How COVID has Accelerated Digital Transformation in US Manufacturing

Introduction

A year ago, U.S. manufacturing stood at record highs of $2.4 billion in output which accounted for 11 percent of U.S. GDP (Source: The State of Manufacturing 2019). Today, most reports and surveys will paint a story about how COVID-19 has threatened these numbers and ultimately hindered progress in manufacturing. 

While I agree that manufacturing has been hit especially hard during this pandemic, COVID-19 has not hindered technological progress in manufacturing, but rather, has accelerated it in many ways.

How Global Crises Have Affected US Manufacturing in the Past

COVID-19 has challenged the manufacturing industry in a way unseen since the 2007 U.S. economic recession. If the recession has taught us anything, it’s that a crisis, even if it only lasts 2 years, will result in generations of lasting consequences and change. For instance, “The Great Recession of 2007-09 accelerated the shift from the ‘ownership economy’ to the ‘experience economy’ and the reliance on off-shore production in order to remain competitive.” (What Will Manufacturing’s New Normal Be After COVID-19?). 

Similarly, there were major shifts in manufacturing echoed by 9/11, WWII, and the Great Depression. What has remained consistent is the U.S. manufacturing industry’s ability to transform times of crises into times of advancement. Manufacturing may never be the same again after COVID-19, but only because the industry will use COVID-19 as a stepping stone as we all advance toward a new normal. 

The Current State of US Manufacturing and how COVID has Influenced It

Throughout history, there’s been a gradual shift for the U.S. Manufacturing industry to move production offshore to cut costs (while maximizing profits), with domestic headquarters mainly focused on research and development, go-to-market strategy, and consumer branding (Source: The Pandemic has Revealed Cracks in US Manufacturing). COVID-19 has challenged this current system for U.S. manufacturing since most countries are constricting international interactions during the pandemic. Hence, U.S. manufacturers must find a new method to maximize productivity for their plants. This is where technology and digitization has come into play. 

But before I dive into the role of technology, it’s crucial to outline the challenges posed by COVID-19 in order to make sense of the types of solutions manufacturers are looking for. According to Artem Kroupenev of Augury, “For the first time in modern manufacturing history, demand, supply, and workforce availability are affected globally at the same time.” (Source: What Will Manufacturing’s New Normal Be After COVID-19?). 

COVID-19 has generated an extreme demand for certain consumer products, but created pitfalls for others. On one hand, essential product manufacturers (pharmaceuticals, cleaning and sanitization, and personal care) are experiencing such extreme demands that they are struggling to keep up. Their demands are high amidst their moral obligations to keep their workforce safe by implementing stricter policies, even if those policies slow down production and their ability to meet those demands. On the other hand, non-essential producers are experiencing pitfalls in demand and are pressured to cut operational costs. Many are forced to close, uncertain of when or if they will be able to re-open again. 

Some of these are challenges we’ve faced in the past and others are fairly recent challenges that are being amplified. Supply and demand, for instance, is a constant balancing act that businesses know well, the difference is that COVID-19 has ushered in abrupt and extreme shifts in demand. Before the pandemic, if there was an increase in demand, manufacturers would hire more employees on-site to produce more. Manufacturers cannot do that today due to major health, safety, and ethical concerns. In essence COVID-19 limits options for U.S. manufacturers, so many are turning to technology for answers.

It’s reasonable to postulate that this trend will persist throughout COVID-19, and beyond. However, even with these challenges, relatively the same amount of work and productivity is being accomplished. According to the US Census Bureau, US manufacturing is still the fifth largest industry, employing about 11.9 million Americans in 2020, compared to 11.6 million in 2019. Growth in the industry may have slowed down, but it has not reversed amidst a global pandemic.

For additional reference, manufacturing production rose 1.0% last month after advancing 3.9% in July (Source: U.S. manufacturing output rises, but momentum slackening as COVID-19 lingers). These numbers are of course slower than pre-COVID-19, but given a global pandemic, these numbers are far better than the dramatic drop we first projected. One of the driving factors for this success is U.S. manufacturing’s shift toward digitizing work and implementing technology to supplement productivity. These trends in digitizing maintenance, accelerated by COVID-19, will persist as we head into the new normal.

The Future of US Manufacturing as a Result of Trends Accelerated by COVID

Manufacturing teams are turning to digitizing their operations and factories to perform their work in COVID-19. What COVID-19 has challenged many teams to do is maximize their work effectiveness and efficiency through technology. The question most face is, “How do we accomplish work, remotely and safely?” I asked the community how they’ve adapted to COVID-19 and which practices they believe will persist in the future. Here’s what Shadrach Stephens, Reliability Leader at Dow Chemicals, had to say:

I couldn’t agree more. Innovation and technology had already been working to digitize manufacturing to increase productivity and collaboration before COVID-19, the pandemic has pushed this trend into full throttle. 

