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The pandemic triggered major changes in the way manufacturers manage their operations. What are the key issues?
Manufacturing is an important driver of Quebec’s economy. In 2019, this sector’s gross domestic product (GDP) reached $50 billion, accounting for 14% of the province’s total GDP and 89% of export values.
It was also one of the largest sources of jobs with 433,000 employees—that’s 11.7% of all workers in the province and 28% of all Canadian manufacturing positions. And since these workers’ weekly earnings are 10% higher than the Quebec average, manufacturing jobs are considered quality positions that keep the wheels of the province’s economy turning.
COVID-19 and its impacts on manufacturing
When the pandemic struck last spring, it resulted in serious repercussions on manufacturers around the world.
In Quebec, businesses were forced to halt their operations or slow them considerably during the first wave. This led to a 33% reduction in global exports and the loss of some 44,000 jobs between February and July 2020.
Not all industries within the manufacturing sector were affected equally, however. Each was plagued with its own set of issues.
While some companies were forced to shut down completely, others faced reduced production capacities, supply shortages, import/export bottlenecks due to border closures, and other constraints. The situation was particularly bad for manufacturers who rely on international trade or hard-hit industries like air travel, tourism and entertainment.
In contrast, companies that make essential products saw demand skyrocket and had to accelerate production despite being short on workers and supplies, and the need to navigate strict new health and safety protocols.
Understanding issues before taking action
These new challenges affected production lines in more ways than one.
Supply disruptions and domino effect
When China closed its borders to stop the spread of the virus, it triggered a domino effect across global supply chains. Manufacturing businesses were the first to feel the pinch. For example, many had to contend with a lack of raw materials and seek out new suppliers.
Interestingly, this also had a positive effect, as it raised questions about how we can create more reliable supply chains for the future.
The situation also highlighted the need for manufacturers to strengthen their relationships with suppliers and diversify their partnerships, leading to interesting debates on self-sufficiency and the Buy Local movement.
Operational resilience
Managing a company involves juggling multiple variables, such as sales volumes, personnel availability, operational inputs, machine capacity, infrastructure quality, technology potential, etc. Each of these variables has an impact on your ability to achieve your targets.
In order to remain operational during the crisis, companies feeling the squeeze had to analyze their processes to determine which ones were at risk and identify potential solutions to minimize the damage.
Ensuring operational resilience depends on a company’s ability to adapt and strike a balance between dynamic production planning, technology optimization and costing. Implementing these actions can help you control costs and improve operations.
IT data security
Since the beginning of the pandemic, there has been a spike in phishing, ransomware and other cyberattacks on businesses of all sizes, to the point where cybersecurity has become a major concern for all organizations.
And since remote work arrangements are now widespread in certain industries and for certain types of jobs, these types of scams are only expected to become more frequent. In order to protect themselves and their data from cybercriminals, manufacturers need to invest in IT security. With the right solutions, they can keep threats at bay and minimize the impact of breaches.
Improving efficiency through digital transformation
The pandemic has accentuated the need for digital transformation. New technologies are essential to keep businesses viable with competitive production capacities that meet the needs of today and tomorrow.
We’ve already seen that the companies that started their digital transformation before the pandemic have been able to adapt better, thanks to process automation, the implementation of remote controls, improved data analysis and the use of artificial intelligence solutions. They’ve been able to remain efficient, achieve better output and take advantage of the situation to set themselves apart from the competition.
Workforce health and safety
Your workforce is your greatest asset. To remain engaged and productive, employees need to feel safe in the workplace. This means having a suitable physical environment and an employer that cares about their physical and mental health.
The pandemic has been hard on workers in the manufacturing industry. Some have seen their workplaces closed while others faced layoffs, reorganized work environments, new health and safety protocols, teleworking and uncertainty about the future. Not to mention the disease that may result from the virus itself.
Companies are rightfully concerned about employee retention and wellbeing. This raises several questions for managers. In this context, it’s important to plan effective and regular communications with employees. You want to keep them informed of any changes and provide them with reassurance.
Cash management
Cash management has always been a major concern for manufacturing companies, even before the pandemic. But in the past several months, most companies have experienced a significant drop in revenue, which is affecting their working capital.
Businesses need capital to meet their financial obligations, such as payroll, accounts payable, loan repayments and business investments. Carefully assessing the situation is critical for making informed decisions, protecting liquidity and limiting financial impacts over the short, medium and long terms.
Preparing for the new normal
Recent events have turned things upside down and our society is changing. Manufacturers have demonstrated resilience in adapting to the new normal and we’re already seeing evidence that the challenge will leave permanent marks on our ecosystem.
Certain trends observed during the pandemic have increased. Others have emerged and look like they’re here to stay, such as taking a more preventive approach to risk management, shortening supply chains, and striking a balance between buying local and complying with the terms of free trade agreements.