COVID-19 is an unmatched challenge for the world and the national lockdown gave the determined opportunity to flatten the pandemic curve. This helps to better watch the surge in cases of COVID-19 patients, which significantly impacts business and economic processes. With Unlock 2.0 here, what happens with the lockdown being over and businesses starting up again? Ever since the lockdown has been lifted, there’s also been a fear and possibility that the manufacturing industry will become irrational to ramp up volume.
The fear that the manufacturing industry will become irrational upon getting back into the cycle post-lockdown is completely understandable as the suppliers and dealers will be under tremendous pressure to ramp up the volume. But that must not imply any kind of encouragement to the unsound decisions which will surely occur if the industry starts getting irrational to get more customers.
Ramping up volume
“As of now, a number of issues await our attention long before the industry begins to operate at normal,” says Maulik Patel, Executive Director, Sahajanand Laser Technology Group and goes on, “first of them being difficulties in making employees accept multiple norms to comply with government and self-initiated measures.”
Plus, with migrant workers moving back to their native, the supply chain, particularly tiered component and sub-assembly suppliers, are in huge shortage of manpower. Therefore, the supply chain has to ramp up with new manpower, untrained and at higher cost. Therefore, they may not be able to ramp up in line with OEM demand.
“OEMs might start shifting the procurement to more stable suppliers with stable and permanent employees, by willing to pay a higher price of procurement,” Rajib Kumar Jena, Former Vice President, IT Systems, Bajaj Auto, puts across and adds, “Also, like normal times, if OEMs start pushing billing to dealerships unreasonably, the dealers will become unviable, stocking huge pile of inventory without any takers in the pipeline.”
Sharing his views on the fear of the manufacturing industry becoming irrational to ramp up volume, Jabez Mendelson, Industry Manager, TechVision, Frost & Sullivan, replies that yes – they do anticipate such a thing, which may impact them negatively. “In an effort to compensate for the losses that occurred during the lockdown, the entire manufacturing supply chain, right from suppliers to OEMs and dealers, will be looking to gain more customers, thereby eating into each other’s market share, resulting in cut throat competition and price wars across the value chain,” he asserts.
Shirish Divgi, Managing Director, Milacron India, on the other hand, begs to differ. The simplest reason for this, he opines, is that any type of manufacturing activity is a result of a cyclic process. He informs, “The inventory is stuck at various places, the import-export has stopped and vendors are not functioning and so on. We will have to wait it out and let the demand come back to normal.”
Bringing back old credibility
However, now that the lockdown has been lifted, ramping up volume may not be the only worry. Bringing back the same old purpose and credibility back into organisations is just as pivotal. “Getting back focus on a company’s mission & vision and rebuilding trust will require time and effort after a long COVID shutdown,” explains Sudhir Gurtoo, Managing Director, Leadec India and continues, “Besides, issues between suppliers and buyers on payments and inventory costs will require tactful handling. This all will settle down in a short time. For this to happen at a faster rate, the economy upswing will play a crucial role.”
Jena avers, “We must allow the entire supply chain to fall into the rhythm gradually. OEMs need to handhold the component supplier to come back by honoring their payment in time.” He believes OEMs must consult and support all captive and noncaptive vendors, particularly those who are dependent on the given OEM. Better to go for pull-based production to gradually fall in line with demand and not forecast unreasonably and push sell to dealers, he cites.
The challenges for the industry
Ergo, as the industries are set to bring back their old credibility into the organisations, undoubtedly, the challenges will be inevitable. For one, they will vary for different industries, and within the manufacturing industry there will be different types of challenges. The companies dependent on migrant labour will face hurdles in terms of getting people back to their jobs and the shop floors will remain idle in absence of the workers who can run the machines. This will have a cyclical effect on the entire manufacturing cycle.
“We’ll face many challenges, both strategic and tactical,” asserts Sanjay Koul, Managing Director, Timken India, and goes on, “On the strategic side, we’ll have to adapt to the ‘new normal’ and make sure that the learnings of the lockdown are not wasted. On the tactical side, getting the whole supply chain flowing like before will require a lot of hard work. On the demand side, we need to see positive momentum in buying behaviour. Here, the spending of the government and its economic policies will come into play.”
Encouraging localised manufacturing
Nonetheless, we will have to really go through a series of steps to ensure that we are complying with government guidelines, and at the same time, ensure that our people are safe and are able to be active as well, Patel discourses. He says, “This will include companies managing teammates and encouraging them to do more than normal in this abnormal condition.”
Mendelson goes on to mention that the challenges associated with restarting and re-establishment of the entire value chain to get the cash cycle running would be the biggest task ahead. However, to get the business cycle running again, companies may have to innovatively market the existing inventory to boost liquidity and get the cash cycle churning. Additionally, governments across the world will encourage localised manufacturing in order to revive their economy.
Prominence to automation & digitisation
What’s more, during the lockdown, every industry had started to realise the importance of digitisation and the need to have a suitable infrastructure. The manufacturing sector will have to rework its operations and methodologies to adopt the ‘new normal’ the world has associated itself with. The only way forward is to change and that’s with the integration of technologies, such as robotics, Artificial Intelligence (AI) and the Internet of Things (IoT) in most processes.
“Yes, there will be lot of emphasis on automation and digitisation,” states Divgi and goes on, “It will be good to see if the industry takes up the tasks of upskilling the existing labour to be able to handle new technologies. We will need to adapt to this change and historically, human beings have adapted to much larger crisis-like situations before.”
Collaboration – A good idea post-lockdown?
Another pivotal aspect that’s looked into in terms of post-lockdown is collaboration. Both business and academic bodies across the globe have actively stepped up to work towards a progressive solution post the lockdown. These collaborations, involving industry participants across the globe, using innovative technologies and a diversified supply chain, will result in plenty of advantages.
“Post-COVID, collaborations on ideas will be even more important,” explains Koul and continues, “Some of the many ways where collaboration would help is where we can come together by using the trade bodies to help the nation make manufacturing grow, by helping the government simplify the labour regulations and by helping companies invest in India. Also, technical collaboration can help with speed to market, which we saw happening as India manufactured PPEs.”
"‘Sanitised collaboration’ is the new trend,” Gurtoo further reveals and adds, “In the post-COVID manufacturing world, collaboration definitely gains importance, but with distancing. What this means is that while collaboration is an essential requirement to keep growth engines roaring, this new collaboration will be no more like in the past. New collaborations are now being chiseled over virtual and social platforms.”
The industry falling in place
Even if the lockdown is lifted now, there’s no doubt that the manufacturing industry will have its share of unavoidable challenges as the coronavirus still lurks about us. Giving time is key. The industry must make the best of automation & digitisation during these times, and at the same time, it’s very crucial to follow government guidelines, while companies look out for the safety of their employees.