We are all dealing with the COVID-19 pandemic in our own ways, but struggles for members of the manufacturing community share similarities. With that in mind, we solicited insights on a few topics from a broad spectrum of industry stakeholders in order to provide perspectives that can help you navigate this unprecedented period. This is the full series.
HOW IS COVID-19 AFFECTING THE MANUFACTURING SECTOR?
“With the COVID-19 situation changing by the hour, it’s difficult to speculate on what the manufacturing sector will look like in the coming months or years. What we do know is that manufacturing is making adjustments—whether that’s ramping up essential products as we’re seeing in the consumer packaged goods space, or adapting output entirely—as we’re seeing automotive manufacturers commit to making ventilators. This is a trend that was already taking place in the manufacturing industry—how you can more rapidly adapt to demand signals.” Pat Byrne, CEO, GE Digital
“While we cannot truly predict the full impact, we can expect that manufacturers will fare better if they have the ability to remain flexible and adaptable to real-time and, at times, volatile market shifts, as major changes in the economy have proven in the past. Companies that have invested and continue to invest in cutting-edge capabilities that allow them to quickly respond to production changes often come through these difficult times strong and as industry leaders. These manufacturers characteristically are able to monitor their operations, including their supply chain, in real-time and adjust their operations accordingly.” Stephen Greene, vice president of global marketing, Stratus Technologies
“As with most sectors of our economy, the long-term manufacturing fallout from the coronavirus is nearly impossible to predict. The intensity of the impact will come down to how individual manufacturers have structured themselves financially and their ability to weather the storm. However, early projections are that the impact will be severe, particularly for smaller manufacturers.” Benson Hougland, vice president of marketing & product strategy, Opto 22
“I think the fallout will be much slower and drawn out than in other industries that consumers might be familiar with. Some companies may be working hard to fulfill contract terms that will keep them busy for months, but some of those contracts may not return. Some industry verticals may be hit hard, while some may see an uptick in quote volume and order size (oil & gas vs. medical).” Eric Fogg, co-founder and chief connectivity officer, MachineMetrics
“We anticipate that the manufacturing sector will begin with the prioritization of resources, contracts and spend. We might see greater priority given to limit-setting, refocusing on critical items, technology integration (such as warehouse-to-transportation systems with location-based services) and critical-asset monitoring. The increased use of remote technology—autonomous equipment and sensors such as forklifts or robotic cleaners—all wirelessly enabled with valuable data insights streaming into organizations for better decision-making and productivity.” Romil Bahl, president and CEO, KORE
“Overall, the manufacturing sector will experience a significant contraction as a result of the virus. Hopefully it will be limited in duration. With globalization, supply chains have become so specialized and geographically dispersed that any slowdown in the movement of goods and services is going to have a big impact. That’s on the supply side. On the demand side, what we’re seeing is unprecedented. With people staying at home, consumption will shrink significantly. In the energy sector, the timing could not have been worse, as the pandemic is coinciding with a price war between OPEC and Russia. The two had previously collaborated to slow oil production and shore up prices that both economies are heavily dependent on. But the impact will stretch to all oil-producing nations. For example, the shale oil industry in the US and the Canadian oil industry will suffer as production costs are higher for these unconventional sources.” Paul Donnelly, industry marketing director, Aspen Technology
“COVID-19 presents a prolonged reality of businesses needing to find and onboard new manufacturers, partners and suppliers. As we’ve seen, countries that have been heavily impacted by the virus, such as China or Italy, have restricted trade and closed their borders, causing a huge disruption in supply chains and commerce. Since no one knows how long the pandemic will last, in order to stay in business, companies that rely on trading partners in these countries must quickly onboard new trading partners to fill in the gaps in their supply chains. Because of this, manufacturers are being inundated with replenish requests, days or sometimes weeks after a supply shortage occurs. Furthermore, businesses are tapping multiple manufacturers for supply to manage the overwhelming influx of demand. This ‘bullwhip effect’ creates an unpredictable and unstable manufacturing environment, wherein suppliers struggle to intelligently predict demand as a result of panicked buyer behavior. Suppliers will need to adopt a more intelligent process for managing unpredictable demand and will need to rely on complete end-to-end visibility into the supply chain in order to better meet consumer demand.” Frank Kenney, director of market strategy, Cleo
“In the manufacturing sector, we anticipate that remote access will play a more critical role during the pandemic and post-resumption to ensure operational resiliency. We are seeing an increase in the use of service technicians, who will remotely access ICS (Industrial Control Systems) devices rather than go on-site in order to solve issues, such as configuration changes and other production concerns. As secure remote access increases as a priority for manufacturers, IT managers will need to impose more granular access controls as to who, what, when and how ICS devices can be managed remotely. IT departments will need to account for any service access. Manufacturers must implement security solutions that provide user and device authentication and operation visibility, as well as offer continuous user authentication and device-security-posture assessment functions to reduce risks such as phishing, ransomware and unauthorized access.” Scott Gordon, CMO, Pulse Secure
“Critical manufacturers that support essential infrastructure should remain open and operating for the foreseeable future. For nonessential manufacturers, the fallout will be different. Our economy has already experienced negative effects. The hope is that the cases will diminish, and we can all get back to some normalcy. Of course, the timeline for this happening is unknown.” Chris Wilder, CEO, Sealing Equipment Products Company (SEPCO)
HOW HAS THE MANUFACTURING SECTOR RESPONDED TO THIS CRISIS?
