As the economy returns to pre-pandemic levels, the call for the public and private sectors is to build back better – more futuristic, resilient and above all greener and therefore sustainable businesses and economy.
By the middle of 2020 when the nature of the pandemic began to unfold and that governments were aware that it was one of the few waves that were hitting the coast, long-term plans were put in place to tackle the immediate and build for the future. In Europe and North America, with minor country-specific variations, the plans were mainly in three stages – Respond, Recover/Reset and Renew/Reinvent.
UK manufacturing has responded with a similar long-term visionary plan for a future-ready sustainable industry with built-in resilience to absorb similar future shocks. Plan for growth was put in place, replacing the flagship industrial strategy to take account of Covid-19, Brexit and its climate change commitments. the Plan for growth intends to rely on the three pillars of Infrastructure, skills and innovation in order to:
- Improve the whole of the UK
- Support the transition to net zero
- Supporting Britain’s Global Vision
Since the start of the pandemic, industrial manufacturing has come a long way and continues to adapt and grow for similar unforeseen future triggers. The Make UK article – Responding, Reset and Reinventing UK Manufacturing summarizes this succinctly, while recommending the construction path for the future. There are four key investment areas that require a different approach than perhaps thought before the pandemic:
- Resilient business operations
- Business models of the future
- Greener and more sustainable company
- Labor requalification
This blog explains the nature of the above changes required for industrial manufacturing companies around the first imperative to build Resilient business operations.
Resilient business operations
The pandemic has revealed some of the key underlying vulnerabilities in the business processes and technology fabric of industrial manufacturing companies. The impact of the pandemic, global supply chain constraints, and ensuing trade tensions ranged from hard impacts like changes in hard-wired business models and processes and productivity to softer elements of the purpose, culture and organizational structures. Key Principles of Resilient Business Operations that can withstand future shocks and lay the foundation for future business can be summarized in the following 4 Ps:
- Goal: Understanding that consumers want organizations to be aware of their environmental impact, the need arises towards building a sustainable multi-stakeholder enterprise
- Path / Model of operation: The constraints of emerging markets and the opportunities presented by the abundance of technologies require organizations to be flexible with products, business models and route to market or channels
- Planning and process: Develop and strengthen collaboration with your suppliers and other partners by dynamically exploiting and sharing data within the company and across the ecosystem
- People and productivity: Improve efficiency and productivity through process improvement, automation and an engaging experience
Goal: Linking financial and environmental metrics to business operations creates a more sustainable business model and a safer, healthier world.
- Manage carbon and climate exposure: Understanding and acting on the carbon footprint throughout the value chain. Get insights into the carbon footprint generation dynamics in your business, such as supply chain or manufacturing. Assess mitigation strategies and operationalize with specific thresholds and ongoing monitoring. Transform your business into a low-carbon business
- Integrate the principles of the circular economy: Building resilience and principles of circularity in the supply chain, material flows, markets and resource consumption. Take steps to reduce waste generation throughout the value chain. Demonstrate factually through material traceability in the supply chain the degree of circularity to regulators and stakeholders
- Put people first: Ensure safe, fair and compliant business operations, engage in social purchasing, scale your diversity and inclusion, and other CSR initiatives. Leverage traceability capabilities to demonstrate ethical business practices and gain superior customer and stakeholder experience
Path / Model of operation: The traditional industrial manufacturing value chain moves from vendors to stand-alone manufacturing facilities to a network run by dealers or large institutional customers. However, given rapidly changing market operating conditions (Covid-19 implications, supply chain disruptions, war-induced inflation), businesses need to be nimble and leverage partner networks both on the both on the supply side and on the sell side to develop a solid operating model.
- Business model transformation: Move existing business models from products to software as a service and back again by adapting your operations to subscription or usage/consumption options, as appropriate
- Smart networks: Extend transformation beyond the enterprise to help businesses move faster by creating dynamic, digital connections with suppliers, carriers and assets, sharing data and orchestrating workflows, while applying network-wide intelligence to guide decisions, adapt quickly and keep improving
- Customer Engagement Platforms: Understand and respond to every demand of the end customer by leveraging new channels to market access, such as direct sales channel to consumers. Creating new products and services with configuration capabilities and highly flexible pricing to offer personalized offers
Planning and process: The Covid-19 pandemic followed by subsequent disruptions resulting from trade lockdowns (geopolitics and physical supply chains), accelerated the move towards greener supply chains and now the war in Ukraine is registering companies reassessing their strategies supply and business chain planning. Mid-term and annual business plans must now be reviewed more frequently than ever, while supply chains consider new sourcing options and a flexible and agile fulfillment network to become resilient and robust to absorb similar future shocks.
- Leverage all data (within and beyond enterprise data) to improve the customer and product experience
- Ongoing alignment between business lines on a forward-looking plan
- Quickly assess scenarios and react optimally to changes affecting your supply chain
- Real-time digital representation of the physical supply chain and tight alignment with execution
- introduce quickly next generation business process and specific solutions LoB to improve engineering processes, manufacturing and supply chain
- Design and deliver the best possible product/service using end-to-end integrated processes from ‘lead to cash’, ‘design to opera’, recruit to retire, finance and ‘source to pay’
- Monitor and control business performance with built-in process intelligence to flag operational inefficiencies
- Explore analytical or transactional applications using built-in analytics
People and productivity: Improving the productivity of an engaged workforce is not a one-time activity, top performing organizations continually improve to stay competitive.
- Engage employees by improving user experience
- Deliver a consistent, role-based user experience across devices and platforms
- Improve productivity by integrating machine learning and intelligence robotic process automation in repetitive tasks and business transactions
- Stay informed of variances in system usage and performance using business process intelligence
- Take proactive measures to remain efficient and continuously improve business processes while optimizing resource consumption
Transitioning from the classic operating model to the next-generation operating model and corresponding technology landscape is easier said than done. With multi-country, multi-currency global operations, landscape transformation must be methodically phased to minimize business disruption while enabling key business requirements to keep competition at bay.
RISE with SAP can help with all the key elements of this Build Back Better business transformation – to develop new business models and avoid disruption, gain efficiencies to fund innovation, and transform critical systems without business risk. Learn more about RISE with SAP
About the Author
Ashutosh Apt: Director Industry Value Advisory – Manufacturing, SAP (UK) Ltd.
Ashutosh brings over 20 years of professional experience, including the last 15 years at SAP – spanning Value Advisory, IT Consulting and Sales & Marketing profiles. Ashutosh has extensive expertise in building technology-driven roadmaps and business cases by working collaboratively with customers and partners. Ashutosh is also responsible for improving business processes by leveraging process KPIs and benchmarking techniques of adopting best practices for manufacturing companies. Ashutosh holds a Masters in Management from School of Management, IIT Mumbai and a B. Tech in Chemical Engineering.