2020: Disrupted Manufacturing and Fragile Supply Chains

Date:

The year of 2020 was marred by a worldwide pandemic and will go down in the history books alongside 1918. 2020 separates itself from 1918 in a variety of ways. The most notable were the strong interconnections across industrial nations, innovations in manufacturing and supply chain technology, and the relative peace and prosperity of countries. These three themes were marked by shortages in consuming nations, adapting algorithms for supply and demand planning, worker safety issues, and using national defense capacity for domestic needs. The Exponential Industry year in review aggregates the best reporting of these themes within industry in hopes we can plan better for the uncertainty of the future.

Some takeaways:

  1. The pandemic likely originated within the Hubei province (Wuhan) of China, a key manufacturing area for textiles, automobiles, food processing, and other industrial goods. Supply shortages in the United States for many consumer and industrial products were forecasted as early as January and caught major media attention by February. US consumers started seeing shortages in many grocery stores and other retail outlets by March.
  2. Demand for many consumer products varied widely from prior years throwing demand planning algorithms into a tizzy. Manufacturers of personal protection equipment (PPE), household supplies, and packaged food struggled to ramp production in response to the surge in demand. Retailers struggled to keep product in stock and maintain positive customer experiences within both physical and digital channels.
  3. Manufacturers’ crisis communication plans had to adapt to managing an infectious-disease outbreak. Some industries such as automotive were able to overcome their unique workplace challenges better than others like the meat packaging industry.
  4. Governmental policies aided the industrial response to the crisis. In the US, the Defense Production Act added significant quantities of PPE and ventilators to the front lines. Also in the US, Operation Warp Speed created parallel paths for the development and manufacturing and distribution of vaccine candidates. The speed at which a vaccine was created is a record in part due to governmental funding on synthetic messenger RNA technology.

Other observations:

  • The COVID-19 epicenters seemed to initially spread along supply lines for the key industries within Wuhan. The spread to Lombardy (Milan), Italy could be attributed to the strong supply chains within the textile industry. Likewise, the spread to Southeastern Michigan (Detroit), USA could be attributed to the strong automotive chains both in Wuhan and Northern Italy. It would be interesting to compare the virus strains by metro region over time to validate this hypothesis.
  • Surely additional thoughts and policy on workforce safety and crisis management will continue into 2021 as new COVID-19 virus variants and characteristics are identified.

COVID-19 is having varied impact across categories, with most grocery-purchased categories seeing significant increases. Credit: McKinsey

As it Happened

From apple juice to antibiotics: Coronavirus epidemic could cause U.S. shortages

Date:

Author: Chris Morris

Topics: COVID-19

Organizations: Amazon, Foxconn, Hyundai, Nintendo, Under Armor

The toll of the ongoing coronavirus epidemic in human life is already devastating enough. But as quarantines continue in China, it looks like the global economic impact of the virus could be incredibly destructive too.

China is a manufacturing superpower, supplying both critical equipment and items of convenience. With some of the country’s citizens unable to report to work and exports curtailed, there are already shortages that have some companies worried.

Read more at Fortune (Paid)

COVID-19: What it means for industrial manufacturing

Date:

Topics: COVID-19

Organizations: National Association of Manufacturers, PwC

The COVID-19 pandemic is already ushering in a host of challenges to US industrial manufacturers, especially those that depend on workers whose jobs cannot be carried out remotely. About 80% of manufacturers expect that the pandemic will have a financial impact on their business, according to a recent survey of the National Association of Manufacturers (NAM). That is significantly higher than the 48% of cross-industry companies that are concerned about the same impact, which is based on CFO responses to a recent PwC survey.

Read more at PwC

'It'll never be fast enough': 5 questions for a ventilator manufacturer

Date:

Author: Maria Aspan

Topics: COVID-19

Organizations: Flex, Johnson & Johnson

Making more ventilators in time to help coronavirus victims is hard enough. But what about manufacturing the sophisticated equipment needed to clinically test them? Or hospital beds for the patients using them?

Read more at Fortune (Paid)

How GM and Ford switched out pickup trucks for breathing machines

Date:

Author: @sokane1

Topics: COVID-19

Vertical: Automotive

Organizations: Ford, General Motors, Ventec

In the most severe cases of COVID-19, a patient’s lungs become so inflamed and full of fluid that they no longer deliver enough oxygen to the bloodstream to keep that person alive. One way to counteract this is by using a ventilator, which helps the patient’s lungs operate while the rest of the body fights off the virus.

As the spread of the new coronavirus bloomed into a pandemic, it became clear that there may not be enough ventilators in the United States (and around the world) to treat the coming wave of patients with these severe symptoms.

Read more at The Verge

The algorithms big companies use to manage their supply chains don’t work during pandemics

Date:

Author: Nicole Wetsman

Topics: COVID-19, demand planning

Organizations: Alloy, Walmart

Even during a pandemic, Walmart’s supply chain managers have to make sure stores and warehouses are stocked with the things customers want and need. COVID-19, though, has thrown off the digital program that helps them predict how many diapers and garden hoses they need to keep on the shelves.

Normally, the system can reliably analyze things like inventory levels, historical purchasing trends, and discounts to recommend how much of a product to order. During the worldwide disruption caused by the COVID-19 pandemic, the program’s recommendations are changing more frequently. “It’s become more dynamic, and the frequency we’re looking at it has increased,” a Walmart supply chain manager, who asked not to be named because he didn’t have permission to speak to the media, told The Verge.

