Manufacturers Get Ahead of the Crisis, Emerge Stronger
While manufacturers continue to grapple with the economic contraction triggered by the COVID-19 pandemic, some are already considering what they can do now to get ahead of the crisis.
According to PwC’s Global Crisis Center, most crises require short-term reactions around mobilization, medium-term stabilization efforts, and developing strategies for long-term and permanent transformation.
PricewaterhouseCoopers (PwC), the second-largest professional services network in the world, says manufacturers should create and adopt strategies now on how they can transform and position their organization in ways that will give them a competitive advantage and help create greater resilience in a post-crisis world. This ought to be done on the heels of the disruption, throughout the crisis and during recovery.
PwC lists four stages of a crisis: disruption, recovery, competitive advantage and resilience.
Given the unclear nature and length of the current disruption, it’s crucial for business leaders to plan now on courses of action for the eventual recovery, PwC says. That will help them get ahead of the curve of this crisis more quickly than their competitors.
“The 2008 recession taught us that the most successful companies took measures in lockstep with each phase of the crisis,” the company notes. “They forged a strategy early on. They made decisive, bold, informed decisions. And, most importantly, they didn’t miss a beat.”
Here are some ways manufacturers can prepare for—and navigate through—the crisis in the current heat of the moment… and well beyond.
The recovery: Charge out of the gate
PwC believes it may be too late if manufacturers wait to act until conspicuous signs of a recovery are in full view.
“That’s a lesson gleaned from the recession a decade ago, when the global economy was crossing the same threshold we’re now facing. The companies that emerged from that recession strongest… moved faster, decisively and more agilely during the recovery phase than their laggard peers,” the company notes.
These leaders focused on transforming operations through the recovery, improving the areas that drive growth and agility, including:
* Investing in manufacturing flexibility to help drive customer service and future growth, despite lower margins during the crisis.
* Rationalizing portfolios to focus on profitable products and eliminate complexity
* Working closely with struggling suppliers (especially sub-tier ones) to avert bottlenecks
* Strengthening ties to customers and rebuilding customer confidence, loyalty and market share to carry through the recovery.
Taken together, such swift, strategic and bold measures carried out during the recovery phase can provide the solid footing needed to achieve sustainable competitive advantage and growth in the wake of the crisis, PcW says.
Throughout the recovery period, the global effects of the COVID-19 outbreak will reveal changes to consumer behaviors and supplier positions. Companies that quickly and thoroughly understand these changes can create a distinct competitive advantage in this next stage of the life cycle. They realize that rare shocks to the system following disruption offer opportunities for smarter, faster companies to enhance and expand their status in the markets.
At this stage, the focus will shift from short-term cash flow and liquidity management to cost reductions and aggressive measures to expand market share. For example, companies will likely put capital expenditure-intensive projects on hold in regions experiencing market contraction, while still making investments that are needed to compete effectively. These include deploying technologies that drive cost competitiveness, flexibility and innovation: the internet of things (IoT), artificial intelligence (AI), automation and 3D printing.
These technologies present tremendous cost-cutting and revenue-generating opportunities that can make the rebound faster and stronger.
Businesses ought to consider these three broad areas as they decide what measures to prioritize in the competitive advantage stage, PcW says.
* Launch new products and services as new demand patterns emerge.
* Shift to a flexible global manufacturing footprint. At the peak of the crisis, companies are moving quickly to build an inventory buffer and explore alternative suppliers outside the most affected regions.
* Maintain, or even accelerate, investments in digital technologies on all fronts. Leaders will deploy new capabilities in supply chain visibility, business modeling and rapid-response.
Keep your eye on the prize: resilience
Post-crisis, it will be important for companies to build on the trust built up over the pandemic and seize opportunities to help reshape markets and their competitive positions, PcW says. The pandemic is reordering the global economy and society in fundamental ways, such as increasing remote working and speeding the adoption of automation and industrial mobility. It’s also changing customer behaviors, with an emphasis on online sales.
Leaders that have a plan throughout the strategy life cycle can signal their progress to their consumers, suppliers and investors through specific actions.
Those that get this right will come out on the other side with very different operations, products and services than they had before COVID-19 hit, PcW says. The traits that will set them apart include:
Leaders that have a plan throughout the strategy life cycle can signal their progress to their consumers, suppliers and investors through specific actions.
Those that get this right will come out on the other side with very different operations, products and services than they had before COVID-19 hit, PcW says. The traits that will set them apart include:
* Decision support tools designed for speed and agility in decision-making.
* An investment in advanced supply chain technology for clearer and near-real-time visibility into production, inventory and supply, which helps with both agility and cost.
* A refocused product and service portfolio
* A ramped-up application of digital technologies to understand and anticipate customer behaviors and preferences to provide a more valuable experience attached to the product.
* Strengthened and diversified value-chain ecosystems to secure capacity and scale smartly.
Despite the uncertainties of the current crisis, the manufacturing sector can be sure of one thing: There will be a progression of waves in this crisis, but it will have an end-point, PcW says.
Forging a well-informed strategy on how to get through the waves of this crisis and then executing on that strategy will help chart a course through what now may seem unnavigable and choppy waters.
