The Coronavirus’ (Covid-19's) unpredictability and global reach have caused a supply chain shock that will undoubtedly cut into worldwide manufacturing revenue, which is currently forecasted to be $15-trillion this year, says technology market advisory firm ABI Research.
The firm points out that the outbreak of Covid-19 has necessitated that many firms allow employees to work from home or use teleconferencing instead of face-to-face meetings; however, for manufacturers the solutions are not as apparent.
Despite investments in automation, reducing the need for staff on assembly lines, manufacturers still need to receive raw materials.
ABI notes that Covid-19 will, thus, have short- and long-term ramifications for manufacturers.
Initially, plant managers and factory owners will look to secure supplies and get an appreciation of constraints further up the supply chain and how much influence they have on their suppliers.
In the longer term, ABI principal analyst Michael Larner points out, manufacturers will need to conduct extensive due diligence processes as they need to understand their risk exposure, including the operations of their suppliers’ suppliers too.
“To mitigate supply chain risks, manufacturers should not only not source components from a single supplier but should also not source from suppliers in a single location,” he adds.
In terms of software applications used by the manufacturing industry, ABI expects the supply chain impact of Covid-19 to spur manufacturer spend on enterprise resource planning (ERP) to $14-billion in 2024.
Larner notes that while many ERP platforms include modules for inventory control and supply chain management, in light of the virus outbreak, many manufacturers will also turn to specialist providers.
“Supply chain orchestration requires software to be more than a system of record and provide risk analysis and run simulations, enabling manufacturers to understand and prepare for supply chain shocks.”
The Fourth Industrial Revolution has received much attention; however, the focus has been on the activities inside the factory gates. “But investments in robotics or Internet of Things sensors and the like assume that assembly lines receive a steady flow of raw materials.
“Covid-19 demonstrated that manufacturers need to be as focused on their supplier’s capabilities as they are on their factory floor,” Larner says.