Digital Transformation: How Manufacturing Industry Reacts During The Pandemic
Eight months ago, a new “coronavirus” began arising among human beings. The new virus spreads incredibly quickly between people, and no one on earth has immunity to Covid-19 yet, because no one had Covid-19 until the end of last year. People become more aware of how they work, how they live, and how they behave during a pandemic.
Back in March 2020, when WHO declared it a pandemic, dozens of companies and organizations started to change how they usually work because many CEOs of manufacturing companies thought that they would have to face financial challenges due to the COVID19 and quarantine restrictions. Gartner’s survey has shown that the C-suite anticipated changes in business operations, and around 35 percent of the participants expected supply chain disruptions.
However, after just one month, the level of concern rose drastically. In April, 80 to 90 percent of the manufacturers worried about their business situations.
Experts revealed that COVID19 would have a significant impact on the global financial status. The amount of money will vary between $2T and $4.5T. The disruption probably has the most notable effect on the economy we have ever experienced.
So, how can businesses adapt to this upheaval in the current reality? Let’s have a look at the whole landscape, some of the best practices and the opportunities lie in this catastrophe.
Manufacturing Industry Reaction Toward COVID19
All manufacturing companies worldwide have faced the same challenges as supply chain disruption, quarantine restrictions, the unavoidable loss of cash flows since the beginning of this year. Companies around the world in any other industries are also going through typical phases during this time.
To identify the underlying opportunities, we should first look at the big picture, each phase, and see what happens. These are three phases that we usually see in a traditional manufacturing company.
- Phase 1: Cost reduction strategies and automation: The first reaction we take during any crisis or pandemic is “respond.” From a manufacturing perspective, we eliminate unnecessary expenses, justify processes, and renegotiate deals to reduce costs. We focus mainly on the essential needs of production and learn how to optimize cash flows.
- Phase 2: Digitalizing in manufacturing: After respond, we come to the “recover” phase. At this time, we probably already figure out the damage from the crisis and try to reset the financial plan, improve efficiency and productivity. Digital transformation is the solution since it allows you to work from home, access your relevant documents, paper, and data stored on clouds, and manage the workflow remotely. During this stage, organizations are forced to rethink their business and operating models. In that case, the ultimate goal is to leverage technology to make improvements.
- Phase 3: The final step is to “renew.” After businesses have figured out what they have to do, this is an excellent time for digitally transforming your business. Renew your business models and operations, change how you work, keep the workflow.
How will IT investment change post-pandemic?
Manufacturers around the world are now looking at IT investments as a solution to help them restore and adapt to the current situation. Suppose one company depended solely on a physical business location and in-person interactions with customers, vendors, and employees, it makes sense if they are stick to one legacy system and paper processes either by itself or outsourcing, either by itself or outsourcing will surely have more advantages during the pandemic.
R&D and IT initiatives are a part of digitalization and automation in this industry.
We recommend manufacturers to have the hindsight of their relationships with information technology, whether they have it in-house to hire a third-party vendor. With hindsight, manufacturers can carry off the next stages easily.
For instance, they can replace technical prototypes with more advanced technologies, put cloud, and advanced analytics into practices, utilize machine learning.
In the next blog post, we will share “5 TECHNOLOGY TRENDS THAT WILL FORTIFY DIGITALIZATION IN MANUFACTURING” during this crisis. For now, let’s look at the pros and cons of both in-house and IT outsource approaches when it comes to digital transformation in manufacturing.
Having an in-house team will gain you more control over the process because you can manage a team that sits right next to you; they are there whenever you need them. The team also can directly see the processes they need to transform, which is crucial since they’ll understand business values better. Moreover, you can develop talents in the way you need them.
However, you should consider the fact that the pandemic is still around. During this crisis, we’re all in restrictions; therefore, the chance that you have a team sitting near you in the office is slightly small. You also need to spend more if you want to develop the talent you need for your company and hire a suitable team with the necessary experience in your location may not come cheap. Not to mention in-house hiring personnel with the required skills take time, plus you will have little access to the talent pools. And even if you find one in your country, it is hard to persuade an expert to relocate for a proportionately short-term IT project.
The benefits of offshoring development are plenty. First, we have cost-efficiency, second of all is the access to the broader talent pool, you can find the suitable and necessary technical expertise for your business’ digitalization. There are no extra capital expenses as in finding a bigger office, equip the new place with IT infrastructure like software, composite hardware, network services, and resource, etc. An outsourcing team can work with whatever your task is, regardless of their location.
However, the challenges lie in communication and level of skills. We do not talk about the language. The outsourcing teams need more clarification and guidance since they are not at the same location as you so that they can really see the processes. Give them as much information as possible to ensure the quality of the result. Pay attention to the timezone’s differences as well. Timezone can be both an advantage or a disadvantage.
An outsourcing team is also required for more management efforts. You can solve this problem with a reliable vendor and appoint an in-house product owner or manager to be your contact point.
Look at all big companies that have successfully implemented technological solutions with the help of an outsourcing team: Skype, Slack, Whatsapp, Alibaba, etc.
(Check out our previous blog post to know more ‘Successful Software Outsourcing Case Studies That You Can Learn From’)
TP&P Technology is one of the top leading software development outsourcing vendors you can trust in. Not only do we provide you with software development but also the IT consulting service. Talk to one of our experts to know your options!