“Half of the manufacturing sector is faring well, while the other half has quickly realized that they have been behind the eight ball. For the companies that have already added a certain degree of automation and remote access to critical business applications, the coronavirus is acting as an external validator. These companies’ workforces have the ability to manage systems from their web browsers on home computers, tablets and even smartphones, enabling their business to continue running uninterrupted. On the other hand, the companies that haven’t automated these processes are forced to shut down until they can upgrade their operations capabilities or physically return to the job site.” Frank Kenney, director of market strategy, Cleo
“Smart manufacturers have been able to change material production and container sizes very quickly. The facilities that had instituted flexible-manufacturing philosophies have been able to respond to this crisis, and to them it is business as usual. Just making something different.” Linda Freeman, industry manager, Rockwell Automation
“It’s clear that manufacturing is rising to the occasion: taking necessary steps to continue operations where possible so that we minimize the impact on our economy and keep employees working. There appears to be a collective understanding that we are in this together, and that by each doing our part we will get through this pandemic.” Benson Hougland, vice president of marketing & product strategy, Opto 22
“So far it is business as usual with my supply chain. It appears most are ready, willing, and able to keep going but it also seems difficult to pivot operationally to fill certain voids, like making respirators. In my Vistage manufacturing network I hear many comments by other business owners that they have capacity and would like to be of service but I see no organized effort to utilize yet.” Juliet Goff, president and CEO, Kal Plastics
“We have been amazed at how the manufacturing sector has responded. Our customers who make medical devices and respirator parts have doubled down to increase production (a feat that must be difficult when staff is cut short and suppliers may be limited). We even have several customers that are making respirator and other key medical devices despite historically only making aerospace or automotive parts. It’s always great to see a community come together!” Eric Fogg, co-founder and chief connectivity officer, MachineMetrics
“In a time when manufacturers were focused on streamlining system integrations, the COVID-19 pandemic quickly modified the focus of those plans to the procurement of supplies to maintain even reduced levels of manufacturing due to restricted travel, abandoned shipments and delays of 4–6 weeks in receiving shipments. These delays may cause pricing spikes as well as encourage the diversification of supply chain parts to a variety of locations around the globe, such as India or other countries outside of the Asia-Pacific arena.” Romil Bahl, president and CEO, KORE
“As has been reported in the media, many oil and chemical producers have already announced reductions in their capital-spending programs for the next fiscal year. This will impact their entire supply chain, from crews drilling new wells to planned refinery enhancements, and will hit equipment vendors, engineering firms and, in the longer term, consumers. Crews in West Texas have already been laid off. The entire ecosystem will take a hard hit for at least 12-18 months. Given how hard it is to start/stop these large-scale projects, it will not be a quick fix, even if the actual pandemic passes in one or two quarters.“ Paul Donnelly, industry marketing director, Aspen Technology
“I’ve been encouraged by the level of resilience and flexibility our customers have demonstrated while remaining innovative in how they keep work going. In challenging and unprecedented times like these, it is vital to band together and unite around helping each other out. There are manufacturers that are completely switching their production focus and increasing capacity to ensure our healthcare workers on the front lines have the equipment they need to treat COVID-19 patients. There are countless more workers who are faced with uncertainty but rise to the occasion, and one of our key priorities is supporting these customers to ensure that critical infrastructure continues to operate day to day.” Pat Byrne, CEO, GE Digital
