The COVID-19 pandemic is ushering in a host of challenges and impact to industrial manufacturers, especially those that depend on workers whose jobs cannot be carried out remotely. Manufacturing is hit hard, and industries are trying desperately to resume production units at full capacity. Consumption is at an all time low, and future demand seems to be weak as well, with only a few measures for this sector.

impact of covid-19

– Plummeting oil prices and demand, supply chain bottlenecks, spending slowdowns and jitters over the credit markets has hit the industry hard.

– Major industrial companies are beginning to close facilities and are mulling the extent of layoffs to help curb the spread of the virus, as well as for economic reasons.

– Plant closures (full or partial) could continue to be necessary for manufacturers in hard-hit regions for a prolonged period – leading to major disruptions in the supply chain.

– Many OEMs are tightly managing cash flows and reviewing all non- existential expenses; major liquidity issues as operating cash flows have diminished due the crisis.

– Financial impact including effects due to closure of operations, future contracts and obligations, and liquidity and capital resources requirements against overheads.

challenges that lay ahead

– Reviving the manufacturing industry back to full potential; decrease in demand will have to correct itself, cash-flows will require influx of capital through regulatory reliefs which may or may not come through at the required times.

– Supply chain disruptions will lead to raw material shortages, transport restrictions may result in stagnant inventories; operational functionality of production units is uncertain – a big challenge.

– Workforce: Manufacturers need to get back to their drawing boards in strategizing to get their plants up and running with plans to address getting resources back to work,

training them about regulated conditions, PPE and safety norms and briefing them on the operational protocols to be taken to stay safe; all while revamping production.

– Social distancing challenges in production plants to ensure workforce safety is a challenge – infrastructure and the process line itself may not be feasible for such distancing.

– Demand for products will be affected as the spending capabilities of individuals will see a decline. Production output may require a reduction to meet reduced demands. Cost of capital in such scenarios will add to product costs and reduce overall margins.

silver lining

– Industries that have suffered through the offshoring of production to lower-cost markets are seeing an increased demand as local producers look to secure their supply chains locally.

– Dependence on Chinese products will see a decline, thereby giving better opportunities to local manufacturing industries.

– Opportunity to review production processes to determine the ownership and control of design, production, installation, testing, maintenance, repair, and overhaul risks, and come up with plans to address crisis situations better.

– Certain reliefs from the government, forming of regulatory committees to boost industries, encouragement of foreign investments etc. will holster manufacturing industries and will hopefully see them getting back to their former self, this time with more discipline and independence.

solutions to adopt post covid-19

– Due diligence can help map the jurisdictions of vendors, apply a country risk rating, and identify the potential risk of each vendor commensurate with their criticality to enterprise operations, fostering a continued understanding of exposure and the means to mitigate it. Information will be vital to know where supply chain disruption is most likely to occur, how governments will react, and whether alternative suppliers are available at a moment’s notice.

– Creating regional clusters for supply chain dependencies, and having multiple regions for the same could assure continuity in business operations even if one region is affected in the future.

– Manufacturers should accelerate development of local, lower-risk suppliers to supply critical parts in case of supply stoppage across borders. They can assist suppliers to move up the value chain by

delegating work of increasing value in the product life cycle.
– Assessing the risk of their more strategic suppliers and investing in extra resources to model the cash flow impact of the crisis.

– Creating dependence on newer technologies that require minimal human intervention could result in lower operational costs and challenges. Migrating to automation lines will tremendously help address health and safety issues.

– Large enterprises should protect both the health and employment of their employees. Embedding hygiene rules in the EH&S, decentralising work by enabling UC&C (Unified Communications and Collaboration), spreading awareness and training the workforce on importance of using PPEs and following safety norms will help boost the confidence of the various stakeholders of the manufacturing industry.

how we can help

We have services that primarily help with the resolution of a lot of challenges mentioned herein. As a part of our response to the current situation, we have teams dedicated to this industry who are available 24/7 to address any queries/requirements you may have. We have also ensured that our services are delivered with promptness and we have tried to keep the consulting and certification process itself as flexible as possible to meet your timeline needs. Quality Management System, GMP, OHSMS, Environment Management and related safety certifications are some of our services aimed at assisting organizations during this crisis.

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COVID-19 Effects on Manufacturing