How Can Manufacturers Respond to a Manufacturing Recession?

Despite technology-based advances such as the incorporation of industrial computers, manufacturing recessions aren’t a particularly strange occurrence. The industry has experienced quite a few of them, even seeing less than stellar performance the past few years due to a skilled labor shortage. Despite these roadblocks, the solution has always remained the same: continue to optimize and digitize with Industry 4.0 technology such as IoT compatible devices. This approach has always been proven to bolster output and even draw in younger, more tech-savvy employees. Unfortunately, those same strategies just aren’t enough when dealing with a unique recession such as the one we stand to face. 

A major hit to the economy is coming and it’s coming fast. According to Goldman Sachs, the US economy could drop somewhere close to a staggering 24% as early as next quarter due to the shockingly fast spread of COVID19. As several industries start to take crippling hits to their business, manufacturing stands out as a particularly unfortunate victim.   

So, what’s changed? What makes this recession so much more threatening according to Goldman Sachs’ predictions?     

The Difference Between This Manufacturing Recession and Past Ones

The difference between recessions faced before and the one we’re facing now is the cause. In 2008, what changed was the public’s mentality. Due to collapses in the market, consumers were hesitant to spend money and business owners were just as hesitant to invest in new tech initiatives and hires, leading to less available jobs. What was ultimately needed to reverse this downturn was an influx of finance to families. Having more funds that could be spent stimulated businesses which would, in turn, entice them to expand and bring on new employees as they grew. Ultimately, an increase in demand was necessary. 

The problem we face now is that the cause of recession is much more physical and prohibitive. Businesses are being demanded to close and people are being strongly encouraged to stay home. Demand is present, but people are being physically barred from spending money. Businesses, on the other hand, are being physically barred from operating as normal due to forced shutdowns and impacted supply chains.

The issue isn’t one of people not wanting to spend, it’s the fact that they no longer have the ability to spend. Furthermore, with global suppliers around the world going out of business, manufacturers are also suffering from an inability to produce. 

So, what can manufacturing do while this is all sorted out? In short, optimize and become more self-reliant. In a recession where any hit to productivity is amplified many times over, manufacturers need to focus on streamlining their operations to minimize breakdowns and move as much of their operations in-house as they can. Here are some practices to keep in mind. 

Predictive Maintenance

Machine breakdowns happen. It’s par for the course for a manufacturer. However, a significant amount of productivity can be saved if you catch a malfunction and address its causes before it occurs. Predictive maintenance leverages the data gathered by interconnected manufacturing machines to provide diagnostics and alert you about any upcoming breakdowns. Not only does this cut down time spent on repairs, it also allows manufacturers to plan ahead for breakdowns instead of having several spare parts on hand on the off chance that one occurs. In a manufacturing recession, many won’t have the capital to hold onto these spare parts, making predictive repairs much more fiscally feasible. 

For those looking to take advantage of predictive maintenance, there’s some hardware that’s necessary. You’ll need to invest in some IoT connected devices capable of sending reports and real-time diagnostics to a central panel pc. 

Using edge computing to move all of your diagnostics and data storage to your internal facility also delivers several benefits. Moving the computations to your internal factory eliminates the possibility of being left high and dry due to an off-site server shutting down because of an earthquake or pandemic. Furthermore, by moving all the data processing to a closer location, diagnostic data can be processed into actionable insights much quicker and in real-time, making predictive maintenance all the more effective at saving you costly repairs during a manufacturing recession.

Carefully Monitor KPIs

Following the idea behind predictive maintenance for your own operation, keeping a close eye on key partners in your supply chain and how they’re being impacted by global and economic developments is essential. The idea is to keep track of your supply chain partners’ KPIs (key performance indicators) in much the same way as you’d keep an eye on your own internal productivity. Fortunately, this can be easily done through supply chain portals. 

Supply chain portals are web-based programs that integrate different facilities and partners as well as their metrics onto a single platform. This gives decision-makers on your team a global view of how their supply chain is performing across all of its interconnected facilities. Closely monitoring these KPIs over a supply chain portal, a team leader could begin to predict slumps in production (which are very likely in the case of a manufacturing recession) and make efforts to address them before they grow into larger issues. 

How these slumps are treated is entirely dependent on the situation at hand. It could be as simple as providing incentives for meeting increased demand, offloading work to a different facility, or, in the case of a shutdown plant that manufactures a key part, switching to alternative manufacturing practices to meet demand.  

Alternative Manufacturing Practices

We’ve already seen several shutdowns due to this global pandemic and it’s very likely we’ll only see more as it continues to run its course. It’s also very likely that some of these shutdowns are going to take place in factories responsible for parts that are integral to your manufacturing process. 

When these hits occur, you may need to take up making those parts yourself, lest you suffer a shutdown of your own. Fortunately, alternative means of manufacturing that are digitally native can help. 

Additive Manufacturing

Additive manufacturing, or 3D printing, can be quite effective in moving more essential facets of your supply chain into your facility. This is because additive manufacturing can be used to produce a number of different, intricate parts made out of plastic, resin, or even steel. And, because these part blueprints can be housed within an industrial tablet or computer that’s hooked up to a 3D printer, they can be printed automatically in-house, removing the need to rely on an external facility that has suffered a shutdown or hindered production. 

CNC Machining

When you need parts that are a little more specialized and heavy-duty, CNC Machining can be a strong alternative to additive manufacturing. 

Like 3D printing, CNC machining is a manufacturing process that uses pre-programmed software to dictate how a machine moves to produce a part. Both also use digital blueprints loaded onto a computer to create these parts. CNC, however, is a subtractive manufacturing process, meaning it starts with raw materials that it whittles away into intricate shapes and functionalities. This is opposed to 3D printing that starts from nothing and adds material to create a part.

CNC machining, therefore, is capable of creating much more intricate parts with precise dimensions, making it fit for applications in the auto and airplane manufacturing sectors.    

A Manufacturing Recession Calls for Complete Operational Reworks

When your plant or factory is optimized to work for a specific type of economy, it only makes sense that your operations adapt when that economy takes a hit. Manufacturing recessions will come and go and this is by far the last one we will ever experience. Those that learn to roll with the punches and optimize where they can will take the lightest hit once all is said and done. For more information on the tech you need to streamline your manufacturing processes, contact an expert from Cybernet today.