It is key to note that the trend to digitize manufacturing accelerated by COVID-19 is twofold. The first part involves advancements in digital technologies like “smart” factories, sensors, digital twins, and automation, technologies most of us have already been exposed to, but might be hesitant to fully invest in

The future of manufacturing is shifting toward digitization, not to replace human professionals, but to enable them to produce more while shrinking costs. According to MForesight’s study on “smart” manufacturing, 

“Smart manufacturing can reduce scrap and rework, minimize work-in-process, eliminate production bottlenecks and improve equipment efficiency, speed new product introductions, and allow more product customization and variety, while reducing costs and potentially raising profitability.”

(Source: Time for Small Manufacturers to Embrace Smart Manufacturing)

The role of technology is to provide professionals the tools they need to perform work more effectively, to free up their bandwidth by automating simple tasks, and to unlock their potential to make insights and key business decisions. Most of us already know this to be the role of technology in manufacturing. However, COVID-19 is not only accelerating technological advancements to digitize manufacturing, but also accelerating a market demand as well. Like I said earlier, the trend to digitize manufacturing accelerated by COVID-19 is twofold. 

The first part is advancements in technology. The second part is a movement. The future of manufacturing demands a movement toward hyper-connected, easy to adopt, and affordable solutions. As US manufacturing innovates to remain competitive amidst a global pandemic, digital technologies like sensors, can not remain too expensive to buy into, can not operate in data silos, and can not be too complicated for end-users to leverage. Previously, digital technologies appeared to be feasible almost exclusively for enterprise manufacturers. Because of COVID-19, however, manufacturers across the nation are looking to digital technologies for solutions. What people are discovering is that digital technology is a boon for all and will stay that way beyond COVID-19. 

In the midst of my discussion about this topic with the maintenance and reliability community, Claude Tomlinson, Partner at Atlas Reliability LLC, had this to say:

The trend to digitize manufacturing accelerated by COVID-19 goes beyond automation and robust technology. It is essential that businesses are able to fully leverage the data from digitizing their plants, then transform that data into key business insights, and move from insight to action. This cannot be accomplished if data centers don’t integrate and talk with each other, if digital technology can’t be simply used by the end-users, and if systems are too expensive then they are worth. 

Predictions on the Challenges the Future of US Manufacturing Might Encounter

Like I mentioned above, the status quo is that digitizing manufacturing is too expensive and too complicated to successfully implement. On top of that, most systems are currently operating without integration with other systems and software. Service providers offer sensors, CMMS, PLCs, etc. but these systems typically don’t talk to each other, or when they do, it’s hardly integrated. In the end, these silos are providing heaps of data, but are creating unnecessary work for team members to properly mine data into insight and transform insight into action. Hence, there are two key challenges US manufacturers are going to face:

1. As manufacturing becomes digitized, businesses’ will have to prepare so that they know exactly which technologies would be the best fit for them in regards to ease-of-use, time-to-value, and hyper-connectedness with other systems.
2. Every team member across the spectrum needs to be open to change and embrace it, from the wrench-turners to operators to managers to CEOs. 

Digitization will not remain exclusive for enterprise conglomerates, COVID-19 and the future of manufacturing have suggested otherwise. At the same time however, digital technology and service providers will need to find ways to make these advancements accessible to the broader market, while also being flexible enough to meet the needs of their customers. The needs between small and enterprise companies are different, yet equally important to keeping U.S. manufacturing competitive as we head toward a new normal.

When I had asked the LinkedIn maintenance and reliability community about their thoughts on the future of U.S. manufacturing, Maureen Gribble, CMRP, raised this concern:

Since COVID-19 has pushed organizations to digitize much of their day-to-day interactions, it’s going to become increasingly crucial that manufacturers are confident that they’re able to build relationships as effectively as they were able to in the past. At the end of the day, digital technology is a tool we must master to provide better service to our customers. Therefore, our goal should be to master technology in a similar way that we’re using our cell phones to manage our lives and personal relationships. 

As we move toward a new normal we’ll encounter new challenges. To summarize, there are 3 key challenges for us to keep an eye out for the future of manufacturing. The first is that businesses’ will have to prepare so that they know exactly which technologies would be the best fit for them. The second is that every team member across the spectrum needs to be open to change and embrace it, from the wrench-turners to operators to managers to CEOs. The third is highlighted by Maureen Gribble, CMRP’s concern, which is that it will take time for us to master digitizing our manufacturing processes and customer interactions to a point of unwavering confidence. 

Conclusion 

In closing, the future of manufacturing is digitized. We’ve seen this trend on a steady rise before COVID-19. Throughout the years the US has made advancements in “smart” factories, digital twins, automations, etc. While it’s easier to outline what COVID-19 has halted, at least in this case, COVID-19 has accelerated a trend to digitize manufacturing in the U.S. This shift has opened up a clear opportunity for this industry to invest in. However, in order to keep on pace with this trend, tech companies (not manufacturing companies) need to start thinking about how their solution can be accessible to the broader market, easy-to-use, and hyper connected with other digital technologies. 

It’s been standard for many to believe that buy-in for digital technologies would be too expensive and too complicated to successfully implement at their manufacturing plants. COVID-19 is challenging this status quo, the future of manufacturing will push for digitizing manufacturing, feasible regardless of the size of business. Brain Bieshck, CMRP, said it best:

If there was ever a time for this digital revolution in manufacturing to thrive, now is it.