Crisis-mode production - What can we learn from COVID-19 in manufacturing?
Poppy Brewer
Co-founder and COO at Cambridge Electric Cement | Sustainable value chains strategist, builder and leader | Manufacturing engineer
There's no doubt that COVID-19 is putting a real strain on global manufacturing, with disrupted supply chains, prolific plant closures, social distancing and remote ways of working. Unsurprisingly, ~80% of manufacturers expecting the pandemic to have a financial impact on their business (1).
However, there is some upside - COVID-19 has seen us collaboratively manufacture products at unprecedented pace, and in new and innovative ways. Under significant pressure, ventilator & PPE programmes globally have proven that we can rapidly form new manufacturing ecosystems and work across complex supply networks to make new products at volume in a matter of days. By taking a closer look, we can learn valuable lessons on how to architect speed and flexibility into our global manufacturing network and build the resilience we need to tackle future challenges.
Our learning will certainly continue to mature, but I think there are five lessons we can already learn from COVID-19's impact on manufacturing:
1. Mobilising a new manufacturing ecosystem doesn't have to be slow - COVID-19 is driving many examples of manufacturing consortiums founded in a matter of days and weeks - partnerships that many manufacturers haven't been bold enough or able to create over months or even years before. Take the “Ventilator Challenge UK” industry consortium. In just 3 weeks, this effort has connected over 30 players from across UK manufacturing & technology (2) to establish a new ventilator supply chain and assembly capability. Production will shortly provide the UK health service with an additional 1,500 ventilators per week (2). In the US, 8 textile manufacturers and the US Department of Health and Services built a new supply chain and fast-tracked manufacturing to move from ecosystem creation to first deliveries in one week. Full production ramp up, to 10 million masks per week, is anticipated in 4-5 weeks' time (3).
So, what's different? Ok - we shouldn't ignore that certain aspects of these rapid ecosystem ramp ups, such as contracts, funding, and regulation are somewhat exceptional for now (see below section on 'Sustaining the change'). But with 46% of executives looking to ecosystems to form new business models (4), there are four key success factors of these rapid manufacturing consortiums that we should carefully observe:
- The criticality of a mutual & quantified goal - Unity behind clear production goals and timelines, collectively serving a clear societal purpose, underlies COVID-19 manufacturing ecosystems. Company purpose is clearly motivating ecosystems to move at a pace way beyond normality. With wider studies indicating 3x faster growth, 30% more innovation, and 40% better workforce retention for purpose-led businesses (5) (and 'purpose-led missions' tipped to be the key to European innovation at scale (6)), this is something that businesses must assess beyond COVID-19.
- New ecosystem operating models & orchestration roles - On a practical, immediate level, defining clear, strong ecosystem roles is also key to enabling rapid progress, particularly in the remote COVID-19 working environment. Ecosystem participants must play to their strengths and trust in the efforts of their collaborators. The wide range of players involved in the Ventilator Challenge UK effort - from F1 race teams to software giants to expert ventilator manufacturers to SME parts manufacturers - illustrates the distinct, complementary roles in action. Over and above transactional participants, new orchestration roles are critical to architect, manage, co-ordinate and scale efforts (4).
- Step change of pace in ways of working - COVID-19 has driven a massive increase in the pace and agility of comms across the world, with daily and even hourly news updates and government communications. Successful COVID-19 manufacturing ecosystems are no different, rising to this challenge with shifts in ways of working to daily governance forums, flat structures, and agile decision making - all in a remote working environment. The dependency on digital technologies to facilitate these new ways of working is evident - with digital laggards experiencing the risks of technology legacy as they struggle to secure and enable a remote workforce. Given speculation that new COVID-19 ways of working might become the new normal (7), manufacturers need to assess their ways of working on a more permanent basis.
- Ecosystem enabled, cloud-based enterprise systems - Projects to deliver conventional manufacturing enterprise systems (notably PLM, MES, ERP, & Asset management systems) are commonly assumed to necessitate expensive, multi-year implementations. However, COVID-19 has demonstrated how COTS cloud-based products can be spun up by ecosystems in record time - the “Ventilator Challenge UK” launched a Microsoft Dynamics 365 Supply Chain Management solution to plan production across the 30x players involved in just 3 weeks (8). There are great lessons in efficiency and transformation to be learned from such efforts.
2. Real-time visibility is no longer a 'nice to have': Simply put, manufacturers that lack real-time visibility of their operations can't understand and respond to disruption. For those that still lack end-to-end visibility of their supply chains and operations, COVID-19 is a huge wake-up call. Those who have visibility of their production have been able to react quickly to vulnerabilities and liquidity challenges, and managed damage control effectively. Those without fit-for-purpose data access, analytics and insights have floundered, forcing major strategic decisions to be made in the wake of unpredictable daily updates, without a clear understanding of the longer-term implications. Furthermore, this visibility needs to include the end-to-end supply chain - not just the Tier 1 scope that left many manufacturers short of Chinese supplies and ended in plant closures (9). Looking forward, those without such capability need to secure it fast. The WEF's interactive Global Value Chain (GVC) widget provides a good place to start, demonstrating the powers of basic operational scenario planning (10).