“The manufacturing sector has embraced this challenge and its role in keeping our infrastructure strong and running. Manufacturers make up the backbone of this country, and so far they have been up to this test. I’m sure that direct manufacturers of PPE and medical devices are feeling more pressure; they are focused on producing the most critical items for the health-care facilities.” Chris Wilder, CEO, Sealing Equipment Products Company (SEPCO)
“Many in the manufacturing sector, along with other industries, had employees and contractors in infected areas forced to undergo work-from-home or other restrictions that required increased remote- access capacity. With size and location, that was not anticipated or planned for, so this required them to pursue immediate procurement, deployment and flexibility. Most organizations have enhanced their visibility capabilities, but are not yet at a point to provide more granular access and ensure endpoint compliance of those accessing their systems. In addition, many manufacturers were not prepared for a significant increase in remote access to service ICS devices, nor had they adequately orchestrated emergency-access controls between their IT and OT systems.” Scott Gordon, CMO, Pulse Secure
“Laborers are being furloughed and fired. It’s never an easy decision to press that stop button on the line and to send workers home because you know it means that completed goods/material/units are not going out that door to be shipped to customers. But it’s the right decision and they have handled it well. We have to keep people safe and healthy.” Chris Catterton, director of solution engineering, ONE Tech, Inc.
HOW ARE SOLUTION PROVIDERS PITCHING IN?
“Many of GE Digital’s customers operate mission-critical and essential industries, including food & beverage, consumer packaged goods, automotive, and water/wastewater. Workers in these industries are increasingly being asked to work from home to ensure business continuity while mitigating the spread of the coronavirus. This is why we have worked quickly to help our customers adapt to these remote working situations. We just announced free remote and monitoring-control licenses for our iFIX and CIMPLICITY customers, and expect to roll out similar remote offers soon across our other vertical markets.
Internally, the majority of our employees have shifted to work-from-home as well. The health of our employees and customers is our top priority, and we have been able to find innovative ways to service and support our customers where previously we would have traveled, like using remote diagnostics for our managed services. These adjustments to our processes and teaming have been vital in keeping teams safe while meeting our commitments and delivering for our customers.” Pat Byrne, CEO, GE Digital
“As a software company, MachineMetrics is lucky that most of our employees can easily work from home. Our biggest adjustments have been in how we work with our customers. We have had to switch away from onsite machine connections and support the customer in connecting the machines themselves. Our customers’ strategies are also changing, so we have to work to make sure we are providing value in all the right places.” Eric Fogg, co-founder and chief connectivity officer, MachineMetrics
“In the early period of the virus, we had to cancel planned participation in various conferences around the world, eventually eliminating travel altogether. The silver lining is that this has given us a chance to crystalize internal business-process improvements that were already in progress and to find ways to innovate on our sales and marketing processes. Regarding employee safety, Opto 22 was proactive about responding to the accelerating situation and what we saw as the likely response by local government. Before statewide stay-at-home orders were issued for California, Opto 22 had already begun deploying office staff to work remotely.
