What’s next for manufacturing after COVID-19?

The Industry 4.0 movement was quickly gaining steam prior to the COVID-19 pandemic, but lock downs and budget cuts forced many businesses to freeze their digital transformation efforts. With manufacturing resuming in many areas, it’s time for businesses to rethink how digitization and sustainability can support them in the current and future crises.

By Marco Paletti, Christophe Mouille, and Sarat Maitin, Accenture

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Restart for manufacturers: Now its time to rethink your digital and sustainable operations. | Image: Accenture

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The COVID-19 pandemic froze many digital transformation efforts, but as manufacturing resumes, they have become more important than ever.

The COVID-19 pandemic has taken a tremendous toll on the global economy and the manufacturing sector is no exception. During the first quarter, the United States Manufacturing Purchasing Managers Index (PMI) fell from around 53.0 to nearly 35.0 before recovering over the subsequent months to pre-COVID-19 levels, thanks to rising selling prices.

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The ISM Manufacturing PMI for the United States | Source: Trading Economics

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While the financial impact on manufacturers may be temporary, operational changes could last a lot longer. Manufacturers have had to implement worker safety measures, improve efficiency to meet new norms and deal with local and federal regulations. The good news is that new technologies can simplify and streamline these requirements.

There are several examples of these roles for technology:

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Many manufacturers have also made operational changes to their product mix and production levels. For instance, manufacturers in hard-hit sectors have pivoted to focus on products in high demand or new products that are better suited to the new economy. Many businesses have also adopted flexible pricing models to support more modest customer budgets.

Reimagining more resilient operations

The COVID-19 pandemic has created enormous challenges on a global scale, but as organizations return to normal, there’s an opportunity to reimagine a future with digital and sustainable operations. Early successes have already shown that companies can start on the journey to Industry 4.0 in small ways and scale these efforts up over time.

For example, the Agile methodology encourages businesses to break down a major transformation into smaller pieces that can be accomplished piecemeal over shorter time frames. Cross-team communications ensures that any roadblocks to implementation are quickly removed and projects remain on schedule.

The best starting points have low capital and infrastructure requirements:

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Companies that already have some existing support infrastructure, such as data sharing capabilities to support Big Data analytics, have even more options:

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The larger pieces of Industry 4.0, such as end-to-end advanced robotic automation or the use of blockchain technology for logistics, may be put on hold until there’s greater visibility following the pandemic. However, there may be a near-term opportunity to begin exploring these technologies at a high level (and a low level) to speed up the process when a decision is made.

By accelerating adoption during the crisis, companies can help prevent further disruption to their existing operations while gaining a leg up over the long-term. The key is focusing on Industry 4.0 changes that can be implemented with limited resources, particularly for companies operating in hard-hit manufacturing sectors.

Make it a part of a wider digitization

Industry 4.0 is about much more than resilient operations—it’s about balancing long-term sustainability and productivity. Worker safety has become a key issue throughout the COVID-19 pandemic, but sustainability, product quality, and productivity are other key issues that digitization can dramatically influence over time.

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The evolution of industry over time: We are about to enter the Industry X era. | Image: Accenture

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Some key areas of focus in modern manufacturing include:

• People: Manufacturers should make the workplace safer and enhance the jobs of workers involved in core manufacturing processes. At the same time, the Agile team should never lose focus on the people that ultimately consume products and ensure that they’re at the top of mind throughout the product life cycle.
• Flexibility: Manufacturing is quickly transitioning from mass production of the same product to highly customized products to meet individual needs and speed up time-to-market. 3D printing and additive manufacturing practices can transform how companies develop products for individuals rather than markets.
• Automation: Automation should extend beyond the factory floor to every part of an enterprise. For instance, reducing data silos and sharing data between business segments can help transition decision support from humans to artificial intelligence and machine learning algorithms that may provide more accurate insights.
• Sustainability: Products should be designed for sustainability. In addition to efficiency gains, companies should consider the entire product life cycle, including the disposal phase. Reusing or recycling product components can both reduce environmental footprints and potentially cut costs.

By starting small and moving quickly, organizations can realize these goals, streamline operations, make better products and meet the various goals of customers, suppliers and stakeholders.

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The bottom line

The manufacturing sector has experienced significant disruption from COVID-19, but as organizations restart their operations, there’s an opportunity to reimagine a future with better solutions. Rather than waiting on the sidelines, taking small steps can help create a foundation for a digital transformation that could provide an invaluable competitive edge.

If you want to accelerate your digital transformation, Accenture provides resources and consulting services designed to distill the wide range of technologies and options into a concise and actionable plan.

Marco Paletti, Christophe Mouille, and Sarat Maitin

Marco is Managing Director at Accenture and currently leading the SAP Platform for Industrial & Mobility around the globe. Meet him on LinkedIn. 

Christophe is Senior Managing Director at Accenture and currently leading the Industry X Key Strategic Partners around the globe. Start a conversation with him on LinkedIn.

Sarat is Managing Director at Accenture and leads Strategy & Consulting Industrial in Central Europe. Prior to that he was leading the Industry X and Supply Chain & Operations Consulting Practice for Products in Europe. Contact him via LinkedIn. 

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Acknowledgements

The authors of the article thank the following for providing valuable insights:

• Ishita Biswas, is Manager within Accenture’s Industry X Digital Manufacturing practice. Meet her on LinkedIn.
• David Briand, is Principal Director at Accenture and takes care of big transformation programs in manufacturing and supply chain practices. Get in touch with him via LinkedIn. 

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