COVID-19 is a Wake-up Call for Manufacturing SMBs

18 Mar 2020

Sir Winston Churchill was credited with saying: “Never let a good crisis go to waste”. His words are as relevant today as when they were first uttered. Humanity is facing one of the most challenging periods in decades. At the same time, we need to think about the day after, when we start rebuilding the global economy.

COVID-19 is the black swan event of the global village

With cross-border transportation grinding to a halt, its enormous impact on the “just-in-time” supply chain, and any human interaction imposing a health risk, there are two clear implications relating to the industrial manufacturing market:

  • We must strike a balance between global production of essential goods and the price-driven global supply chain on one side, and the geo-sensitive, independent continental/regional/local supply chain on the other. This is a once in a century opportunity for SMBs in Europe, North America, and Latin America.

  • This is a trigger to expedite Industry 4.0 in general, and the autonomous and remote operation of smart factories in particular, in order to reduce dependency on direct human interaction.

These two vectors are bound to have social, political, and economic implications that need to be addressed - especially during times of uncertainty. First and foremost, the suggested resurgence of manufacturing SMBs (or ‘Mittelstand’ in German) requires board members and executive leaders to make bold decisions and deal with one of the main challenges associated with the digitization process: managing vulnerable and digitally sensitive cyber-physical system (CPS) production as the enabler of the factory of the future.

Time for the SMB digital transformation

Reality is constantly changing, and humanity must adapt and transform accordingly. When the change is gradual, the development process which drives adaptation calls for a gradual innovation. The sudden and radical effect of COVID-19 constitutes a revolutionary change, which can only be addressed appropriately with a fundamental transformation.

In addition to competitive pricing, reliable, continuous production and supply will become a leading market KPI once COVID-19 will be contained. Board members and traditional industrial SMB leaders need to grasp the opportunity presented to them. They have to stop relying on the pre-digital industrial “machine-driven” intuition and experience that led to its previous successes, and instead upgrade to Industry 4.0 processes and information products. They need to drive their production to become smart, resilient, and agile.

Fully autonomous production may not be attainable yet. However, smart supply chains, remote monitoring, control, maintenance, and operation will become enablers for increasing the market share.

Smart Sensors, Hyper Connectivity, Edge and Cloud computing and advanced robotics to the production floor - from the single machine to the entire site level digitalization will reduce the dependency on human intervention on-site. Smart sensors that control industrial systems, all interconnected using 5G networks and harnessing the power of cloud computing will bring rise to fully automated Smart Factories. Technology that until recently was only implemented in hazardous environments, will now become an essential market differentiator for the providers of essential goods.

Furthermore, leaders must adopt a level of urgency regarding the process, with an understanding that lack of change will lead to their organizations not being able to continuously meet market demands, and thereby lose their market position.


*In my next blog I will address the critical principles needed for implementing digital solutions while maintaining the safety, reliability, and efficiency of production in the COVID-19 era.

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