The manufacturing industry, like so many others, was impacted significantly by the global pandemic.
Now, nearly two years on, how are manufacturing organisations holding up? And how will the continued challenges of the pandemic inspire the road to recovery, as well as the future of the industry?
The industry bottleneck
The global output for manufactured goods drastically dropped in Q2 2020 as a result of strict pandemic measures in factories around the world. And while this decline did not quite reach the levels suffered in the 2009 recession, the impacts are still very much being felt.
Fortunately, pent-up demand has seen manufacturing production make a notable rebound, with Q2 2021 figures registering an annual output growth of 18.2%.
Despite this, the continued unpredictability caused by the pandemic’s trends has resulted in some uncertainty about the long-term outlook for the manufacturing industry.
Some are speculating that production figures will not stabilise at pre-pandemic levels until 2024, while others are anticipating an uptick in production levels that will trend downward again due to ongoing supply chain and distribution issues (something we have already begun to see).
In addition, changes to buying trends and demands globally are seeing consumers favour greener products and more sustainable practices to reduce the negative economic, social, and environmental effects.
The manufacturing industry is facing significant change, including digital transformation, changing customer expectations, and altered buying habits (e.g. online shopping). Green technologies and pivoted business models in light of both the pandemic and international relations, such as Brexit, also play a part.
Such changes are necessary for manufacturers to progress and remain competitive in a constantly evolving marketplace. But, of course, these developments come at a cost. So, many CIOs will be scrutinising their budgets to see where they might be able to locate the required resources, without leaving their organisation to the existing and emerging risks posed by the pandemic.
With so much information, so little certainty, and an industry-wide transformation on the horizon, how can manufacturing organisations best prepare themselves to navigate the post-pandemic markets?
Getting back on track with Gartner’s recovery strategies
Well, in light of the impacts of the COVID-19 pandemic, Gartner issued advice centred around five key pathways that organisations could take to reset their strategy and build resilience.
Each of the notions outlined in the Gartner article indicates a route of recovery for organisations to consider when looking at how to regain lost ground and move forward in the aftermath of the pandemic. (It’s worth noting, however, each pathway could differ greatly depending on several variables, including business model, product, and supply chain efficiencies.)
So, how could organisations in the manufacturing industry safeguard their future according to Gartner?
|Return||Returning to pre-pandemic levels for some will largely be bolstered by pent-up demand; however, for other manufacturers, the recovery may be slower as changing consumer habits dictate a gradual return in demand. As a result, manufacturers may need to adapt their operations and practices to remain agile and able to meet these fluctuations.|
|Reduce||If demand does not return, or supply issues render an organisation unable to fulfil demand, an organisation may choose to scale down areas of operation in favour of recovering profitability.|
|Retire||If recovery is struggling, an organisation may deliberately want to wind down an area of the business to push forward with an innovation or development plan.|
|Reinvent||When facing mounting pressure from COVID-19, there may be a significant need to change the business, or operating model, via reinvention, such as digital transformation.|
|Rescale||For those manufacturers who benefited during the pandemic (such as those that pivoted operations to produce PPE), there may be a need to adjust the business and operating model to accommodate the increase in demand.|
Each of these pathways are underpinned by a need to boost profitability in a way that could be achieved most easily in challenging market conditions.
In the case of the reduce and retire routes, the basic premise here is to generate sufficient cost savings to improve stability. But rather than having to reduce your headcount, scale back operations, or even completely wind down areas of your organisation, you could procure massive savings and recover a large portion of your budget by making only one change: swapping vendor support for third-party support.
With third-party support (a Gartner approved alternative to vendor support), manufacturers could reduce their annual support costs by at least 50%.
So, in a similar vein, opting to use third-party support for their IT estates could see manufacturers pivot a considerable portion of resources and budget towards improving business infrastructure through innovation, development, and key progressive projects.
This would then facilitate the three remaining recovery strategies (return, reinvent, and rescale) suggested by Gartner, and could better position organisations in the manufacturing industry to keep pace with existing and emerging trends in the marketplace.
Trending in the industry for 2022
But what are some of the top trends that are expected to shake up manufacturing?
Already the manufacturing industry has experienced some significant changes over the past 12 months as a result of the COVID-19 pandemic and Industry 4.0 (the fourth phase of the Industrial Revolution that is largely driven by automation, interconnectivity, and machine learning).
It’s no surprise, then, that digital transformation (including IIoT, 3D printing, and predictive maintenance) continues to be one of the key factors at play in the evolution of the manufacturing market. In fact, it’s estimated that 34% of manufacturers have plans to incorporate IT technology into their processes to secure operational efficiencies and yield greater margins.
The idea of ‘smart factories’ is not necessarily a new concept (the term being coined in 2006); however, the continual advancements in technology see the applications and capabilities constantly change.
For example, in more recent years a significant biproduct of the manufacturing industry’s digitalisation is big data and data mining. Manufacturers are now able to adopt a data-driven approach to production, monitoring processes, input, and output to drastically enhance productivity and forecasting abilities, as well improve resilience in the face of external disruptions, such as supply chain issues.
The digital transformation of the manufacturing industry will not just improve the internal performance of organisations. It is widely suggested that the use of technology could be used to greatly improve and strengthen relations with customers, as well as employees, resulting in much improved satisfaction metrics.
These trends and innovations may well afford your organisation the competitive advantage that you’ve been looking for and offer a little more security in the face of adverse market conditions, but how exactly do you fund these plans? (Especially when the pandemic continues to send aftershocks rippling through economies around the world.)
Well, in addition to cutting your organisation’s annual support bill in half, third-party support also frees up a whole host of internal resources. We believe in ‘right-first-time’ fixes, so our team won’t be firing across any self-help guides for you to trawl through. Instead, we draw on our own expertise to resolve the incident efficiently and effectively for you.
So, now, not only have you recovered quite a large amount of IT budget, but you’ve freed up your IT team and found the time to pursue the innovations your organisation needs to safeguard its market position.
Achieve kaizen with third-party support
Mega-vendors, like Oracle and SAP, are far more interested in investing in their own futures (yes, we’re talking about the Cloud that’s hanging over all our heads) and, therefore, won’t be too bothered about your organisation’s plans.
While organisations in the manufacturing industry have been riding the (many) lows and (less frequent) highs of the Covid-19 rollercoaster, SAP and Oracle reported a period of growth. This can largely be attributed to the fact that annual support costs continue to rise (sometimes by as much as 24%) despite nominal innovation and poor-quality support.
Having worked with these mega-vendors for more than 20 years, we realised that we could provide a far superior and fully compliant support service (much better than either vendor is willing to) while helping organisations to make massive savings.
We know that every organisation’s roadmap and situation will look different, and that’s why we offer a flexible and dedicated support service, without the pressures of rising support costs or unwanted upgrades.
But that’s not all.
At Support Revolution, we were able to save our customers (on average) 64% of their current support bills last year. Imagine what those savings could do for your organisation…
So whether your organisation is looking to return, reduce, retire, reinvent, or rescale its operations, third-party support can help.
Keen to find out a little more? Discover how we helped Premier Modular, a manufacturer of building solutions, make amazing cost savings and avoid at least two major Oracle upgrades by clicking the button below: