How COVID-19 can lead to digital transformation

The original article was published on my Beyond PLM blog

Over the course of the last few years, digital transformation was a topic of many discussions. While there is a conclusion that the status quo is probably the biggest factor that slows digital transformation in the industry, the opinions about what can provide a big push to manufacturing companies to change was leading to different opinions. In a nutshell, I can see to camps - technology and people. While not completely mutually exclusive, technology vs people captured multiple discussions in the past.

I capture this snippet about digital transformation earlier this week from Jim Brown of Tech-Clarity.

At first glance, it can be funny, but it is not. We are moving forward and the first shock that was caused by the COVID19 pandemic is over, in my view. The immediate reaction like "when it will over" and another one "soon it will come back normal" is the most natural for many people. Remember, we all hate changes. And COVID19 is this kind of change that was forced on us. Now we have no choice and we are going to change. I had many conversations with companies and engineers in manufacturing companies over the past few weeks. Here are three main things I captured during these conversations. They are not a prediction, but mostly questions about what to do next.

Contract Manufacturing

It becomes almost a no brainer decision for many companies for a decade or sometimes, even more, to follow a full turnkey manufacturing in China. Such situations might be too risky for many companies and they will be forced to change. The companies are moving manufacturing to closer locations. The decisions will be driven by different factors - customer proximity, materials, and transportation. It will lead to changes in the processes that were managed before by contractors and after this change will require the introduction of digital processes of communication between manufacturing companies and contractors.

Supply Chain

About 70% of the average product is parts and assemblies purchased from other companies. With such a high level of dependencies on suppliers and contractors to have the ability to optimize will become more urgent than ever. Check the article Are Countries Flattening The Curve For The Coronavirus? We can see how each country goes through the process and stage of their fight with the pandemic. The disruption will be happening in the country level and even the regional level. Combined together, it will create a new level of complexity in the supply chain. What systems will be capable to manage such a level of complexity? It will be certainly not old fashion systems designed and built 20 years ago.

Engineering and Product Development Management

Engineering personnel is moving to work online. It is much easier for people working with computers and offices, but it brings a new level of complexity. Working with people closely gives a lot of flexibility, so you can easily tell to people what to do. When you're physically not at the same place, the processes are getting much harder. One of the biggest problems of the past was data sharing and centralized data management of information. This is the first complexity to overcome and IT of most of the companies are challenged how to make it work remotely. As much as it is a complex problem, I can see how it will be solved. Old systems will be moved to a hosted infrastructure and new SaaS cloud PLM systems will bring a new norm of efficiency in data sharing. A bigger problem is process coordination and work management. I've heard about people that already today stuck for 10 hours zoom meetings every day. Management of people and development processes can be a nightmare in this situation.

What is my conclusion?

COVID19 is a change that was forced on us. We hate it, but we are going to manage it. The change will be a lot of pain, but systems will adapt and transform. Manufacturing companies will continue to build products. Infrastructure will be still needed, transportation will be still needed, communication will become paramount. All together will create a demand for better information, process planning, and coordination. Now it is time to think about it. Just my thoughts…

Best, Oleg

Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud based bill of materials and inventory management tool for manufacturing companies, hardware startups, and supply chain. My opinion can be unintentionally biased.