As the economy claws back to pre-pandemic levels, the call for the public and the private sector alike, is to Build Back Better – more futuristic, resilient and most important greener and hence sustainable businesses and economy.
Towards the middle of 2020, as the nature of the pandemic started unfolding and governments realised that this is one of a few waves bound to hit the shores, long term plans were put in place to tackle the immediate and build for the future. Across Europe and North America with minor country specific variations the plans were primarily three staged – Respond, Recover / Reset and Renewal / Reinvent.
The UK Manufacturing sector responded with a similar long term, visionary plan for a sustainable future ready industry with built-in resilience to absorb similar future shocks. Plan for Growth was put in place, overriding the flagship Industrial Strategy to take into account Covid-19, Brexit, and its climate change commitments. The Plan for Growth intends to build on the three pillars of Infrastructure, Skills and Innovation with the aim to:
- Level up the whole of UK
- Support the transition to Net Zero
- Support Global Britain vision
Since the onset of the pandemic, Industrial manufacturing has come a long way and continues to adapt and build for similar unforeseen future triggers. Make UK’s paper – Responding, Resetting and Reinventing UK Manufacturing captures this succinctly, while recommending the build path for the future. There are four key areas of investment that necessitate a different approach than what was perhaps thought of, prior to the pandemic:
- Resilient Business Operations
- Business Models of the Future
- Greener and Sustainable Business
- Workforce Reskilling
This blog elaborates on 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 exposed some of the key underlying vulnerabilities of the business process and technology fabric of industrial manufacturing enterprises. The impact of the pandemic, global supply chain constraints and trade tensions that followed ranged from hard impacts like changes in business models and hard-wired processes and productivity to softer elements of organisational purpose, culture and structures. Key tenets of resilient business operations that can sustain future shocks as well as lay the foundation of the future enterprise can be summarised in the following 4 P’s:
- Purpose: Understanding that consumers want organisations to be mindful of their environmental impact, need is felt towards building a sustainable multi-stakeholder enterprise
- Path / Operating Model: Emerging market constraints and opportunities provided by the profusion of technology demands organisations to be flexible with products, business models and route to market or channels
- Plan & Process: Expand and strengthen collaboration with your suppliers and other partners by dynamically leveraging and sharing data within the enterprise and across the ecosystem
- People & Productivity: Improve efficiency and productivity with process improvement, automation and engaging experience
Purpose: Linking of financial and environmental metrics to business operations creates a more sustainable business model, and a safer, healthier world.
- Manage Carbon and Climate Exposure: Understand and act on the carbon footprint across the value chain. Gain insights into the dynamics of carbon footprint generation in your business – e.g. supply chain or manufacturing. Evaluate mitigation strategies and operationalise with specific thresholds and continuous monitoring. Transform your business to a low carbon footprint endeavor
- Embed Circular Economy Principles: Build resilience and circularity principles into supply chain, material flows, markets and resource consumption. Take action to reduce waste generation throughout the value chain. Demonstrate factually through traceability of materials in the supply chain the degree of circularity to the regulators & stakeholders
- Prioritise People: Ensure safe, equitable and compliant business, engage in social procurement, scale your diversity & inclusion, and other CSR initiatives. Leverage traceability capabilities to demonstrate ethical business practices and gain superior customer & stakeholder experience
Path / Operating Model: The traditional industrial manufacturing value chain moves from suppliers to self-owned manufacturing setups to a dealer managed network or large institutional customers. However, given the rapid changes in the market operating conditions (Covid-19 implications, supply chain disruptions, war-led inflation), enterprises need to be nimble and leverage networks of partners both on supply-side and sell-side to evolve a robust operating model.
- Business Model Transformation: Shift existing business models from products to software-as-a-service and vice-versa by adapting your operations to subscription or usage / consumption-based options, as applicable
- Intelligent Networks: Extend transformation beyond the enterprise to help businesses move faster by creating dynamic, digital connections with suppliers, carriers, and assets, share data and orchestrate workflows, while applying network-wide intelligence to guide decisions, adapt quickly, and keep improving
- Customer Engagement Platforms: Understand and fulfil each end customer requirement leveraging newer routes to market like the direct-to-consumer channel. Create new products and services with highly flexible configuration and pricing capabilities to deliver personalised offerings
Plan & Process: The Covid-19 pandemic followed by subsequent disruptions arising from trade blockages (both geopolitics as well physical supply chains), accelerated the move towards greener supply chains and now the war in Ukraine is making enterprises re-evaluate their business and supply chain planning strategies. The medium term and annual business plans now need to be revisited more frequently than ever while supply chains are looking at newer sourcing options and an agile flexible fulfilment network towards becoming resilient and robust to absorb similar future shocks.
- Leverage any data (within and beyond enterprise data) to improve customer and product experience
- Continuously align across business areas on a forward-looking plan
- Rapidly evaluate scenarios and respond to changes that affect your supply chain optimally
- Real-time, digital representation of the physical supply chain and close alignment to execution
- Rapidly introduce next generation business processes and LoB specific solutions to improve engineering, manufacturing and supply chain processes
- Design and deliver the best possible product/ service using end-to-end integrated processes of ‘lead to cash’, ‘design to operate’, recruit to retire, finance, and ‘source to pay’
- Monitor and control business performance with built-in process intelligence to point out operational inefficiencies
- Drill-down into analytical or transactional apps using embedded analytics
People & Productivity: Productivity improvement for an engaged workforce is not a one-time activity, top-performing organisations improve continuously to remain competitive.
- Engage employees by improving user experience
- Deliver a consistent, role-based experience for users across devices and platforms
- Improve productivity by embedding machine learning and intelligent robotic process automation in repetitive tasks and business transactions
- Stay informed about deviations in system usage & performance with the help of business process intelligence
- Take proactive steps to remain efficient and continuously improve the business processes and simultaneously optimise on resources consumption
The transition from classical to next generation operating model and corresponding technology landscape is easier said than done. With multi-country, multi-currency global operations the landscape transformation needs to be a methodically phased to minimise business disruption while enabling the key business requirements to keep competition at bay.
RISE with SAP can help with all the key elements of this Build Back Better enterprise transformation – to develop new business models and avoid being disrupted, gain efficiencies to fund innovation, and transform mission-critical systems without business risk. Learn more about RISE with SAP
About the author
Ashutosh Apte: Director Industry Value Advisory – Manufacturing, SAP (UK) Ltd.
Ashutosh brings over 20 years of professional experience including last 15 years at SAP – spanning Value Advisory, IT Consulting and Sales & Marketing profiles. Ashutosh has extensive expertise in building technology led transformational roadmaps and business cases by working collaboratively with customers and partners. Ashutosh is also responsible to drive business process improvements leveraging process KPIs and best practice adoption benchmarking techniques for manufacturing enterprises. Ashutosh holds a Master of Management degree from School of Management, IIT Mumbai and B. Tech in Chemical Engineering.