Work from home (WFH) has become a common term as the world continues to reel from the effects of the global pandemic referred to as COVID-19 or coronavirus. The outbreak and subsequent forcing of people to work remotely has accelerated adoption of teleconferencing technology, reviving the fortunes of some fledging technology brands that may have thought their pre-COVID-19 days are number.
For manufacturers,
the situation is a little more complicated. Investments in automation meant to
reduce the need for staff on assembly lines, isn’t helping stem the effects of
COVID-19 as they still need to receive raw materials.
ABI Research noted that the impact of Coronavirus is both
global and unpredictable, and the supply chain shock it is causing will most
definitely and substantially cut into the worldwide manufacturing revenue of
US$15 trillion currently forecasted for 2020.
Short- and long-term ramifications for manufacturers
“Initially, plant managers and factory owners will be looking to secure supplies and be getting an appreciation of constraints further up the supply chain plus how much influence they have on their suppliers,” explained Michael Larner, principal analyst at ABI Research.
In the longer term, manufacturers will need to conduct an extensive due diligence process as they need to understand their risk exposure, including the operations of their supplier’s suppliers too.
“To mitigate supply chain risks, manufacturers should not only not source components from a single supplier but also, as COVID-19 has highlighted, shouldn’t source from suppliers in a single location,” he advised.
Positives for software industry
ABI Research forecasts that the supply chain impact of Covid-19 will spur manufacturer’s spend on enterprise resource planning (ERP) to reach US$14 billion in 2024. The pandemic will also benefit specialist providers.
Larner added that: “Supply chain orchestration requires software to be more than a system of record and provide risk analysis and run simulations, enabling manufacturers to understand and prepare for supply chain shocks.”
Bump in the road for Industry 4.0
Industry 4.0 has received much attention; however, the focus has been on the activities inside the factory gates.
“But investments in robotics or IoT sensors and the like assume that assembly lines receive a steady flow of raw materials. COVID-19 demonstrates that manufacturers need to be as focused on their supplier’s capabilities as they are on their factory floor,” Larner concluded.