Manufacturing processes have certainly been impacted as well, including our entire manufacturing workforce. However, our work is essential to supporting critical infrastructure across several industries as defined by Cybersecurity and Infrastructure Security Agency. As such, we are implementing the safe practices designated by the CDC that will allow our manufacturing employees to return to full productivity as soon as possible.” Benson Hougland, vice president of marketing and product strategy, Opto 22
“Here at KORE we have taken many steps to ensure the well-being of our employees and some of our customers are feeling a temporary slowdown, while others are seizing opportunities this challenge is bringing. Examples of the areas we have seen an uptick of activity include tablet and other device connectivity for remote workers and remote education. Field and remote services have long been a strength for KORE, and at times like this, when entire parts of the economy are shifting to an online-only model. Our remote patient-monitoring area is seeing more demand, as are our mPERS and other LBS-powered services. We are helping some customers with services we have not provided before, including logistics/fulfillment and IoT managed services. We are delivering on our commitment to provide services and bundles that make it easier for our enterprise customers to adopt and securely scale IoT to meet the demands of their businesses, and for our solution-provider customers to grow by improving how they serve their end customers.” Romil Bahl, president and CEO, KORE
“At AspenTech, the health and welfare of our employees and customers is always our first priority. We continue to work with local authorities where we have a presence to comply with their directives and do our part to curtail this unprecedented pandemic. We are also taking multiple steps to help both our customers and employees during this time. We have transitioned customer meetings and trainings from face-to-face discussions to online, virtual interactions, and we’re assisting customers that are working from home to make it easy for them to access AspenTech software for remote access and operation. Finally, we are evaluating ways that we can lend our expertise, software and capabilities to help our customers get through this trying time.” Paul Donnelly, industry marketing director, Aspen Technology
“We’ve had a wave of companies come to us for a gap analysis to pinpoint all the various chokepoints where their current processes are lacking, so they can focus on areas that are most critical to their business. From there, we help them migrate many of their business processes to the cloud to maintain as much agility as possible in such a volatile environment. This can include first identifying their business processes from order reception to fulfillment and delivery.” Frank Kenney, director of market strategy at Cleo
WHAT CHANGES TO THE MANUFACTURING SPACE WILL THIS PANDEMIC PROMPT?
“As a result of this pandemic we will see redesigned work environments with fewer workers spending less time collaboratively due to physical-distancing requirements. This creates an acute need for individual employees to be more agile, which existed previously in the form of the global skills gap and is now exacerbated by COVID-19. Counterintuitively this creates a transformational opportunity to advance productivity initiatives that would have been unheard of only a few weeks ago due to cost, union fears, cultural resistance or IT barriers. As a result we will see a surge in the adoption of 'connected worker’ initiatives with a renewed passion to eliminate rework. In the process boosting productivity numbers and empowering employees to execute tasks beyond their usual mandate by taking advantage of proximity whenever possible.” Gabe Batstone, CEO, contextere
“We see our customers showing a renewed interest in tackling a lot of projects that were on the back burner due to their lack of resources before this crisis. Whether it’s researching new automation, implementing a new planned-maintenance process or diving deep into manufacturing data to seek areas of improvement. I think after this passes, the industry will be more efficient than ever before.” Eric Fogg, co-founder and chief connectivity officer, MachineMetrics
"With many manufacturers having to limit their number of employees in a plant, organizations are finding creative ways to stay productive. Many are sending sets of teams (like engineering, design, quality, executives, and human resources) to work from home while others are rotating shifts—all in efforts of creating distance. These techniques are shedding light on possibilities for cost savings while maintaining productivity, which may otherwise have gone unseen. Going forward, many organizations may adopt these remote-working agreements as strategies to reduce costs, improve productivity, and increase worker satisfaction." Jason Kleinhenz, marketing and training manager, Exact Metrology
“In manufacturing, the silver lining of COVID-19 is that there will be increased commitment to the safety and efficiency of production-line workers and the quality of their work…those unsung heroes that are still going into factories to ensure we get the essential products we need. For how long have we heard that robots are going to take over those jobs? Yet we all know robots aren't saving the day right now.
Instead, many manufacturers are increasing efforts to equip their human workers with digital connected-worker tools that incorporate safety checks into workflows, ensure collaboration with colleagues when physical contact is off the cards, and other such processes that ultimately balance business continuity and employee health. This is also the dawn of a new era where 'frontline' workers and desk workers are harmonized with tools that can support the flow of collaboration and data, and even event triggers, where something that happens on the factory floor initiates a communication or workflow in the back office.
