Reimagining manufacturing partnerships after COVID-19

15 October 2020
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Reimagining manufacturing partnerships after COVID-19

Manufacturing partnerships were already transforming manufacturers’ operations before the pandemic. Now, when outsourcing to partners, manufacturers need to consider what in-house capabilities each partner has to offer. 

Even in countries where COVID-19’s initial impact has begun to recede, severe disruptions are likely to remain a fact of life for several years to come. 

However, volatility has become the watchword amongst manufacturing leaders and supply chain companies even before the pandemic broke out. 

As businesses adjust to the ‘new normal,’ manufacturing leaders are grappling with the longer-term question: 

How will manufacturing and supply chain logistics appear post-COVID-19?

Manufacturers will be anxiously keen to know how long it will take the industries to recover from the coronavirus pandemic.

Based on the experience of the 2003 SARS epidemic, it could take months for the sector to bounce back.

But how will manufacturing look after the pandemic? 

Manufacturers must improve their business networks to protect against the shocks of future supply chain disruptions.

 

Acknowledging the impact of COVID-19

The impact of COVID-19 has demonstrated that manufacturers need more resilient networks.

Even Apple, with its vast network of components, saw production cease in February in China. By March, its manufacturing network of chips and circuit boards in South-East Asia and Europe had ceased. 

As of mid-June, Apple had yet to reach ‘normal’ pre-crisis operations

A halt in operations of a global giant like Apple has a ‘domino’ effect on the world’s economies due to decreased consumer confidence.

Companies must evaluate whether their existing networks and partners can still operate in this new business environment.

Finding reliable and robust manufacturing partners is now more critical than ever.

 

The new era of manufacturing partnerships

Powerful partnerships between manufacturers and partners help reach business objectives. A manufacturing partner should have such in-house capabilities and demonstrable experience in the following areas:

  • product development and research
  • ensuring the highest quality 
  • regulatory and market compliance 
  • supply chain networks 
  • building a competitive advantage

Manufacturers struggle to keep up with continuously shifting customer expectations and ever-changing marketing-sales environments. 

One method to manage this is to develop effective and robust external business relationships, who collaborate to achieve business goals.

It is these business relationships that enable manufacturers to pivot quickly, efficiently and successfully. It brings positive results for all parties.

Business partnering is more cost-effective than a company acquisition or hiring more in-house employees that require extensive training. 

Outside of raw product manufacturing and packaging, custom machine builders often offer many services that the manufacturer does not need to handle nor their staff, including:

 

R&D and new product development

Established machine builders have experienced research and development (R&D) personnel. They can take concepts and generate tangible products that scale for mass production. 

It’s this type of collaboration that leads to more creative innovation, making new products or improving existing ones. 

It’s advantageous for both manufacturers and the partner to work closely during the product development process to avoid potentially costly errors.

No company or in-house staff know everything, so partnering with the right companies like Tech Group can significantly expand a manufacturers knowledge base. 

In a true manufacturer/machine builder partnership, the manufacturing partners may even help with pilot runs, mock-ups and stability studies. Invaluable in developing new machines for producing products.

 

Quality and regulatory

Quality and regulatory compliance represent a significant budget for a manufacturer. Depending on the type of products a business is selling, that type of infrastructure may not make sense to maintain in-house. 

It’s not to say that businesses don’t need to have an in-house quality team (in fact, they do). However, by partnering with the right machine manufacturer, a brand can have a cost-effective resource at their fingertips.

The cornerstone of a partnership is the quality and IP agreement. Not only does the agreement stipulate who is responsible for what, but it also ensures that all IP is that of the manufacturer and not the machine building partner, even if the partner brings new expertise to the original blueprint. 

Although the manufacturer should still have an in-house quality system, the partner can add additional value and expertise, including their network of suppliers to produce other components. 

 

Supply chains and networks

Manufacturers need more transparency with components suppliers, and machine building partners provide this.

Many brand owners specify the exact components and sometimes even the costs of that raw material.

In other cases, machine building companies receive more competitive pricing on individual parts. They can offset the price differences with their customers because of the volumes they need.

Having a good network that supports a manufacturer in times of disruption is imperative. As the pandemic demonstrated, most component sourcing hailed from China, the epicentre of the outbreak. 

Chinese suppliers had to close their factories hitting manufacturing output in North American and Europe.

One method to limit this disruption to find a manufacturing partner with a network across several countries. Thus, lessening the impact of any disruption.

 

Aiding in a competitive advantage

Business partnerships should develop successful, long-term, strategic relationships between manufacturers and their network. 

These relationships can increase a manufacturer’s competitive business advantage. 

The cooperation can lead to better opportunities from cost-savings, obtaining invaluable market knowledge, qualified specialist staff to getting better-quality components.

But there are other critical factors why using a partner can make manufacturing more resilient.

 

Building resilient manufacturing beyond the factory walls

During the crisis, many companies are furloughing or making employees redundant, working remotely, creating breaks in company workflows and structures.

Job roles have diminished, and employees take on redundant colleagues roles.

Whilst this sounds financially viable during the crisis, it is not sustainable. Once over, it will become challenging to find suitable personnel to rebuild and grow and meet expected demand.

It’s critical that once business returns to some degree of normalcy, that every opportunity to grow and replace lost revenue is taken.

Simultaneously, if your time is devoted to hiring and onboarding new employees, then you’ll not be in a position to scale the company to pre-crisis levels. 

Partnering with a custom machine builder like Tech Group reduces the liability of hiring and terminating employee roles where business demand has fallen.

When manufacturing scales, a machine building partner has all the in-house capabilities and experienced staff to scale new products quickly.

Imperative when working with limited resources and an unclear market situation. Finding the right partner to help a manufacturer scale is business-critical.

 

Automate, outsource and lower your fixed costs

At the core of any business lies costs.

Automation, done successfully, will analyse and highlight areas that are ripe for operational efficiency. 

Robotic factory automation solutions provide vast advantages to manufacturing companies, including higher productivity, lower costs, increased worker safety, and improved quality. 

Manufacturers experience faster production times and increased quality, boosting product output volumes. Over time those improved efficiencies lead to additional cost savings due to reduced waste and lower labour costs.

 

Change is here to stay

The global pandemic has presented both business and humanitarian challenges that need a new approach to succeeding in this ‘new normal’ world. 

As manufacturers begin to rebuild their operations, they have a critical opportunity to reimagine a more automated business future. 

A future that is more digitised yet highly robust by forging partnerships with companies that have in-house manufacturing capabilities and vast support networks.

Those that do this well and to achieve more of their strategic goals and remain competitive and resilient in the new business environment.