How is the Coronavirus Impacting Manufacturing?
COVID-19, the pandemic disease caused by a newly discovered coronavirus, is bringing lives and routines to a standstill as we attempt to slow the worldwide spread of the illness. The scale of this disruption has affected business as well, and manufacturing is no exception. In fact, the coronavirus impact on manufacturing has already had implications on production, demand and supply chains — three key areas that underpin standard manufacturing cycles and processes.
How will COVID-19 impact manufacturing? In this blog, we’ll examine the current effects of the disease on demand and the supply chain, and how manufacturers are responding.
The COVID-19 Impact on Manufacturing
Many workers in the U.S. and abroad have been called upon to remain at home and away from others in order to limit the potential spread of COVID-19. A major byproduct of this pandemic effect on manufacturing has been disruption to production and supply chains, as goods and commodities in the upstream supply chain have been produced in lower quantities, and sometimes not at all, in the months since the disease began to spread.
Supply chain disruption creates several problems, which some manufacturers have already begun reporting:
- Delivery delays — In one electronics industry survey, more than two-thirds of respondents reported being told to expect delays. While the average quoted delay is three weeks, 15% of respondents have been quoted delays of six weeks or more. Manufacturers are forecasting actual delays of five weeks — a full two weeks in excess of what they are being quoted.
- Increased costs — Most manufacturers are attempting to maintain production levels in anticipation of a return to business as usual and an accompanying increase in demand. However, in order to maintain production in the face of supply chain disruption, manufacturers have had to seek alternative suppliers. These often have higher costs, which some manufacturers have been forced to pass along to customers.
- Uncertainty — With the scale of the global economic slowdown still unknown, 25% of electronics manufacturers stated it was too soon to tell when business would return to normal, although most expect that to happen by July. One positive sign: China appears to have the outbreak under control, allowing production to start ramping up again.
The Demand Question
On the demand side, the coronavirus impact on manufacturing has yielded two distinct results, with decreased demand in some areas and an increase in others.
- Decreased demand — Industries such as travel have been hit hard, with airlines and cruise lines seeing major decreases in bookings as a result of COVID-19. On the manufacturing front, 78.3% of surveyed respondents expect a financial impact, with 53.1% anticipating a change in operations, such as reduced production volume or head count.
- Increased demand — At the other end of the spectrum, consumer packaged goods and medical equipment and supplies, including ventilators, are seeing major spikes in demand and pressure to increase production. Demand for items such as toilet paper and hand sanitizer also spiked as the gravity of the pandemic became clear. Manufacturers of these products are now running 24/7 in order to meet global demand. On the medical front, ventilators and personal protective equipment like face masks are recognized as a critical need, and manufacturers have stepped up production in order to meet the spiraling demand.
The Impact of Production Changes on Manufacturing Equipment
Whether manufacturers are increasing capacity or adjusting production in response to demand, these changes can have a major impact on equipment performance, maintenance schedules and practices, and the ability to meet demand in a timely manner – especially in the case of medical equipment production, as lives truly hang in the balance if that production is delayed.
As pioneers in the field of industrial maintenance management and support, Advanced Technology Services is able to provide the advanced people, processes and technologies to meet demand surges, ensure that production schedules are met and conduct critical repairs when a piece of equipment is down. These critical asset support services can make the difference between meeting demand and missing deadlines. For more information about how we can help you at this critical time, contact us today.