Let’s get digital: What has the manufacturing industry learned from the COVID-19 crisis?

digital manufacturing

Will Lovatt, General Manager at PROS discusses the lessons the manufacturing industry has learned from COVID-19 pandemic.

It goes without saying that COVID-19 has had a significant impact on business in recent months. The virus has provoked change (good or bad) across every sector in one way or the other. During this time, we have seen companies respond to the outbreak in different ways and what has become increasingly clear, is that some sectors and companies were better prepared to deal with those changes than others.

What is the common thread that runs through all the businesses who have responded best to the COVID-19 outbreak? The ability to meet customer demands through digital selling. The immediate solution to try and stop the spread of the virus was to close down places of work and points of sale in non-essential businesses. Subsequently, the easiest way for customers to buy from a brand was online. And if businesses weren’t prepared for that fact, then naturally they were going to be left behind by competitors.

With that in mind, what did these societal changes mean for the manufacturing industry and what has the sector learned from the initial wave of the virus?

Benchmarking the industry

While industries like manufacturing are often classified as ‘traditional’ this is not to say they are opposed to deploying technology. The manufacturing industry has been an early adopter of 5G, artificial intelligence (AI) and machine learning (ML) on the factory floor, and across the supply chain, to connect, automate and streamline where possible. That willingness, however, to digitalise and innovate has in many cases been limited to internal, production processes rather than customer-facing and selling initiatives.

What we have seen from B2B2C businesses, retailers in particular, who have reacted well to the challenges of COVID19 is an ability to engage the customer where they want to be sold to. There will have been a number of high-street retailers doing a good trade pre-COVID-19 at a time when customers were happy to go in-store as part of their shopping experience. But when that was no longer feasible, or desireable these same customers were forced to shop online – and if they could not buy through that channel at their preferred store – they shopped somewhere else. The importance of having a strong digital offering has been highlighted by COVID-19 and this learning has to influence and accelerate digital transformation in the industries that need it most.

Almost three-quarters of UK manufacturers are preparing to cut jobs in the next six months. A worrying trend and one that shows the industry’s inability to generate sufficient revenue when traditional revenue streams are compromised. Where businesses in other sectors have been able to pivot and direct customers online, manufacturers, in many cases, have not.

Bottlenecks for manufacturing success

Manufacturing body, Make UK has warned that the UK manufacturing industry will not recover from the effects of COVID-19 until 2022 – so how did we get here? Social distancing has made day-to-day operations difficult for a number of industries but manufacturing has been hit particularly hard. The idea of working from home is not an option when your job is interacting directly with expensive assets on the factory floor. With physical segregation, zoning and staggered shifts to contend with, productivity within manufacturing plants is bound to suffer and this applies to distribution and warehouse operations, too.

Putting sales aside for one moment, the ability to produce goods in the same way, as usual, has been hampered. This leaves manufacturers in the unenviable position of having to supply unpredictable demand all while being hampered on the production line. The result of this is, if manufacturers are unable to sell effectively through digital channels or are unable to capture online demand, then they are losing significant sales – which will cost them financially. Implementing a process whereby they utilise all available customer and competitor data to assess the new reality and adjust pricing to remain competitive and profitable could be hugely beneficial in influencing the supply and demand balance. In a moment where data is sparse the ability to collect and interpret every bit of information is critical.

Adapting to current circumstances  

The good news for the sector is that there are examples of manufacturers who have been agile enough to adapt and sell through multiple channels to great success. Before the onset of COVID-19, Saint Gobain processed approximately 10 percent of their orders online. Now, over 80 percent of their orders go through their online platform.

Like Saint Gobain, manufacturers that invest in a digital platform to process market data quickly to adjust to any new reality are in the best position to offer a personalised yet profitable quote to customers. Having the capability to sell to customers through multiple channels has meant that manufacturing businesses can adapt rapidly to changing scenarios and while protecting brand reputation, maintain healthy and profitable sales.

2020 has been a challenging time for manufacturers but the industry has a great opportunity to bounce back in the second half, provided manufacturers put a digital selling strategy in place with appropriate controls to benefit from online demand. The important next step for these companies is to embrace technology away from the factory floor so that they can benefit from their adaptable manufacturing teams’ work. This is a rapidly changing market, and businesses need to listen to their customers and adapt accordingly.

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Will Lovatt

Will joined PROS in January 2019, leading the B2B EMEA sales business. Prior to PROS he led and grew sales organisations in supply chain, manufacturing, publishing, defence, and the public sector. His experience spans three decades, including working at IBM and Peoplesoft.