How the Covid-19 Crisis Has Driven Manufacturing-Related Change
Understanding what looks different is crucial to evolving and growing through those changes.
Covid-19 has driven a host of changes across industries, but perhaps no industry has been more dramatically affected than manufacturing. Because those changes will influence how companies around the entire world do business years into the future, it’s beneficial for workers of all stripes to grasp exactly what’s been shaken up.
A perfect storm of issues
During the pandemic, the demand for employees fluctuated at first but increased drastically in most manufacturing sectors as the initial uncertainty about the pandemic disappeared. Many workers had concerns about health and safety, and others simply had other priorities. At the same time, businesses also saw a huge number of new orders as people tried to get supplies online. Companies found it difficult to keep enough staff, and getting products from place to place became highly unreliable, even where shipping faced fewer formal restrictions.
Because shipping was so disrupted by both the lack of workers and travel issues, many raw materials and goods became sparse or unreliable. Businesses had to delay or reduce production, with some companies forced to find new partners or create different products for their catalogs.
Manufacturers also saw a big shift in demand fluctuation. Before the pandemic, many companies had relatively good visibility about what their customers/markets were buying and how much they were spending, which allowed businesses to plan and make decent predictions about sales. However, during the crisis, there were unexpected demand spikes that caught leaders off guard and were difficult to meet.
Another significant problem involved pricing. For all of the reasons above, costs for different shipping areas (e.g., container boat, freight, and package shipping) skyrocketed and weren’t stable. Manufacturers that had good relationships with their partners often saw less of an influence, but rates were a big issue overall. Standard items suffered as well. The average cost of building a new home, for example, went up by $30-40K in timber alone.
To overcome hurdles, communicate openly and nurture your relationships
Meeting challenges like those seen during the pandemic isn’t a walk in the park, but investing in communication and relationships is key to finding solutions and adapting successfully. Within this context, there are multiple points to tackle.
First, work out a plan with everyone, not just your management, because a lack of staff buy-in can create conflicts, slow transitions, and generally make overcoming the production/supply chain issues that much harder. Conversely, when you make it clear why elements like overtime are important or why you’re compensating as you are, staff will typically be more likely to get on board and deliver what you need.
Second, open up to your external people (e.g., customers). What’s realistically doable for the future for what you can manufacture and deliver? The answers may not be exactly what the customer wants to hear and might not always match demand, but people will appreciate the fact that you’re being transparent and avoiding unpleasant surprises. It’s always best to be proactive.
Finally, get conversations going with your current supply chain managers. Talk to them about points such as schedules and quantities, and include what they say in your production plan. Nurturing these existing relationships is crucial and usually preferable to forging new ones because it often translates to your partners giving you higher priority in a crisis. Even so, figure out which other suppliers and vendors could help you out by supplementing or offering alternatives. Chat with them and expand your support network so you have options in place if you find yourself experiencing constraints.
No matter what supplier you’re dealing with, remember that pricing isn’t the only thing to concern yourself with during negotiations. Other elements, such as product quality and reliability, also matter. Focus on getting the best overall package.
As you try to coordinate everything, work for cross-functionality to improve predictability. For example, your sales and supply chain leaders need to work together to get information from the sales side to the production side and vice versa. Aim for cross-functionality between your team and customers as well, because customers need to know what you’re doing and your team needs their feedback to plan accordingly.
Stability is coming, so keep your conversations going
It’s still too early to know exactly what will happen in the manufacturing industry. It’s wise to be cautious and not take unnecessary risks to meet peak demand, because that peak might end up being a short-term deal. But you can be sure that, sooner or later, demand and supply will start to even out and return to more normal levels. If you communicate well as priorities shift, you’ll be able to make a plan that benefits everyone.
Entrepreneur Leadership Network Contributor