When I was first asked, like the other contributors to this magazine, to write an article on what the impact of COVID-19 will be on our industry, what came top of mind was: uncertainty. While most of us are two months into physical distancing and other measures to help stop the virus, there is still so much uncertainty in how things are going to play out, and so much that needs to happen before life can return to normal.
Additionally, it is extremely difficult to predict how the COVID-19 outbreak will impact us as a whole, as there has been, and continues to be, so much geographic disparity regarding the severity of the virus.
Genius ERP works exclusively with custom manufacturers across North America—and in talking with our customers over the last weeks and months—there has been so much variation on how they have felt the effects. Some have been relatively unaffected, with their operations continuing at a somewhat normal pace, whereas others have been completely shut down and are trying to navigate how to begin to restart operations.
But the more I thought about it, the more I realized that we have always been in the business of helping manufacturers, and that is what we are going to continue to do during these uncertain times and beyond.
While so much uncertainty continues to exist around the course of the outbreak and how the economy will be impacted—and ultimately recover—we will continue to support manufacturers in the important work they do. ERPs are in a position to greatly help manufacturers meet the new challenges caused by the COVID-19 crisis, and continue to push their businesses forward.
The Impact of COVID-19 on the manufacturing industry
The manufacturing industry is already and expects to continue to be, extremely impacted by the COVID-19 crisis. In a recent survey conducted by the National Association of Manufacturers, almost 80% of manufacturers replied that they expect that the pandemic will have a financial impact on their business, which is significantly higher than a recent PwC survey of cross-industry companies that saw only 48% of respondents concerned about the same impact.
Compared to other industries, almost all manufacturing jobs are on-site and cannot be carried out remotely. Manufacturers also strongly anticipate that the slowed economic activity due to COVID-19 will reduce demand for their products in North America and globally.
Keeping workers safe and healthy will also continue to be the number one priority for businesses and governments for the foreseeable future, meaning full or partial plant closures may continue to be necessary for manufacturers in hard-hit regions for a prolonged period.
Additionally, supply chains and supply chain logistics will be of major concern to manufacturers over the next months, as supply chain disruptions already have, and will continue, to be a major issue for manufacturers.
The COVID-19 outbreak has shown cracks in countries’ supply chains, especially in terms of medical supplies and PPE. Due to this, in the long-term, there may be a trend towards increasing domestic production for all types of manufacturing. But in the short term, until these changes come to fruition, supply chains will continue to be fraught for manufacturers in all sectors. Not only can manufacturers expect to see changes to supply and demand of different materials and components, supply chain partners may experience their own challenges and may not be able to fulfill orders on time—or at all—during the crisis.
How ERPs will help manufacturers deal with the COVID-19 outbreak
ERPs will play a crucial role in helping manufacturers adapt to these new and uncertain times. ERPs can allow for key tasks, like accounting, financial management, and purchasing to be done remotely. They also offer companies the ability to monitor real-time production and other operations of manufacturing plants, meaning front-end staff, including managers, accountants and purchasers can work remotely, and still keep up with their vital tasks that keep their businesses moving. Real-time remote access and production monitoring keep production on track and can inform production, sales, and service teams on order status, shipping, delivery, and service updates.
Scheduling
But in an industry where most jobs are on-site, manufacturers will need to find ways to adjust to the new normal of social distancing and decrease the density of workers on their shop floors. ERPs will be crucial to manufacturing shops, as they can help manufacturers schedule their shops, ensuring that jobs get done while still maintaining physical distancing and having a reduced number of workers on-site per shift.
Manufacturing ERP systems minimize the number of onsite shop floor staff by precisely scheduling work. ERPs with their ability to provide real-time data to managers will give operational managers the information they need to learn how to optimize processes and production and create new schedules that will allow jobs to be completed while maintaining physical distancing measures.
Supply chain management
There may be no area that ERPs will be more influential in terms of manufacturing than in supply chain management. With supply chains becoming precarious due to COVID-19, manufacturers will need to manage their supply chains with more finesse than they have ever had to in the past. The only way manufacturers will be able to do this is with the data, visibility, and the connectivity that ERPs give them. Manufacturers will need better, real-time awareness of their supply chains, particularly those related to critical materials and components.
ERPs, again with their ability to connect and integrate a manufacturer’s operation, are essential to helping manufacturers better plan and manage their supply chains. Manufacturers need to interact with numerous suppliers and partners to obtain the raw materials and resources needed to bring finished goods to the market. ERPs play a vital role in helping manufacturers access real-time operational information across multiple departments, procure goods from multiple vendors, and ensure that workers are better able to direct their efforts in sourcing essential parts and materials. ERPs provide manufacturers with more flexible supply chain solutions that may be readily adapted to meet the needs of changing circumstances.
ERPs are the future for manufacturers
I know it will be a hard road forward for many, but especially manufacturers. The past few years have already caused manufacturers to adapt to a new normal of uncertainty, with trade disputes and tariffs impacting their business. Fortunately, manufacturers are resilient and have learned how to deal with uncertainty, which will help them to move forward during this current crisis with more confidence than some other industries.
Technological solutions will continue to be important to manufacturers to help them deal with the unfurling impacts of the COVID-19 crisis, and many foresee further investments into automation solutions and the industrial internet of things (IIoT).
But even more crucial to manufacturers will be a good ERP system. Nothing can help manufacturers on so many different levels like an ERP, and enable manufacturers to better manage key elements of their businesses. AI, IIoT, and other automation solutions will help manufacturers improve production lines, but none of that matters if manufacturers do not have the raw goods and materials they need.
According to Michael Larner, principal analyst at ABI Research: “COVID-19 demonstrates that manufacturers need to be as focused on their supplier’s capabilities as they are on their factory floor.” ABI Research forecasts that the supply chain impact of COVID-19 will spur manufacturers’ spend on enterprise resource planning (ERP), to reach $14 billion in 2024.
And as more and more ERP solutions are offered through the cloud, manufacturers will have more flexibility to implement data-secure ERP systems to meet their needs. Real-time production monitoring, the kind only an ERP can give manufacturers, will become the new standard for manufacturers during this crisis. Allowing for as many front-end staff to work from home, while still overseeing a manufacturing operation is crucial. Helping manufacturers to schedule and oversee their supply chains will keep manufacturing businesses moving forward at this crucial time.