3. Network agility and flexibility convert visibility into useful action: Building on the visibility point, to respond to crisis in a helpful way, manufacturers need the network agility and flexibility to convert insights into tangible actions. Those with high digital manufacturing maturity i.e. connected assets, plug and play platforms, flexible lines, automation (collaborative robotics, autonomous logistics etc.), and a digitally native workforce are able to redirect and repurpose efforts, and are also more likely to be able to transition to remote operation. United around the COVID-19 purpose, manufacturers with these flexible capabilities have demonstrated impressive repurposing agility - switching production lines from perfume to hand sanitiser (luxury goods conglomerate, LVMH(11)), semiconductors to face masks (Foxconn (12)), beer to disinfecting alcohol (Brewdog (13)), and jet engines/cars to ventilators (Rolls-Royce (14), Tesla (15)). Naturally, supply expansion and innovation is also necessary to secure these switches - and COVID-19 has seen some cool examples of this, from materials switching (of car interior materials to medical grade textiles) to full factory relocation (ZF Friedrichshafen a German automotive supplier, bought a small, faltering face mask company in China, transported the machines to its factories and produced 100,000 masks a day within two weeks) (12). And product complexity of course dictates the pace of flex, from 1/2-2 weeks for simple masks to 4-8 weeks for complex, regulated ventilators (12).
For those that can, repurposing production has other benefits beyond serving the COVID-19 cause - notably securing workforces, keeping production lines running in low demand, generating revenue and reputational gain (12). Those with the agility and flexibility to act stand in best stead for adaptation and survival in times of change. Where funding is accessible and with such low cost of capital, perhaps now is the time to invest.
4. The manufacturing capacity/resource Sharing Economy has great potential: Whilst there is certainly more available capacity in production now than in business as usual, COVID-19 is demonstrating the potential of cross-industry capacity sharing, with manufacturers pooling and sharing both machinery and people to manufacture priority products. Xometry, a leader in the industrial machinery as-a-service space, is offering up its network of 4,000 facilities around the world to 3D print, mould, or machine PPE designs (16). Many specialist engineers can share resources to scale up production under negotiations and licencing agreements, like GM's conversion of a precision electrical parts plant into an FDA-approved ventilator production facility in partnership with Ventec. GM will assign ~1,000 workers to the effort, including idle capacity from other facilities (17). Of course, not all resources have the capabilities to make complex goods, but lower complexity production has mobilised some innovative pools of resource - for example, New York State has employed inmates at correctional facilities to produce hand sanitiser (18). Whilst resource pooling may not be the first-choice option - maximising existing capacity and product repurposing/reuse should be exhausted first - it still holds potential in certain circumstances. With some first frameworks for sharing arrangements coming out of COVID-19, there is potential for both high-tech manufacturers working around high demand skills shortages (e.g. welding, data science) and low-tech production industries (e.g. FMCG) looking for rapid, localised SKU production to take further advantage of on-demand resource pooling.
5. Localised, open source production networks can offer solutions in hours - Many efforts are pairing open innovation efforts with additive manufacturing production techniques to print new medical products. These can operate at unrivalled speed - the Open Source COVID19 Ventilator Project launched, designed, and produced a ventilator prototype from a Facebook group in 7 days, with participation from over 300 engineers, medical professionals, and researchers (19). Italian start-up Isinnova delivered 100 3D-printed valves to connect ventilators to oxygen masks just 24hrs after hearing about a shortage from a local hospital and have now partnered with Lonati to expand production (20). And the Tikkun Olam Makers community has compiled a free library of 27 designs for open-sourced, 3D printed medical devices (21). That's not to say that these DIY Manufacturing projects come without their own risks - Lucia Corsini of the University of Cambridge has written a great article on the 'maker' movement response and explores these further (22). However, COVID-19 has reminded us that the open source network can provide a huge source of talent and innovation on tap, help plug unanticipated demand gaps and move from idea to production in a matter of days. This doesn't form part of many manufacturing strategies today but should be a more serious option in the future, particularly as better, more secure technologies come online to smoothly transition maker prototypes into mass production.
Sustaining the change
Of course, when production eventually returns to normal, there are some aspects of this rapid manufacturing success that we will need to work out when this is over, notably:
- Access to funding: Frameworks for joint value and risk sharing - Many COVID-19 efforts have been Government funded (e.g. German Government orders for 10,000 ventilators (23), UK's NHS funded ventilators, but downstream frameworks to secure joint incentives and risk will be key. Clear business perspectives on joint value and risk management will be critical to replicate these accelerated partnerships and ecosystems.
