The Corona pandemic and its effects on key industries: What you need to do now
Published on: September 3, 2020 / Update from: March 18, 2022 - Author: Konrad Wolfenstein
8 possible measures at a glance. For mechanical engineering, logistics and the manufacturing industry
The Corona pandemic and its effects on key industries – @shutterstock | Dusan Petkovic
Competition is increasingly a question of proper control of time. It's not the big ones that eat the small ones, it's the fast ones that overtake the slow ones.
The SARS-CoV-2 virus and the associated respiratory disease Covid-19 are not temporary phenomena. The Corona pandemic has already changed our lives significantly. With the lockdown, the emergency management of the Federal Republic and the shutdown of the economy last March, regardless of all measures, we are threatened with the second wave - no matter how strong it is.
Despite the various easing measures and the wave of holiday travel, many people seem to have completely overlooked the fact that we are still in a crisis. Dealing with the invisible illness has become too natural and too commonplace. Exit restrictions and the requirement to wear a mask in closed rooms are still in force and a minimum distance of 1.5 meters from other people is still recommended.
The summer holidays are coming to an end, the increasing number of corona infections due to those returning from vacation abroad and the flu season coming in autumn are exacerbating the fragile situation. Especially that of the economy.
Now the experts are needed to prevent another failure or at least to be well prepared for it in the worst-case scenario.
What is certain is that the Corona pandemic will inevitably drive the expansion of digital transformation, especially in key industries. These key industries in particular are of great economic importance because, with their interconnections with other sectors of the economy, they are the backbone of our currently stable but fragile economic situation.
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Changed working models such as home office and virtual meetings or video conferences are already being used widely. The supply chain is still struggling. The time is too short until all capacities and stocks have adapted to the new challenges. In addition, many companies work first and foremost on sufficient liquidity in order to secure the future of the company. Many manufacturing companies have reduced their production. At the same time, logistics must maintain supply chains and flows of goods. What makes matters worse is that consumer behavior has changed. Unforeseeable extremes included, for example, the long absence of toilet paper, disposable gloves, disinfectant, flour or rice. Here the interaction of order, planning, production and delivery no longer worked.
Cost pressure continues to increase, which means that internal company processes and those along the supply chain must run even more efficiently. It becomes clear that the organizational design concept “Industry 4.0” is still in its early stages. The danger, however, is that large companies will expand their market shares with the associated better networks and advanced digitalization. They are even the big winners of the Corona crisis, as can be seen very clearly from the example of Amazon. The smaller ones become more dependent and inevitably degrade themselves into vicarious agents. On the other hand, it cannot be in Amazon's interest if the smaller retailers collapse due to the threat of mass insolvency and the market is therefore increasingly left to Chinese retailers.
“The big ones eat up the little ones,” is how William Shakespeare once described the law of the strongest, which is all too often used as a reproach and indictment for general social conditions as well as for capitalist concentration processes.
In fact, competition is increasingly a question of the correct control of time. It's not the big ones eating the small ones, but the fast ones overtaking the slow ones, says Eberhard von Kuenheim, former CEO of BMW AG.
Industry 4.0 – The fast overtake the slow – @shutterstock | alphaspirit
Controlling time is an essential element of digital transformation and therefore also of Industry 4.0.
We must always keep this aspect in mind if we want to stabilize the key infrastructures, including digital transformation and intralogistics, for our key industries and make them fit for the future.
Of course, we can't wait until Industry 4.0 is established. We must now take measures and, ideally, organize them in such a way that we can easily incorporate the methodology as a module into the further expansion of the Industry 4.0 concept.
Suitable for:
The following measures should currently be the focus:
- Further expansion of warehouse optimization towards contactless picking. Full automation would be a further step. An example of this can be found at: “ Japan is already working on the future of tomorrow ”.
- Increase inventory. So far, just-in-time deliveries of goods in production have kept storage costs low. However, this increases the risk of production failure in times of crisis.
- Reshoring or onshoring production. The pandemic disrupted the global supply chain in ways no one could have predicted. As the global supply chain begins to stabilize, manufacturers are re-evaluating their processes. Many are considering reshoring, i.e. moving production tasks back to the headquarters.
- Scaling and coordination of storage capacities. While part of the logistics sector was suffering from limits and overload, in others the demand for orders collapsed completely.
- Smaller decentralized warehouse locations (hubs) increase speed and flexibility in the event of delivery fluctuations. Proximity to customers reduces transportation costs and reduces the risk of supply chain disruption. While some manufacturers will look to set up these decentralized warehousing facilities in key locations, others may look to leverage established 3PLs (Third Party Logistics). Additionally, as new satellite distribution centers are established, warehouses will seek to utilize high-density automation to minimize warehouse footprint and limit initial capital expenditures and ongoing labor costs required.
- Expansion and focus on e-commerce. According to Forbes, the pandemic is accelerating e-commerce growth by 4 to 6 years. Storage and distribution centers must be expanded accordingly. Expansion of full automation, away from static warehouses. Improvement of split case orders or single order management, especially in terms of speed and flexibility.
- In a split case picking system, individual items are picked from containers. This method is sometimes referred to as single or piece picking.
- E-commerce is driving automated individual piece picking (Smart Piece Picking System).
- E-commerce and full automation: Goods-to-robot picking, the optimum in split-case picking.
- Expansion of digital intelligence. Both in hardware and software. Current focus on the next few months, which should transition into medium to long-term planning. Actions that are only designed for the next few months without knowing what will happen afterwards would be fatal.
- Don’t leave the expansion of energy efficiency until later. Include it in the implementation now so that you can see the first successes in the next few months.
- Automation and autonomous energy supply are Amazon's key components to reduce costs while securing and expanding market share, especially for the future.
- Read more about this here: “ CO2 Neutrality – Learn from Amazon ”
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