McKinsey: 3 actions to consider for recovery from COVID-19
As organisations begin to consider how to recover from the global pandemic, McKinsey and Company’s , , and have published their “Decisive Actions to Emerge Stronger in the Next Normal”. Manufacturing Global takes a detailed look at 3 actions and how they can be applied to manufacturing companies specifically.
1. Think long-term
The overall goal must be to rebuild for the long term. This is an overarching theme that can be applied to all aspects of the handling of the covid-19 crisis. This involves being responsive and flexible when it comes to future plans and structural shifts. In terms of manufacturing - it is not enough to focus on adapting to cope for right now, larger process and system changes need to be made to ensure that consumers can have confidence in the organisation long term.
The handling of the pandemic needs to be done with an emphasis on 2121 and beyond, not just the immediate future of 2020.
2. Focus on high-impact actions
Once you are back on your feet and planning for the long-term future, you will need to assess which high-impact changes can be implemented. These will need to make a significant impact and could include Analytics and Automation or heavy investment in certain technology.
It's important to work out which actions are best for the business. These will change depending on the company but could include technology-enabled next-generation operations, analytics-enabled productivity or automation of service-related processes.
3. Rebuild for speed
Speed is the underlying factor which can be seen mirrored across the companies that continued to function during the pandemic. Those that were able to adapt quickly to retrain staff, improving productivity, or even just streamlining decision processes have been able to reap the benefits during this time.
This point ties in quite well with number 2, with high impact actions, often being those that can improve speed around the business. In the world of Manufacturing, this could be as simple as investing in a small amount of robotic process automation, this has the benefits of increased productivity and efficiency.
Most organisations are feeling the strain of the global pandemic and its repercussions, McKinsey and Company believe that by focusing on these 3 key actions, and the others detailed in their report, most businesses can navigate the next uncertain quarter.
IHS Markit/CIPS: UK Manufacturing PMI near-record high
UK manufacturing trends
For the UK manufacturing sector, growth of output and new orders were both reported by IHS Markit and CIPS as among the best seen over the past seven years, which in turn has led to a strong increase in employment. Despite this, the sector continues to face supply chain delays and input shortages, which resulted in increased purchasing costs and record selling price inflation.
UK Manufacturing IHS Markit/CIPS Purchasing Managers’ Index® (PMI®)
Seasonally adjusted, IHS Markit/CIPS Purchasing Managers’ Index® (PMI®) rose to 60.9 in April, which was an increase compared to March (58.9) and above the estimated 60.7 for April.
Increasing for the eleventh consecutive month, the latest readings are the highest since July 1994 (61.0). The output growth for April has been attributed to the loosening of lockdown restrictions, improving demands and a rise in backlogged work.
“The manufacturing sector was flooded with optimism in April as the PMI rose to its highest level since July 1994, bolstered by strong levels of new orders and the end of lockdown restrictions opened the gates to business. It was primarily the home market that fuelled this upsurge in activity though more work from the US, Europe and China demonstrated there were also improvements in the global economy. This boom largely benefited corporates as output growth at small-scale producers continued to lag behind,” said Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply.
In addition to expanding production, total new orders rose for its third consecutive month, which was attributed to a revival of domestic market conditions, stronger client confidence, parts of the economy reopening and improving global market conditions.
While new exports rose in April, the rate was reported as weaker in comparison to new orders. “Companies reported improved new work intakes from several trading partners, including mainland Europe, the US, China and South-East Asia. Large-sized manufacturers saw a substantial expansion in new export order intakes, compared to only a marginal rise at small-sized firms,” said IHS Markit/CIPS.
UK Manufacturing’s outlook
Remaining positive at the start of the second quarter, 66% of companies forecast that output will be higher in a year's time, which is attributed to expectations for less disruption related to COVID-19 and Brexit, economic recovery, improved client confidence and new product launches.
“Further loosening of COVID-19 restrictions at home and abroad led to another marked growth spurt at UK factories. The headline PMI rose to a near 27-year high, as output and new orders expanded at increased rates. The outlook for the sector is also increasingly positive, with two-thirds of manufacturers expecting output to be higher in one year’s time. Export growth remains relatively subdued, however, as small manufacturers struggle to export,” said Rob Dobson, Director at IHS Markit.
Adding to comments from IHS Markit and CIPS, , Managing Director of Freight and Logistics at Accenture Global said: “While today’s figures are positive overall, the worsening supply situation is still a concern, with rates of both input costs and selling price inflation running far above anything previously seen. Shipping delays and material shortages are driving huge backlogs of uncompleted work and the surge in manufacturing orders is leading to many firms struggling to boost operating capacity to keep up with demand. With business expectations becoming even more optimistic as the economy rebounds, the big question will be whether firms will be able to cope with the surging inflows of new orders.
“As ongoing supply chain issues are still at large, companies with wide international footprints should look to reassess their logistics strategies by running supply chain stress tests and simulations in order to respond quickly to upswings and variability in demand. A flexible and resilient supply chain will be a key way for businesses to remain both competitive and stable as we emerge from the pandemic”