Impact of COVID-19 on the Manufacturing Industries
Published by : Industrial Automation
The outburst of COVID-19 is the major incident that happened in 2020, till yet. It already impacted 12.5 million in the world and still going strong, even as the world struggles to come up with its vaccine. The COVID-19 surge as a pandemic and affected millions of lives, along with the business operations in the global market.
Impact on the Component Manufacturing Industry
The component manufacturing sector is heavily hit by the impact of the virus, as it shut the production and factory operations in the automotive, electronics, aerospace, and others. It all originated from China, which is the hub for the supply of raw materials to the global companies in the global market, then it impacted the whole supply chain for the manufacturing companies in order to follow lockdown, social distancing, and prevent coronavirus spread measures suggested by the local government.
The lockdown was aimed to bring component manufacturing plants to a halt and derail the entire supply chain of the company. It is estimated that over 75% of the total businesses in the world are direct or indirect contact for the procurement of raw materials from China companies and almost 950 Fortune 1000 companies have tier 2 suppliers in China. Moreover, as per the United Nations Conference on Trade and Development (UNCTAD) prediction that the global foreign direct investment (FDI) will reduce by 5% to 15% owing to fall in the operations of manufacturing companies in terms of factory shutdown.
Impact on the Pharma Manufacturing Industry
COVID-19 created a disrupted effect in the pharma industry and further leads an incredible pressure on the companies to maintain a positive supply of medical products, creating a problem of shortage. The countries are dependent on the partnered countries for the raw materials in the pharma industry are heavily impacted by this spread of the virus, as it created a halt in the supply of all products between two countries. For instance, the US are greatly depending on the Asian companies for the raw materials related to pharmaceutical and medical devices and now they are facing high risks in supply shortages.
Currently, China is the leading producer and supplier of the active pharmaceutical ingredients (API) in the global market. Around 80% of Indian APIs are arrival from the Chinese companies, while the US’s 13% of the medical supplies are producing by the Chinese.
Thus, these statistics stated that the pharma manufacturing companies in these countries have suffered heavily after the outbreak of the pandemic. In the industry, the virus enforced many pharma manufacturing to extends its production capabilities to produce masks, ventilators, sanitizers, and other pharma cleaning products to minimize the impact of the pandemic to some extent.
Impact on the Food & Beverage Industry
Considering the current market conditions, the virus is rapidly impacting the consumption and supply chain for the companies in the market. There is a wide increase in the alcohol-based cleaning sanitizers and important daily consuming food products, which makes consumers panicking in the market and this results in grocery shelves to face scarcity. This disturbs the supply chain and suddenly created the demand for a high amount of raw materials and ingredients to the F&B companies, this hampered the production and forcing them to shut operations due to limited manpower availability. It is expected that the F&B companies suffered a revenue loss of around 22% worldwide, as followed by the French trade group ANIA study.
Impact on the Personal Care & Cosmetics Manufacturing Industry
The industry primarily comprises products related to skin care, fragrances & perfumes, haircare, and others. These all products witness a wide downfall in the demand and consumption owing to halt in operation across the online and offline distribution channels in the global market.
Considering many countries' operations in the pandemic situation, there is still a lockdown and pause in the supply of any kind of non-essential products. This decrease in demand from the end-users and limited manpower engagement in the production areas are resulted in the shutting production operation of the companies and stops trade of personal care & cosmetics products in the market. The industry mainly affected owing to the halting distribution of non-essential products of e-commerce companies such as Amazon, Alibaba, and Flipkart. Moreover, hypermarket and supermarket companies also halted the distribution of non-essential products in some countries.
Considering the impact of COVID-19 to the manufacturing industries are expected to result in reduced demand and disrupted supply chain flow. In addition, the virus is also creating opportunities for the companies to re-innovate and change with time to remain relevant. The operation can be redesign and restarted with key development in the operation sites –
• Remeasures worker safety with the mandatory use of hygiene & sanitization products at worksites
• Reintroduce souring supplies
• Rationalize their product ranges
• Reevaluate the supply chain issues and make it agile and strong
• Reintroduce the emergency response plans
• Bring optimization in the distribution channel, i.e. online and offline channels
• Change in pricing and promotion strategies through reviewing customer behavior
According to many industry experts, the incorporation of software and automated technologies for the factory operations and workers safety is expected to enhance the production capacities of the companies, along with the product quality with the limited spread of COVID-19 in the manufacturing facilities in the post-pandemic conditions to gain employee and consumer trust.