As China (known as the “factory of the world”) continues its fight against the COVID-19, much of the country’s offices and factories have remained closed—drastically decreasing or even halting production and shipping operations for the past few weeks. The world is now starting to feel the outbreak’s impact on the global supply chain, and manufacturers both inside and outside the country are now feeling the pressure.
As consultants, we’re here to help ensure businesses maintain continuity in their supply chain operations amid the coronavirus outbreak. Here are the major manufacturing challenges we’ve observed from some of our clients and what you can do about them in your operations.
5 Major Manufacturing Challenges of COVID-19
1. Workforce shortages & backlogged orders
Chinese New Year and the Coronavirus quarantines have left many factories significantly short-handed. To get an idea of the extent of this situation, factories have reported numbers as low as 10% of their previous workforce. As a result, they are often backed up on orders from productivity loss over the previous months and because of the extended holiday.
- Factory layout reorganization
- Production & material planning improvements
- Process improvement
- Full automation
- Quick changeovers
- Selective outsourcing
- Prevention of quality issues (mistake proofing, etc.) if inspection and rework take a lot of resources that are needed elsewhere
2. Over-reliance on a sub-supplier that is not delivering
If you (1) need a component to make your product, (2) find that the component's supplier can’t deliver up to your needs, and (3) can’t develop a backup supplier quickly, you might have to shut your lines down. Recently, Nissan had to do just that because their factory in Japan is experiencing a shortage of Chinese parts.
Many businesses are facing these problems because firms are over-reliant on a few key suppliers.
- Many of the solutions will be the same as the previous challenge, except you will have to apply them to your sub-supplier to help them improve their capacity.
3. Diversifying supply chain
The COVID-19 outbreak showed many of our clients that their supply chain was too strongly based on one location: China. Many are now looking to mitigate the risk through diversification—with some considering relocating their plants out of China entirely.
Establishing alternative sources for product parts is a good way to reduce your dependency on key suppliers and also, mitigates the risks of other challenges mentioned above. Though this may not provide immediate relief to all supply chain problems, it is definitely something to consider in the long-run.
- Supply chain optimization including developing backups for all custom parts
- Feasibility study for new locations
- Local support in new location to ensure good quality and cost
4. Lack of specific competencies (engineers and technicians who are stuck or have not returned), and difficulty setting up, controlling, and maintaining processes
Factories don’t just need skilled operators to make production, they also need engineers and technicians who know how to set up, control, and maintain processes—especially when sophisticated and high-tech equipment is involved. If it means 1 critical component can’t be made, an entire manufacturing facility may be down.
- Find knowledgeable personnel to set up, control, and maintain processes to keep production running and avoid surprises. CMC has a network of specialized technical service providers who can support you with this.
5. Top management unable to come on-site
It is possible that even the top leadership is unable to come onsite, due to the lock downs of many cities and areas (even outside of Hubei). Many restrictions and travel bans have been places when travelling to China, and for many foreign business staff, this poses to be their biggest challenge, as travelling to and from China is a major part of their work.
Are you dealing with any of the following challenges from COVID-19?
If so, CMC and its North American partner, MTG, can provide solutions tailored to your specific challenges.