’s easy to start thinking that it’s the end of the world, while in other instances, you really start feeling there’s the dawning of a new era. Stability is what we are seeking in 2020. Life is really about how you perceive it. Fortunately, there are still good things to celebrate in this life.
The important thing to note about business is that it will be ensuring that your organization is operating in three modes: Thriving, Breakeven, Surviving. The key as an industrial enterprise, is to ensure that you are aware of how you can operate at each of these modes, and also ensure that you have a plan that will keep you thriving regardless of what’s happening in the world about you. The good news about being able to see your future is that you can actually prepare for it. Now is not the time for your business to be filled with surprises. You really have to know what’s going in on your business, and its trajectory.
Economic Shifts on the Manufacturing Sector
The COVID-19 pandemic has affected all industries in a major way, and the manufacturing sector is not exempt. As a SARS variant that originated in China, it just so happens that this province is the region with the majority of the suppliers for many of the major industrial companies in the world. The source of supply was affected, and this ripple effect transitioned to the rest of the world. While measures were taken to mitigate against the propagation of the virus, we all can see the impact that its presence has had on the world.
This is really not just business as usual. With the global supply chain in flux, and with flows somewhat hindered, many organizations with tier one suppliers in China, have had to rethink their organizational strategy.
What is the fix if your primary supplier is in China?
The first thing that you need to do, is to actually seek an alternative supplier in your local jurisdiction. While China does have the advantage of being a low cost, high volume supplier, in 2020 and beyond, it will be in your best interest to ensure that you have a contingency supplier who can meet the needs of your products. Even if you have to pay more for your new local supplies, it will be better for you to have a slightly higher cost product to sell to your customers (you can reduce your profit margins, not adjust your price), than to have no products to sell due to a disrupted supply chain.
How COVID-19 has affected the process manufacturing sector
According to an industrial study, the impact of COVID-19 on the global industry, can be placed into differing classifications. In the discrete manufacturing sector, organizations like automobile manufacturers, the aviation and electronics industry were affected by the pandemic. In the process manufacturing sector, there were food, drug and cosmetics entities that were affected by the change.
Disruptive Impacts of COVID-19
COVID-19 has had disruptive effect on all sectors, but somehow the global supply chain of medical products has been the one to be put under the most strain. COVID-19 has actually created a shortage of medical supplies. The primary reason that individuals are being mandated to stay at home is because the hospital systems cannot manage more cases than they currently do have, particularly for a condition that they don’t know how to treat. From the previous discussion, China also happens to be the largest supplier of medical resources materials, and since their supply chain was affected, so too was the rest of the world.
What this pandemic should teach the world, is the need for independence. Where possible, identify medical suppliers in your own jurisdiction, and challenge them to be as competitive as your Chinese manufacturing sources. Clinical trials, and the progression of drug development activities, have also been halted as a result of the COVID-19 pandemic.
Within all other jurisdictions, the link to the core supplier of China is highly noted. At this point in time, the solution for all industries remains the same. This involves ensuring that independent supply chain paths be established, until the primary paths can be restored. The reason that industrial operations seem to have stopped, is not because of the demand element, but rather the supply disruption.
In a time where system redundancy is built into space rockets and planes, there is no reason why the manufacturing supply chain can’t be optimized to ensure that there are more than one supplier for a product or service. It is time to become more resilient as an industry.