- Agile IP management: IP has a significant presence in the medical devices sector, and in this time of fast, significant innovation questions, such as who owns what in the long-term, are likely to arise as the crisis subsides. The paywall removals, royalty-free licensing, compulsory licensing, IP pledging (notably through the recent 'Open COVID pledge' - where IP will be shared until 1yr after the WHO declares the pandemic to be over (24)) and IP sharing (25) will require resolution, and agile ecosystem IP solutions that can move and evolve quickly across many parties are needed moving forward.
- Accelerated regulation - In this moment of need, regulations surrounding COVID-19 innovation are somewhat relaxed. Whilst some of this innovation comes with a level of risk that wouldn't be acceptable in normal conditions, it is an opportunity for us to assess and ensure that there is real value in the regulation that we apply, and for us to enable accelerated frameworks that can move at pace without an emergency mandate.
- Contracts, contracts, contracts: Production security - Fast production of course still needs a level of guarantee. Even in this crisis, businesses have struggled to get this security, as articulated by the CEO of Ventec Life Systems who cited contractual enablement as the key constraint to 5x production volume increases in a 3-6mth period. Whilst governments can help with mandating collaboration efforts in this time of crisis (e.g. US Defense Production Act mobilisation (26)), in usual business we will need other means, orchestrators, integrators and constructs to run at this pace (27).
Whilst required at a level, such obstacles really slow down business-as-usual innovation, with new (European) medical devices in Europe taking 2-3 years to develop and launch (28). Ventures such as OneBreath, a low-cost ventilator start up founded out of Stanford University, prove that even in this time of immediate demand, significant approval barriers are still causing issues. Having taken a decade to reach production readiness, OneBreath is still unlikely to mobilise for another 11 months due to contractual, regulatory, and funding constraints (29).
Conclusion
As COVID-19 spreads across the world, it is driving impressive manufacturing innovation. As we have explored, in some ways this urgency is accelerating our movement towards futuristic production capabilities. Rapid ecosystem formation, network flexibility, automation, capacity sharing, and open innovation are all maturing, and can contribute to future manufacturing resilience. Ok - we still need some further innovation to cement the financial, regulatory and legal frameworks required to secure our progress beyond the crisis. But if we build these and sustain this pace of innovation, manufacturing will be in a stronger position to tackle onward global challenges.
Let’s collectively take this opportunity to learn and apply what we can from this difficult time and build a more resilient and adaptable future.
This article is entirely my independent, personal perspective and does not reflect or represent the views of my employer.
Sources
1 https://www.pwc.com/us/en/library/covid-19/coronavirus-impacts-industrial-manufacturing.html
2 https://www.ventilatorchallengeuk.com/
4 https://www.accenture.com/us-en/insights/strategy/cornerstone-future-growth-ecosystems
10 https://www.weforum.org/whitepapers/future-of-manufacturing-and-production-report
11 https://edition.cnn.com/2020/03/15/business/coronavirus-lvmh-dior-hand-sanitizer-trnd/index.html
13 https://www.newsandstar.co.uk/news/18317273.brewdog-now-making-hand-sanitiser-combat-covid-19/
14 https://www.bbc.co.uk/news/business-51410700
16 https://pages.xometry.com/coronavirus-need-for-manufacturing-3
18 https://edition.cnn.com/2020/03/09/health/coronavirus-ny-hand-sanitizer-trnd/index.html
20 https://www.vice.com/en_us/article/5dm4mb/people-are-trying-to-make-diy-ventilators-to-meet-coronavirus-demand, https://www.weforum.org/agenda/2020/04/covid-19-ventilator-shortage-manufacturing-solution/
22 https://medium.com/@lucia.m.corsini/the-maker-movement-responds-to-covid-19-98a78a21fae6
24 https://opencovidpledge.org/
25 https://www.ifm.eng.cam.ac.uk/uploads/Research/2020-04-07-IPCOVID.pdf
26 https://fas.org/sgp/crs/natsec/R43118.pdf
Co-Founder & CEO @ Ameba | Eliminate stock-outs, overproduction, and tedious admin work by harnessing the power of data in your supply chain
4 年Very interesting insight. I found it fascinating to see how quickly manufacturing firms, especially in Europe, were able to adapt. The big worry is how resilient the manufacturing sector, particularly SMEs, can be during a global recession when experiencing a massiv shock on the demand side.
Group Head of Digital, Laing O'Rourke
4 年Poppy, Congratulations on an excellent, well structured and insightful paper! It’s even more enjoyable because I know that you are doing this stuff for real, driving progress and innovating with our team and clients. You’re a true leader!
Recruitment Operations Manager at Toyota Motor Europe from Hudson RPO
4 年Well-written, insightful article Poppy!
Strategy Manager at Accenture
4 年Ellie Spelman
Head of Supply Chain South Europe. Operations & Transformation
4 年Good insight Poppy, agree. Just to highlight that European manufacturing industry has been able to adapt itselft to current requirements, due to we still keep core capabilities onshore and also know how at all levels. In the future, European Goverments should analyze deeply about the importance of the industry as an strategic asset.