Jun 1, 2020

COVID-19: local manufacturing sees sharp decline

Smart Manufacturing
Georgia Wilson
3 min
With COVID-19, continuing to significantly impact the manufacturing sector, we look at the recent report conducted by IHS Markit on local manufacturers...

With COVID-19, continuing to significantly impact the manufacturing sector, we look at the recent report conducted by IHS Markit on local manufacturers.

Following measures taken to contain the outbreak of COVID-19, market analyst IHS Markit’s recent report has indicated a sharp decline in revenue and production volumes for local manufacturing. 

Key findings: The IHS Markit report details a Purchasing Managers’ Index (PMI) of 31.3 for the direction of economic trends in April. Compared to its index in March (48.4) the sector has seen a 17.1 decrease - the sharpest performance decline since the collection of data began in 2012.

Within the report IHS Markit explains that the local and global restrictions enforced in order to contain the pandemic, is the key factor contributing to the industry's latest performance, due to restricted demand forcing producers to operate below full capacity, or even completely suspend output. 

This trend comes partly due to the insufficient manpower and lack of new projects and purchase order. As a result this is having an unprecedented impact on the supply chain. 

“It’s no surprise to see that measures taken to contain the Covid-19 outbreak led to a sharp fall in manufacturing activity in April. Domestic demand was hit hard by containment measures and production at many firms was curbed by business closures,” said Chris Williamson, IHS Markit’s Chief Business Economist, who added that “export demand meanwhile collapsed as governments around the world took drastic action to prevent healthcare systems from being overwhelmed.”

Other observations made by IHS Markit included a decrease in orders from foreign customers reported by 83% of companies, stemming from the transport and delivery limitations. In addition the report also details how price trends have dropped as a result of strained production lines causing the price of raw materials to fall. 

When it comes to maintaining their workforce, IHS Markit reports 95% of companies have managed to retain staff, reporting unchanged numbers in employees.

“It was reassuring to see only a modest fall in employment, as the vast majority of firms held on to staff to safeguard longer-term production capacity. Business expectations for the year ahead also ticked higher, as more companies saw prospects improve. In that respect, with increasing numbers of governments looking at ways to ease Covid-19 restrictions, it’s likely that we will soon see the rate of export decline moderate, helping drive a recovery in production.” commented Williamson. 

“A recovery is nevertheless likely to be sluggish, as global demand looks set to remain relatively subdued for some time,” concludes Williamson.

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May 12, 2021

Gartner: Leaders Lack Skilled Smart Manufacturing Workers

SmartManufacturing
DigitalTransformation
DigitalFactory
ConnectedFactory
2 min
57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support smart manufacturing digitalisation

With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.

While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.

“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.

“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”

Change Management

Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.

“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.

Technology and People

While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.

“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.

Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.

Discover Gartner's Five Best Practices for Post COVID-19 Innovation' in manufacturing.

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