Insights on the 1st-Order Challenges and 2nd & 3rd-Order Effects of the COVID-19 pandemic

COVID-19, Smart Manufacturing

It’s safe to say that most, if not all of us, have had our lives significantly disrupted in the last couple of months. As the pandemic ‘rules of engagement’ loosen, and economies begin to restart, I believe we’ll begin to see more clearly what the mid to long-term impact will be for each of us. What’s clear is that there’s no modern-day precedent for the simultaneous ramp-down of both supply AND demand.

I believe that we (CESMII and our members) have a significant role to play in helping manufacturers emerge from this pandemic-induced economic disruption. We’ve recognized that there are 1st, 2nd and 3rd order challenges that need to be recognized and addressed, and we’re acting accordingly. We would appreciate your feedback and your perspective as we proceed on this basis.

The 1st-order challenges are the immediate requirements for pandemic-related healthcare: PPE and ventilators/respirators, etc. Our efforts here have been focused on supporting a number of great organizations – large and small – that are committing resources to these vital endeavors. This support consists of Smart Manufacturing guidance, rapid technology deployment strategy, and providing access to the manufacturing experts (SME’s) here in our ecosystem as resources to help scale up new manufacturing processes, improve the performance of these new operations, and so forth.

The 2nd order effects represent a significant opportunity for investment in Smart Manufacturing to bolster recovery. As the pandemic plays out and the economy begins its recovery, the early conversations I’ve been part of point to a renewed sense of urgency for digitizing operations, and the value of quickly ramping up manufacturing and energy productivity (improving quality, throughput, yield, regulatory compliance and reducing waste, energy inputs, risk, etc.). This is clearly aligned with the core of our focus, enabling us to focus our resources on the acceleration of these initiatives. The most vulnerable manufacturing segment will be the small and medium manufacturers (SMMs), and while what we do is certainly significant for the F1000, we bring a unique value proposition to the SMMs, offering them a real opportunity – in many cases for the first time – to engage in SM/Digital Transformation. This would catalyze a significant portion of this ecosystem (vendors, system integrators and machine builders) to expand their business model and focus on SMMs as well. Many of our existing vendor members have already offered free software and services to underpin this effort, and I believe others would quickly follow suit under the right strategic framework. It’s important to add that this will require the accelerated education of a significant portion of the implementation ecosystem – those that would be on the front lines implementing these solutions – to upskill the workforce in the domain of Smart Manufacturing (online education for manufacturers, vendors and SI’s on the value of SM and digitizing operations and the role of SM Innovation Platform in doing this; working with our community college network and other organizations to retrain the existing workforce for the digital factory of the future and the reshoring of supply chains).

The 3rd order effect, we believe, will be around reshaping and creating more resilient supply chains. We believe there’s an urgent need to create a national, real-time Supply Chain data exchange with Visibility and Mitigation tools necessary to provide resiliency to support the critical production of products needed during COVID-19 and beyond. This initiative will accelerate the creation of solutions and U.S. common infrastructure, data models, data engineering and integration required to insure that the U.S. small, mid-size, and large multi-national companies can be better equipped to offer resilient, real time, proactive and digitally transparent Supply Chains for essential products.