The COVID-19 crisis has accelerated the adoption of some technologies by as much as seven years. How will this affect manufacturing in 2021?

As we approach the finish line, thankfully, of a year unlike any other year in modern experience, companies around the world find themselves forever changed.   According to a recent report by McKinsey, the COVID-19 crisis has accelerated adoption of some technologies by as much as seven years as businesses scrambled to meet the demands of customers’ new online buying habits.   These changes, which include supply chain digitization and an increase in digitally enabled products, is expected to remain part of business models next year and into the years beyond.

While these technology shifts were lower and slower in the manufacturing sector and, given the typical B2B business model, such digital shifts weren’t considered imperative for survival, new technologies have still thrived.  Here are two major technology-based trends from 2020 and how they may affect 2021 business goals.

Building resilience into the supply chain

In 2018, US manufacturing made up over eleven percent of total GDP and employed one out of every twelve people. Even so, the American manufacturing industry is built upon a specialized sub-manufacturing supply chain with many third and fourth-tier suppliers located somewhere in Asia.  When the pandemic hit, companies found their supply network had collapsed over a necessary but suddenly unavailable component from an unknown vendor deep within their sourcing.

While calls to reshore all manufacturing have increased over the last months–often in response to supply chain pain points caused by the pandemic–this seems an unlikely scenario.  In a complex world full of specialization, division of labor goes hand in hand with economies of scale. Decades of globalization will not be undone in a few months or a few years, if ever.

But change is not impossible. In a recent podcast from McKinsey, Susan Lund noted that even before the pandemic “trade among neighboring countries was growing faster than trade between countries in different regions,” as a way to improve resilience.  Shorter supply chains also act with more speed.

Moving forward

In the wake of the pandemic, building resilience should become a priority.  Some steps that should be considered include examining existing supply chains for weaknesses and bottlenecks, forging closer geographic partnerships to decrease response time to negative events,  or finding secondary sourcing opportunities within existing supply chains.

Additionally, manufacturers should reconsider the value of maintaining buffer inventory.  This may be more efficient than a continued dependence on global transport logistics that has been disrupted several times in the last two decades by occurrences like the pandemic, the 2008 financial crisis, and the 2011 double-hit of the East Japan earthquake and flooding in Thailand.

Finally, some may consider if they should bring sourcing of some parts in-house by adding additive manufacturing to their existing capabilities.  As shortages occurred in needed medical supplies earlier this year, 3D-printing manufacturers helped to fill the gap.  This quick response time and adaptability inherent to additive manufacturing may well become invaluable to more traditional manufacturing companies during the coming recovery period.

Better Data Security, More Upskilling

While on-site jobs are the norm for the industrial and manufacturing sectors where frontline jobs must be boots-on-the-ground (a war-inspired phrase that seems appropriate for 2020), many companies have shifted certain positions to virtual work environments in response to the pandemic.  This shift has led companies to increase their operational technology and their IIoT security as they seek new ways of meeting business needs.  Hardware and software investment has ensured proper tools were in place to meet the changing conditions of this new remote workforce, and training or retraining employees has helped prevent opportunistic cyberattacks.  This includes an understanding of email protocol when away from the main office, how to properly safeguard business information, and what to do if a cybersecurity incident occurs.

But in a year where manufacturers are looking to make full use of every asset, continuous upskilling should also be a part of capitalization of the current workforce, even those still on-site.   Manufacturing was on its way to a 2.4 million-employee workforce shortage by 2030 according to one 2018 Deloitte study. That was before the pandemic. While the US has lost 658,000 manufacturing jobs since then, many jobs in the industry remain unfilled because there are no applicants with the proper skills available to fill them.

Moving forward

Optimizing current employee skills can be critical for future success. Companies should consider how their processes are changing and what sort of skilled workers will be needed in the decade to come.  Collaborative efforts to upskill current workers for future demands benefits everyone: it overcomes the skill gap and improves today’s operations while at the same time creating a happier, devoted workforce that feels valued by the company and can be retained and retrained as needed.  This also bypasses the cost and time involved with recruiting, including hefty sign-on bonuses.

When the pandemic is over and manufacturing rebounds, the skills gap will remain. Companies will compete for employees with advanced digital skills, extended computer skills, an understanding of cobot systems, and robot/automation programming skills.   It may become increasingly difficult to find qualified workers for newly technical jobs that are quickly becoming the norm. Rather than recruiting and competing for these workers,  the solution instead may be to give new technical skills to the company’s existing workforce.

Conclusion

The manufacturing industry is facing remarkable challenges and change.  But with a step-by-step approach and a focus on what needs to be done, transformation can happen in a measured and logical way.   The reality created by this year’s pandemic has accelerated changes most already knew were on the horizon.  The change underway will likely lead us into one of the most interesting, innovative, and creative decades the industry has ever known.