4 MIN. READ
Almost overnight, COVID-19 plunged the nation into a recession. With people unable to go to work save for certain critical fields, the virus exposed the interconnectedness of our country’s economy in a way never seen before.
Rather than being discreet and insulated industries, every sector relies on other sectors in order to be viable.
As such, manufacturers that had been seeing steadily increasing revenue are suddenly forced to consider new ways of coping with dramatic dropoffs in demand for products and services.
Costly Ripples
Take, for example, the closing of restaurants. With people not eating out, the demand for food went down. Lower demand for food meant lower demand for food processing equipment and lower demand for transportation vehicles to get the food to the restaurant.
There were also losses felt by utensil, dinnerware and kitchen appliance manufacturers.
The reduced need for these products and services rippled up into the raw material supply chain. Since restaurants did not need glasses, forks and plates, delivery companies did not need new trucks, and food processors did not need equipment, the raw materials to make these items were not needed either. This, in turn, lead to losses with the companies that procure these raw materials.
As an example, mining for the materials to make steel, aluminum or ceramics dropped off as manufacturers canceled orders.
On the surface, these downstream effects represent the worst economic conditions since the Great Depression. The good news is that this forced reset gives manufacturers a chance to look at the future and determine what their best course forward is.
Related: The Great Pivot: U.S. Manufacturers Retool to Support Frontline Workers
It is a time for upgrading procedures, equipment and getting ready for the eventual return to prosperity. Ultimately, it is a time for innovation. Take a look at a few ways manufacturers can take advantage of this downturn by innovating their processes.
New Technologies
The internet of things is widely touted as the technology that will revolutionize manufacturing in the 21st century.
Despite being rapidly adopted by many companies, it is still nowhere near its full capabilities. The next few years will see a confluence of increased computing power, automated systems and remote management interfaces.
The consequent gain in efficiency and quality control will boost bottom lines while reducing workload.
Additionally, the introduction of new technology has a side effect of changing the dynamics of how people interact with their workplace.
By automating many manual processes and promoting easier collaboration and communication, technology fosters engagement in the workforce.
This allows employees to become more productive, more creative and more satisfied with the work they do perform.
New Markets
Sometimes an intended market is not the biggest market. When duct tape was invented, its only market was the US military. The sole use was keeping ammunition cases watertight. It was only after the war that construction workers who had served in the military remembered how tough and resilient that tape was and started using it on job sites.
Related: COVID-19's Impact on the U.S. Reshoring Movement
Occasionally, a new market will find a product, but more commonly a new market must be found. Taking this proactive route, there are certain steps manufacturers can take to see whether their existing product line or services can be used for other purposes. Consider these steps:
• Identify what the product use is. Do not think in terms of who it should serve or what it currently does. Instead, think about who could actually benefit and what it can do.
• Identify specific groups, individuals or industries that may need something along those lines.
• Reach out to companies in these fields to let them know that there is a solution they may not have thought of. Consider publishing an announcement of your new product or idea on IndustryNet.
Local Supply Chain
Now would also be a good time to investigate the feasibility of switching supply chains to domestic sources. After seeing the absolute meltdown of the globalized trade model, it makes sense to keep the lifecycle of products near home.
Not only is it easier to manage disruptions, but relationships can be established with suppliers on a face-to-face basis. This is in stark contrast to needing agents and translators to help navigate the complex business laws and customs of another nation.
Although at first glance it may be hard to see any positives to this pandemic-induced recession, there is a silver lining.
Manufacturers can take this opportunity to seek innovation in order to help them grow and thrive in a post-COVID-19 economy.
By adopting new technology, exploring new markets and considering alternate supply chains, manufacturers can poise themselves for success amid a downturn.
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