How industry will change post-COVID-19

Omron Electronics Pty Ltd

By Harry Mulder
Friday, 10 July, 2020



How industry will change post-COVID-19

The COVID-19 pandemic has changed Australia’s manufacturing industry forever, and experts across the globe agree that businesses now have to change the way they operate. From end-user demand to supply-chain disruptions and plant closures, companies across many sectors are facing monumental COVID-19 impacts.

With increasing customer uncertainty, industry is facing disrupted supply chains and a significant drop in consumer demand. Cash flow and sources of capital are under pressure like never before. An estimated 75% of organisations globally have reported disruptions to their supply chains — some experiencing dramatic reductions in demand.

And with so many countries closing their borders, up to 70% of internationals flights have been grounded. This has seen freight costs double or even quadruple, as well as long delays in delivery times.

Chinese manufacturing has also been severely disrupted due to COVID-19, and Australian supply chains have had limited access to essential supplies. Unable to source materials from China, domestic manufacturing has had to swiftly adjust to meet local demands.

To survive, many businesses will have to reinvent themselves with new capabilities and skills.

Since the early 1960s, manufacturing as a percentage of Australian GDP has dropped from 30% to 5.7% in recent years, and to save costs, many Australian businesses have relied on overseas manufacturing. But COVID-19 has forced many of those manufacturers to now rethink their manufacturing strategy.

How technology can help to reduce costs

The best way to reduce costs is by employing technology. Digitisation has made this a reality, and innovation now holds the key to long-term innovation.

Flexibility and faster decision-making cycles are key to building resilience, adapting to new situations and new processes, and driving innovation to remain relevant. Advanced manufacturing has the potential to benefit all manufacturers.

The federal government recognises that the future of Australian manufacturing lies in embracing new technologies and developing high value‑added products and services for the global marketplace. A raft of incentives is now being offered to support Australia’s manufacturing industry and minimise the reliance on off-shore manufactured goods. This includes the $100 million Advanced Manufacturing Growth Fund (AMGF) to create jobs, grow businesses, improve productivity and be globally competitive. It includes programs to encourage investment in new technologies and stimulate further research.

The AMGF provides grants that support capital projects from small and medium enterprises.

Manufacturing must undergo a rapid digital transformation

Companies investing in new technology will be the ones to better respond to change and continue to operate efficiently in an ever-evolving landscape, so manufacturing must undergo a rapid digital transformation.

Business resilience in the new world will require more connected, intelligent solutions to re-ignite operations, and as a result, Industry 4.0 is increasing in relevance like never before. Technologies such as robotics and artificial intelligence (AI) are set to change the local manufacturing landscape, allowing more employees to upskill.

Also, expect to see greater flexibility in the workplace in the future, with more staff working remotely and fewer people on the factory floor.

However, this also raises some significant challenges and threats. Managing a virtual workforce can be extremely challenging. Businesses must now consider their digital capacity as well as online security and online privacy.

Every crisis provides opportunities

The challenges we face with COVID-19 are significant, but temporary. Every crisis provides opportunities — and it’s now up to industry to capitalise on those opportunities. The current crisis has taught us many lessons — most important of which is to ALWAYS be prepared.

It’s time for organisations to invest in Industry 4.0 technologies to help plan for all contingencies to ensure their future viability. Organisations must increase their focus on supplier risk programs.

As your business contingency plans take effect, you must keep assessing the impact on your supply chain and operations. A key lesson is to synchronise supply, manufacturing, logistics and fulfilment and reposition inventory.

Finally, industry needs to focus more on building a highly skilled and flexible workforce, with high-performing employees who are constantly learning new digital skills.

Industrial transformation in Australia will depend ultimately on the adequacy of our workforce and management skills. Education and training must be a key element of your industrial strategies going forward.

In the next decade, there will be some golden opportunities for local companies, created by the technology revolution and surging demand from Asia’s vast and affluent new middle class. Let’s not miss out on them…

Harry Mulder is Engineering Manager, Omron Oceania

Image: ©stock.adobe.com/au/Coolpicture

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