“Never waste a good crisis.”
WINSTON CHURCHILL
Questions for Prof. Dr. Torbjörn Netland, Head of Chair of Production and Operations Management (POM) at
ETH Zurich
1. Professor Netland, in your blog you state, that “we need better operations.” How can manufacturing and the services sector improve operations despite COVID-19 restrictions that hamper the movement of people and goods?
To continue the production of goods and services during a pandemic first requires improvement capabilities. Suddenly, factories need to rethink operator movements and logistics and install testing regimes and PPE routines. Service companies – especially those with direct customer contact – must redefine the customer experience. And they do! We have witnessed great agility in many organizations to make their businesses run. The pandemic is an effective teacher. The question is if the companies are also taking the opportunity to improve for the longterm or accept that they will have to pay penalties for all their extra efforts.
Sometimes attributed to Winston Churchill, the proverb “never waste a good crisis” could motivate companies to use the opportunity to innovate smarter solutions for how they run their business. Freed-up resources and time should be used to prepare for post-COVID operations.
This can be a good time to accelerate training and implementation of digitalization and operational excellence programs. But it is obviously easier to invest in such initiatives when the company is convinced that there is light in the end of the tunnel – or better yet, can already see it!
A special challenge during the pandemic is how to coordinate best practice sharing and benchmark visits when site access is heavily restricted. A few companies that are experiencing this challenge have approached me, wondering how to coordinate and coach facilities from home. I think virtual reality can be a promising technology. This is something we are currently working on with leading manufacturers. We are learning fast how to use digital technologies to overcome hurdles posed by the pandemic. To what extent physical site visits can be replaced by IT remains to be tested and seen, but I am much more positive towards it today than before Covid-19.
2. What will manufacturing’s “new normal” be after COVID-19? Will we see a revival of domestic production or maybe a decoupling of supply chains?
I believe the new normal will not be radically different from the old normal. There is a strong path-dependency in manufacturing and supply chains. It takes time to turn the ship. The two big unknowns are the progression of the pandemic and geo-politics. If the pandemic ends soon, we might experience a return to “normal” within a few months. If it continues for months and years, many companies will go bankrupt and people would need to find new ways to earn a living. Then we will see much more innovation of business models. In parallel, geo-politics with its trade wars, taxes, and tariffs affect manufacturing and service activities.
While some seem to dream about the great reshoring, I believe that is both erroneous and harmful. Of course, the pandemic has reminded us that some products are more critical for nations. While there will be political incentives to reshore manufacturing of such products, it will not be easy. Take medicines as an example. Most generic drugs are produced in India. It would be highly inefficient if all countries had factories for all types of drugs. It simply would not work. It is easy to blame globalization for supply chain shortages, but the fact is that we would not even have these products if it was not for global cooperation and trade!
3. Has the coronavirus crisis increased the acceptanceof robots and digitalization in manufacturing?
Yes and no. On the one hand, companies that digitized their supply chains were better off during the pandemic. Common IT structures, robust master data management, and track-and-trace capabilities enable these firms to respond faster to disruptions and manage remotely. The key to quick response was transparency. But, on the other hand, many investments in state-of-the-art technologies were useless when the pandemic hit. All the amazing repurposing initiatives to fight the coronavirus would be impossible without people. I often say that the human is the cheapest multi-purpose machinein the world.
Artificial intelligence didn’t play a big role in manufacturing during the pandemic. Robots that can chuck out thousands of parts are not paying off when market demand drops to a few hundreds. It may be tempting for organizations to invest in robots to reduce the dependency on people, but I would be careful with the lure of the “lights-out-factory.” Everyone has heard about it, but nobody has seen one. While manufacturing is unthinkable without technology, it needs people just as much.
Has one become more receptive to digitalization? Absolutely yes. This pandemic forces even grandparents online. I think we all realize the power of IT. We were able to sit isolated at home yet see large parts of society work almost uninterrupted. Have people become more receptive to automation? Hard to say. Top managers maybe, but shop floor workers no. I think smart managers first take care of their people, then their technology.
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