And although the concept of using connected-worker technology to empower workers around safety, quality and productivity may be heightened right now, it will still be just as critical to build business resiliency after this pandemic is over.” Lawrence Whittle, CEO, Parsable
“Go back to basic economics 101. Understand that competition is the only market type that combines innovation, flexibility, service and lowest cost possible. Monopolized single or even worse sole-source situations are ticking time bombs. Sole sourcing is a design mistake, caused by lack of collaboration and innovation. Single sourcing is a management mistake driven by short-sighted metrics and lack of technology enablement. Resiliency is key to win in any turn. When others fail and cannot protect their market share and are unable to deliver products and services, those companies which are able win the left shares with not much other effort, no marketing expenses, no price negotiations and, if they are also combining resiliency with high customer loyalty initiatives, the companies which left the shares on the table will not only have to worry about the supply chain recovery but more expense to fight a lost cause for recovery that will never happen. Therefore, dynamic risk management is an investment with a definite but unpredictable ROI whereas crisis-management is pure expense with a predictable red impact to any company’s P&L and no return on the investment.” Koray Köse, senior director analyst, Gartner
“We see manufacturing, among many industries, emerging from this pandemic more resilient and more innovative. This is the time where creativity, embracing technology, and outside-the-box thinking is called upon in ways that we couldn’t have imagined prior to this experience. IoT will be there hand-in-hand to connect autonomous devices and sensors, identify supply gaps and prevent shortages with rich data to help manufacturers manage, deploy, and scale to keep their organization as productive as possible.” Romil Bahl, president and CEO, KORE
“At the rainbow end of this challenging time, I believe, we will see a greater acceptance of open-source solutions both for automation and IT infrastructure. NIST guidelines for proper cyber-hygiene are not new, but are seldom implemented within smaller organizations. Now is the time to review security protocols before rushing into remote-working or data-integration solutions that might leave a business more vulnerable to cyber-threats.” Chris Misztur, owner, Mr. IIoT
“Manufacturers overall are now running scenarios and planning for future supply chains that have more redundancy and are less reliant on one region. On the consumer side, lower energy prices will boost spending in other areas and should have a broad, positive impact on non-energy sectors as the world recovers from the pandemic. Longer-term, though, the reduction in CAPEX by energy firms now will drive up energy prices for consumers over the next 2-5 years and could be a drag on the overall economy.” Paul Donnelly, industry marketing director, Aspen Technology
“A positive outcome is that we can expect companies to start migrating their business processes to the cloud to modernize their capabilities around adding scale, speed and reliability. This will allow them to gain significant reduction in costs and make improvements in team efficiency by consolidating the integration solutions that power their supply chains. Additionally, this will help to optimize their user experience, gain end-to-end visibility and be in a better position than they were in prior to the pandemic.” Frank Kenney, director of market strategy, Cleo
“The outcome of any crisis is a new perspective on how to get work done and to maintain a level of normalcy in the face of new challenges. Likely, manufacturers will embrace distribution of work across traditional boundaries where possible and where it makes sense.“ Benson Hougland, vice president of marketing & product strategy, Opto 22
“With Industry 4.0 trends and the convergence of IT and OT environments, Incident Command System infrastructure is becoming more connected to the outside world to enable production analytics and optimization. This will require converging IT and OT monitoring, security, and in particular remote and on-premises access control capabilities. Organizations are looking at Network Access Control technology to bridge that gap in order to offer user, endpoint and IoT/OT device visibility and threat response.” Scott Gordon, CMO of Pulse Secure and CISSP
“I predict there will be a reluctance to offshore and a resurgence of reshoring for certain goods. This is a positive thing, but it will take time for things to adjust—capacity/availability. Hopefully we will see new investment in the manufacturing infrastructure by government, and greater consumer demand. The biggest challenge for some, like myself, will be to survive and flourish once this is over. It will take a long time to recoup the losses, and we are still early into this nightmare.” Juliet Goff, president and CEO, Kal Plastics
“In many situations, innovation comes from difficult challenges. I expect innovation in medical-equipment manufacturing to occur during this time, either in manufacturing technique or speed of production. I also predict that our facility will be more cognizant of hand-washing and more careful during future cold and flu seasons. In general, I think remote work and digital learning will become more commonplace.” Chris Wilder, CEO, Sealing Equipment Products Company (SEPCO)
“These are early days and manufacturers are still in the middle of making adjustments. Digital solutions will be critical as we emerge from this unprecedented situation. As we’ve quickly seen just within the past month, companies that invest in digital-transformation programs will have the agility to adapt to changing conditions.” Pat Byrne, CEO, GE Digital
“I used to joke with clients that now that our asset-performance management solution was implemented, they could be on a beach in Hawaii and have more insights to how their facilities, lines and individual assets were performing than they could have prior to the technology deployment, even if they were standing right next to the machine. That joke is now a reality. They may not be on a beach in Hawaii; they may be in their homes with the ability to log into our solution and see how all automated lines are performing down to individual components on the machines that may be showing signs of failure. Bottom line, Industry 4.0 tech is not all hype, there is real value that companies, now more than ever, are realizing.” Chris Catterton, director of solution engineering ONE Tech, Inc.