Narrative I/O's Nick Jordan
Manufacturers hoping to survive the pandemic are finding that access to the right data is more important than ever. And digitization is the new normal.
According to a recent PwC study, there is a real possibility that the current health crisis will result in bankruptcy for some manufacturers, as declining demand, production and revenues, along with debt obligations, take their cumulative toll.
But this doesn’t have to be a new reality. COVID-19 is unlocking new opportunities to see manufacturing—an industry that has been ripe for disruption—head toward innovation at an unprecedented speed.
Forward-thinking manufacturers are quickly implementing technology and best practices that will make all the difference. With new requirements impacting everything from worker safety and the supply chain to consumer experience, new approaches to demand forecasting are taking center stage to optimize production for both revenue and profit.
What can manufacturers do now to ensure success today and in the future, even in the midst of COVID-19? Let’s explore…
Supply-chain planning: Data reinvented
At the start of the pandemic, not having timely external data available meant that manufacturers couldn’t quickly and effectively react when consumers shifted most of their spending away from brick-and-mortar to online stores. They were ill-prepared to ramp up production to meet skyrocketing demand from stockpiling consumers.
The idea of demand forecasting is not new to manufacturers, especially those here in the US, where the cost of mass production is expensive. But the missing component has generally been predictive analytics. Using advanced statistical algorithms, predictive models are much better at accounting for everything ranging from consumer buying habits, raw-material availability and trade-war impacts to weather-related shipping conditions, supplier issues, and other unforeseen circumstances such as those we now face.
Many who had previously relied on traditional approaches to data insights and data management were finding their methods to be completely ineffective. Historical sales data was no longer a viable indicator and real-time insight into changing consumer preferences and rapidly evolving operations. Supply chain realities became a lifeline.
What are the lessons learned? By better leveraging data, manufacturers can create greater transparency and address supply-chain implications in the long and medium-term. Establishing connections between different variables and drivers influencing demand is also an important part of the picture.
For example, during the pandemic, monitoring the spike in COVID cases along with other factors (time of year, mobility trends, other external data) could help a manufacturer of masks, gloves and other PPE equipment find correlations to predict demand.
Tapping into data on consumer-purchasing behavior with a look toward the future is no longer a “nice to have;” taking this predictive approach is critical to success in this challenging market.
Digitization: A make-or-break proposition
A recent McKinsey survey of manufacturing and supply-chain professionals found 90% plan to invest in talent for digitization.
In a post-COVID-19 world, the current economic and social downturn will create a much deeper divide between manufacturers who have just started to digitize and those who are much further down the road.
As manufacturers think about retooling their operations and creating a stronger infrastructure to deal with future mega-crises, they need to consider adopting digital technologies. These include artificial intelligence, cloud computing and Manufacturing as a Service (MaaS) solutions for real-time data about manufacturing equipment and the use of software to ensure better product quality.
Now, more than ever before, having a 360-degree view of an ever-widening group of data sets and insights is increasingly a standard component of running the organization. Manufacturers that gain this level of visibility can then better handle sudden uncertainties, the likes of which we have witnessed in recent months.
Thriving in the new normal
With the current volatility we are now facing, PwC forecasts a recovery that may not be seen for a full year. The best thing manufacturers can do to weather this storm is to embrace innovation. Tapping into predictive analytics, data-driven insights and real-time demand will provide the competitive advantage needed to survive and thrive.
Adopting digital technologies, taking into account internal data, as well as external datasets from suppliers, customers, weather forecasters, demographic sources and broader economic indicators, will empower manufacturers to respond to changing dynamics and absorb external shocks more effectively. In doing so, they can ultimately ensure resiliency now and in the decades to come.
Nick Jordan is founder and CEO of Narrative I/O
