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While 2020 is behind us, the continuing global pandemic has taught a host of supply chain lessons, highlighting both the strengths and weaknesses of electronics suppliers, distributors, and manufacturers. In the turn of a calendar year, this traditional industry has gone from embracing the way it’s always been done to looking at new ways of doing business.
There’s ample evidence that the pandemic has cost many organizations dearly. “The Covid-19 pandemic has been a rough reality check for our entire economic system,” said Marco Annunziata, former chief economist of General Electric and Scoop’s newest partner. “In some areas, new technologies have helped us react fast: manufacturing platforms have mitigated the disruption of global supply chains; and 3D printing has allowed us to switch production lines and ramp up personal protective equipment (PPE) production. But it wasn’t enough to prevent economies across the world from plunging into a deep contraction, and policymakers now know we need to be better prepared for ‘black swan’ disruptive shocks; and to cope with the ongoing, lower-frequency disruption that will continue to come from protectionist pressure and trade tensions.”
At the same time, some nascent trends were thrown into overdrive by new needs caused by the chaos. “Covid has been an extraordinary accelerant for pre-existing trends,” said Theo Saville, founder and CEO, CloudNC. “The death of the high street, the uptake of cycling, the move to flexible remote working, the rise of retail investment: We’ve seen ten years of progress jammed into 10 months. The strongest and most innovative companies are surviving and even thriving, and coming out on the other side leaner, meaner, and with a reduced field of competition.”
Now, it’s time for the rest of the industry to learn from those who have survived and thrived.
Business from a distance
Perhaps the first big shift for many organizations is the realization that folks don’t need to be in a physical headquarters to get things done. Typically, many organizations have resisted the work from home trend until it was foisted upon us by Covid-19. “Previously, many organizations may not have seen the need for these types of deployment as they could not see a quick enough return on investment or any ROI at all, but this pandemic has proven to them, and to their customers, the need to be able to operate remotely at all times,” said Carl Hung, CEO, The Season Group (an EMS provider) and SG Wireless.
Smart organizations doubled down on worker wellness, a new concept that needed to be added to the normal safety concerns implicit in manufacturing. “We’ve seen serious disruption to the manufacturing sector as well as creativity and camaraderie as the industry came together to solve immediate healthcare problems, like personal protective equipment (PPE), test equipment and, of course, medical equipment like ventilators,” said Dave Evans, founder and CEO, Fictiv. “But while it showed the manufacturing industry’s impressive will, creativity and capability, it also exposed weaknesses in the way goods are made and the way supply chains are managed, underlining the need to transform from the old ways of doing business to something more agile and resilient.”
Getting efficient
In light of these new realities, many electronics manufacturers took a good hard look at the question of efficiency and flexibility of their operations with an eye on keeping products heading out the door. “Manufacturing companies need greater agility, to respond faster to sudden changes in demand and supply chain shocks. And they need to better leverage the power of their human capital: we’ve heard for years that the robots were taking all the jobs, but when people could not go to work for fear of contagion, production came to a halt,” said SCOOP’s Marco Annunziata.
In the past, cost and pricing was a point that was hammered to the exclusion of any ability to react quickly. “Leaders took a hard look at the inefficiencies in their existing processes: spending millions on international travel to put engineers directly on the line, relying on dozens of experiments during development to suss out root causes, and pushing new programs over the line with a combination of luck and heroism,” said Anna-Katrina Shedletsky, founder and CEO, Instrumental.
In part 2 we look at the impact Covid-19 had on the digital supply chain and the on/offshoring debate.
