Three Ways Midsize Manufacturers Can Stay Viable In Unexpected Times

Part of the “Navigating Disruption Today, Planning for Tomorrow” series

Industrial manufacturing companies are no strangers to disruption. In the last 18 months alone, they have faced everything from trade tensions, supply chain volatility, and fluctuating demand to an ongoing shortage of skilled talent.

Even though such challenges have become the norm, no one was ready for the uncontrollable upheaval that COVID-19 brought. This disruption seemed to come far out of left field as it immediately shut down entire countries and exposed severe vulnerabilities in the supply chain. And in a matter of days, business leaders were making on-the-fly decisions and taking action that fell beyond the scope of their traditionally comprehensive contingency plans.

This crisis may be unusual, but I believe it is a testament to the resiliency of midsize manufacturers.

A test of operational resiliency

In many ways, midsize manufacturers are responding to this pandemic with great defiance and agility with strategies such as:

  • Switching component and raw material suppliers to avoid pandemic-afflicted areas or border closures
  • Reconfiguring the shop floor and adjusting shift patterns and factory processes to ensure the safety of every worker – in terms of social distancing, access to protective gloves and face masks, continuous health monitoring – while monitoring erratic demand patterns
  • Modifying production lines to produce and deliver products that are desperately needed among first responders, healthcare workers, home-bound patients, and facilities housing vulnerable people and collaborating with other companies and institutions to do so

How are these companies shifting gears so quickly? Their secret comes down to the combination of three critical lessons: end-to-end visibility, fast-paced and responsive pivoting, and empathetic leadership.

Lesson #1: Increase internal and external visibility

Real-time visibility – this one lesson is the basis for everything else midsize companies need to learn right now to survive today and plan for tomorrow. This pandemic is changing our world so quickly that business leaders must keep an eye on everything that’s happening within operations, throughout the marketplace, and outside traditional industry boundaries.

This level of internal and external transparency can be achieved with a variety of technology tools and reporting. For example, manufacturers should be able to run, analyze, and reconsider their planning scenarios daily (or more frequently) to achieve better visibility across the extended supply chain and carry real time simulations of different situations with on-demand solutions like SAP Supply Chain Planning as a Service. In addition using tools like the Supply Continuity Pulse can be useful to see how your suppliers and supply chain are doing. Having both sets of insights enables the operational managers to use the analysis to shift sourcing, production, and workforce arrangements quickly across the entire supply chain.

Lesson #2: Pivot quickly to respond to change

At the same time, production operations need to sense real-time signals through integrated manufacturing technology. The company can collaborate with suppliers, exchange data with connected sensors and devices on everything from production machines and equipment components to warehouse shipments and final products.

This approach allows manufacturers to pivot operations quickly to avoid emerging risks or potentially take on new opportunities early on to safeguard capital. Solutions, such as SAP Ariba Discovery, can be used to assess suppliers who can deliver on immediate sourcing needs in ways that minimize shipments delays, and costs while keeping up with demand.

Lesson #3: Look after all employees with an empathetic heart

When choosing between maintaining the current workforce and breaking even, midsize manufacturers must make difficult decisions to bring staffing down to minimal coverage. Many companies are looking at furloughing employees so that it will be faster to bring them back when economic conditions begin to recover. However, companies still need to keep furloughed employees engaged and trained until that happens.

With visibility into every employee’s experience, skill gap, and the criticality of their role, business leaders can decide which employees to keep on the production line now and develop training plans to ensure coverage of critical roles. In the meantime, on-demand training can be extended to the rest of the workforce in preparation for expected changes when full-scale operations begin again.

For many small manufacturers, this is also the first time that they have to support work-from-home arrangements for some employees. Ensuring that employees can access the systems and information they need to carryout vital business functions has been a priority. But at the same time, business leader must be empathetic to the changes and challenges that working from home presents.

So during this time, manufacturers should check on employees – whether they are actively working or furloughed – with feedback tools, such as Remote Work Pulse. This technology allows managers to gain a real-time view into the mental and physical well-being of their employees and work toward resolving any issues or concerns immediately. Additionally, gain insight into the remote accessibility of business systems.

 A position of strength emerges from visibility, adaptability, and empathy

The end game of this pandemic is unclear for manufacturers. But I also see glimmers of hope that such a historic disruption does not have to mean bad news across the board.

Revenues will again grow one day as midsize manufacturers continue to reshuffle, retool, and reimagine their business models, processes, and the very core of their company. Most importantly, they will survive this moment and emerge out of it stronger than ever.

This blog is part of a series offering suggestions to help small and midsize companies weather the challenges related to the pandemic. You may also be interested in recommendations to manage supply chain disruptions, “Supply Chain Resiliency:  A Model to Survey and Thrive for Midsize Businesses.”