Read more at The Verge

Why Meatpacking Plants Have Become Covid-19 Hot Spots

Date:

Author: @MeganMolteni

Topics: COVID-19

Vertical: Food

In Texas, the fastest growing Covid-19 outbreak isn’t in Dallas or Houston or San Antonio, the state’s most densely packed metro areas. It’s hundreds of miles to the north, in the dusty, windswept flatlands of Moore County, population 20,000. According to data reported Monday by the state health department, 19 out of 1,000 residents in Moore County have so far tested positive for the novel coronavirus that causes Covid-19 — 10 times higher than the infection rates in the state’s largest cities.

So what’s in Moore County that’s making people so sick? One of the nation’s largest beef processing facilities, where huge armies of employees slice, shave, and clean up to 5,000 cattle carcasses a day. Last month, Texas health officials launched an investigation into a cluster of Covid-19 cases linked to the massive meatpacking plant, which is operated by JBS USA, a subsidiary of the largest meat processing company in the world, based in São Paulo, Brazil.

Read more at WIRED

The case of the missing toilet paper: How the coronavirus exposed U.S. supply chain flaws

Date:

Author: Jen Wieczner

Topics: COVID-19

Organizations: Amazon, Costco, Kimberly-Clark, Procter & Gamble, Walmart

Before executives at consumer-goods giant Kimberly-Clark rushed to shut their offices on Friday the 13th of March, they convened for one last emergency meeting. Commuting home that final time, Arist Mastorides, president of family care for North America, stopped at his local Walmart, on the edge of Lake Winnebago in Neenah, Wis., to see the emergency firsthand. Mastorides oversees toilet paper brands like Cottonelle and Scott, but that evening he could find none of his own products. “A long gondola shelf that’s completely empty of bathroom and facial tissue, I never in my life thought I would ever see that,” he says. “That’s a very unsettling thing.”

Read more at Fortune (Paid)

How Ford, GM, FCA, and Tesla are bringing back factory workers

Date:

Author: @sokane1

Topics: COVID-19

Vertical: Automotive

Organizations: Stellantis, Ford, General Motors, Tesla

In the last week, factory employees have returned to work across the United States to make cars for the country’s four main auto manufacturers: Ford, General Motors, Fiat Chrysler Automobiles, and Tesla. And each of those companies has published a plan showing how it will try to keep those workers from contracting or spreading COVID-19.

Those plans largely take the same shape. They’re presented in glossy PDF pamphlets, each starting with a letter to employees from the respective company’s highest-ranking executive overseeing workplace safety. Like any corporate document, they occasionally get bogged down with platitudes. But they all largely describe a lot of the same basic precautions, including supplying employees with Personal Protective Equipment (PPE) like masks or enforcing physical distancing of at least six feet.

Read more at The Verge

How Instacart fixed its A.I. and keeps up with the coronavirus pandemic

Date:

Author: @JonathanVanian

Topics: COVID-19, demand planning, machine learning

Organizations: Instacart

Like many companies, online grocery delivery service Instacart has spent the past few months overhauling its machine-learning models because the coronavirus pandemic has drastically changed how customers behave.

Starting in mid-March, Instacart’s all-important technology for predicting whether certain products would be available at specific stores became increasingly inaccurate. The accuracy of a metric used to evaluate how many items are found at a store dropped to 61% from 93%, tipping off the Instacart engineers that they needed to re-train their machine learning model that predicts an item’s availability at a store. After all, customers could get annoyed being told one thing—the item that they wanted was available—when in fact it wasn’t, resulting in products never being delivered. ‘A shock to the system’ is how Instacart’s machine learning director Sharath Rao described the problem to Fortune.

Read more at Fortune (Paid)

Industry 4.0: Reimagining manufacturing operations after COVID-19

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Authors: Mayank Agrawal, Karel Eloot, Matteo Mancini, Alpesh Patel

Topics: COVID-19

Organizations: McKinsey

Industry 4.0 technologies were already transforming manufacturers’ operations before the pandemic. Now adoption is diverging between technology haves and have-nots.

Read more at McKinsey

The story of mRNA: How a once-dismissed idea became a leading technology in the Covid vaccine race

Date:

Author: @damiangarde

Topics: COVID-19, mRNA

Vertical: Pharmaceutical

Organizations: BioNTech, Moderna, Pfizer

The liquid that many hope could help end the Covid-19 pandemic is stored in a nondescript metal tank in a manufacturing complex owned by Pfizer, one of the world’s biggest drug companies. There is nothing remarkable about the container, which could fit in a walk-in closet, except that its contents could end up in the world’s first authorized Covid-19 vaccine.

Pfizer, a 171-year-old Fortune 500 powerhouse, has made a billion-dollar bet on that dream. So has a brash, young rival just 23 miles away in Cambridge, Mass. Moderna, a 10-year-old biotech company with billions in market valuation but no approved products, is racing forward with a vaccine of its own. Its new sprawling drug-making facility nearby is hiring workers at a fast clip in the hopes of making history — and a lot of money.

Read more at StatNews

Politics, Science and the Remarkable Race for a Coronavirus Vaccine

Date:

Authors: Sharon LaFraniere, Katie Thomas, Noah Weiland, David Gelles, Sheryl Gay Stolberg, Denise Grady

Topics: COVID-19, mRNA

Organizations: BioNTech, Moderna, Pfizer

The furious race to develop a coronavirus vaccine played out against a presidential election, between a pharmaceutical giant and a biotech upstart, with the stakes as high as they could get.

Read more at New York Times (Paid)

Inside one of the new, quick-build factories making the Moderna vaccine

Date:

Author: Adele Peters

Topics: COVID-19

Vertical: Pharmaceutical

Organizations: Moderna

The race to produce as much of the new vaccine as possible goes through these factories, which were spun up much faster than usual by building the shells before the vaccine production process was finalized.

Read more at Fast Company