Contingency planning: Crisis provides new clarity for automation

As the global manufacturing sector has been powerfully reminded during the COVID-19 pandemic, nothing tests the preparedness and resilience of a manufacturer and a supply chain like a true disaster.

What quickly became clear throughout this pandemic is that the unforeseen, unprecedented and unpredictable elements of a disaster can quickly expose vulnerabilities in even a painstakingly modelled and tested contingency plan.

What also became clear is that companies with the ability to collect, analyze and promptly act upon fresh data from across their enterprise and across their supply chain are better positioned to weather a disaster with minimal disruption — and even adapt their businesses in ways they never envisioned, demonstrating nimbleness and agility when it’s needed most.

The current pandemic is testing even the most robust supply chains. At one point, Amazon announced plans “to temporarily prioritize household staples, medical supplies and other high demand products coming into our fulfillment centres so we can more quickly receive, restock and ship these products to customers. We are working around the clock with our selling partners to ensure availability of these essential products, and continue to bring on additional capacity to deliver customer orders.”

A manufacturer’s contingency planning is only as strong as its ability to capture, analyze, disseminate and mobilize on real-time data.

Industry 4.0 digital capabilities make all this possible. Here are some of the capabilities manufacturers likely will need to rely upon in their contingency planning going forward.

1. Manufacturers need a high degree of real-time supply chain visibility to keep current with rapidly changing market signals, as well as potential disruptive issues, then to rapidly adjust accordingly.

The coronavirus pandemic conjures a distinct memory of the Great Recession more than a decade ago, when Jim Griffith, then CEO of the Timken Company, an industrial equipment manufacturer, was quoted as saying he had dubbed the crisis the “SAP recession.”

He did so not because of anything negative SAP had done to exacerbate the situation, but rather because the insight Timken had gained from supply chain analytics had prompted it to curtail manufacturing activity well in advance of others, avoiding costly inventory stockpiles.

The same type of supply chain visibility can enable manufacturers to ramp up production in response to shortages of certain materials, components/subcomponents and products, as companies like GE Healthcare are doing during the crisis, ramping up production of CTs, ultrasound devices, mobile X-ray systems, patient monitors and ventilators.

Having a highly networked and data-responsive supply chain also enables a manufacturer to quickly pivot to help other manufacturers with their supply chain, as General Motors did in deploying its factories to help Ventec Life Systems produce more ventilators.

2. Industrial Internet of Things (IIoT)-connected factories can enable dramatic product pivots.

Intelligent digital factory capabilities give manufacturers the means to rapidly adapt their factories to ramp up production, or even to pivot into an entirely new line of business. Faced with a likely drop-off in demand for its vehicles, this month Volkswagen began preparing its manufacturing facilities to produce medical equipment like ventilators using 3D printers.

“Medical equipment is a new field for us,” the company said in a statement. “But as soon as we understand the requirements, and receive a blueprint, we can get started.”

Having production facilities that are sensor-equipped and IIoT-connected enables a manufacturer to pivot like this during a crisis to quickly and flexibly adapt its operations to produce the goods communities need.

By integrating intelligent factory assets and processes into a broader intelligent supply chain network, Volkswagen could link digitally with medical equipment manufacturers to access product blueprints, and with suppliers to get the materials and components required to produce those products.

Once production began, VW could collaboratively manage logistics with government entities, healthcare providers and its supply chain so products would get where they need to be in a timely manner.

3. Automated production and lights-off manufacturing capabilities are critical to maintaining supply chain integrity.

For their ability to continue producing goods without necessarily relying on human beings, automated production capabilities are critical to disaster response.

In certain segments of manufacturing, full automation – lights-out production – is not only possible, it’s practical. Automated equipment on the factory floor can be connected to machine learning– and AI–equipped asset-monitoring and management tools, and monitored remotely to ensure production continues with virtually no human intervention.

This in turn frees people to focus on higher-priority tasks that inevitably arise during a disaster.

While a global pandemic that prevents humans from working in a factory wasn’t top of mind when factory automation took hold, it’s now clear that robots and self-directed equipment will be more sought-after than ever.

Most manufacturers have already implemented distributed supply chains geographically, and rely on them during other crises such as natural disasters and tariff issues. However, even more manufacturers are reconsidering re-shoring production to North America. Factory automation helps to compensate for the higher labour costs of doing so.

Human workers remain indispensable

Amid all the talk about the value of digital capabilities in the context of contingency planning and disaster preparedness, it’s easy to lose sight of just how critical human beings and their skill-sets are to a manufacturing business and the integrity of a supply chain.

It’s vital that manufacturers find ways to keep their employees ready, willing and able to mobilize during and after a disaster. As a company, you don’t want to have to try to fight to get employees back, nor do you want to be left to train legions of new employees once normalcy is restored.

Treat them like the indispensable resource they are. Manufacturers that do right by their employees during trying times are likelier to retain the workforce talent they need to hit the ground running when the normal course of business does return.

Let’s hope that happens sooner rather than later.

Gary A. Nelson is the industry executive advisor for industrial machinery & components at SAP America.