Future generations will divide the 20th century into pre-Covid and post-Covid
Published on : Friday 07-01-2022
G Ganapathiraman, Vice President & General Manager, ARC Advisory Group, India
How did the industry fare in 2021 after the initial impact of Covid caused widespread disruption in 2020?
2021 was a year of adapting and adjusting to the new normal. It has been a year of transition and there is no going back to the pre-Covid era. Future generations will divide the 20th century into pre-Covid and post-Covid. We saw acceleration in the use of technology, digitalisation, and new business structures. The crisis has made it imperative for companies to reconfigure and transform their operations to enhance productivity. The buzzword is resilience and it has been prioritised in the supply chain and throughout production operations.
Many companies moved faster than previously planned on building supply chain redundancies, improving data security, and increasing the use of advanced technologies in operations. They also supported ‘connected’ remote and frontline workers far earlier than they anticipated, and this trend will continue.
What were the changes and new technologies businesses widely adopted in 2021?
As we return to a new normal, industrial innovation is accelerating. A renewed focus on sustainability, the circular economy, and climate change is sparking innovation and powering transformational and technological change throughout the industrial sector. Dominating the scene are technologies like cloud, machine learning, edge computing, IoT, cybersecurity technology, additive manufacturing, augmented reality, and more are enabling new business processes and obscuring traditional functional boundaries. OT, IT, and ET teams are growing their skills and capabilities and transforming real-time operations. Governance and compliance, workforce and skills, customer-centricity, competitive excellence, and change management are all part of the new business scenario.
While Covid triggered the supply chain disruption, it now continues in various forms and for different reasons. What could be the solution?
It’s very clear that Covid has dramatically altered business dynamics and things are never going to be the same again. It is called a black swan event, i.e., a ‘rare, unpredictable disruption that causes lasting damage’. Today’s business landscape is complex and capricious; global trade laws are changing on a continuous basis and companies have to swiftly comply with these new regulations. While the pandemic has encouraged collaboration and altered the way work is done, it has also made countries more cautious and careful when it comes to trading. Across countries, the global trade compliance rules and regulations have become stricter; non-compliance has a lot of repercussions, such as huge penalties and loss of revenue and reputation.
There is ‘no one-size fits all’ solution for this problem, but to a large extent deploying global trade compliance (GTC) solutions can help thrive in an ever-changing regulatory landscape, minimise risk, and optimise operational costs. GTC solutions automate the discovery, creation, retention, analysis, and communication of information about international supply chains that are of importance to customs and other government authorities responsible for regulation and taxation of cross-border trade. Besides deploying GTC solutions to ensure supply chain efficiency, companies must have centralised information and decision making, be flexible, and have alternative plans to manage customer demand.
With new strains of the virus appearing periodically, is the WFH culture here to stay and become a permanent feature?
The work-from-home (WFH) concept came into force with the onset of Covid in March 2020 and radically changed workplace dynamics. The WFH culture is likely to continue into the foreseeable future. Although many people are returning to the workplace as economies reopen, executives have indicated in surveys that hybrid models – where some employees go to the office and others continue working from home – are going to be the norm.
However, the potential for WFH depends on the mix of activities undertaken in each occupation and on their physical, spatial, and interpersonal context. This depends on whether an employee needs to be physically present on-site to do a task, interact with others, or use location-specific machinery or equipment.
Several top companies including Nestle, Coca-Cola, Dabur, Godrej Consumer, etc., have allowed their employees to choose whether to return to offices or continue working from home for the next couple of months. With new strains of the virus raising its ugly head, companies are unwilling to risk employee health and safety.
How is the outlook for 2022, given that a lot of lessons have been learned during the last two years?
Uncertainty over the global economic outlook is at its peak now. Most believed that the worst was over – and then came the Omicron – so we know that 2022 will be a continuation of what we have already gone through and we cannot let our defences down. We have to rebalance our expectations with the reality of the situation.
The outlook for 2022 is unclear and cloudy at present. Inflation and the resurgent pandemic pose downside risks to growth and raise the prospect of earlier interest rate rises. The pandemic is likely to remain a headwind in the first half of 2022, impacting industries globally. Assuming that the Omicron variant is milder than the earlier strains, supply chain bottlenecks will gradually ease. Market trends that will continue shaping business operations:
1. Digital innovation
2. Resilient and sustainable supply chains
3. Agile organisations, and
4. Changing work and business models.
Climate change and sustainability are matters of serious concern. How sustainable are present business practices?
Issues regarding climate change and sustainability are of serious concern globally. Climate change refers to long-term shifts in temperatures and weather patterns. These shifts may be natural, but since the 1800s, human activities have been the main driver of climate change, primarily due to the burning of fossil fuels that produce heat-trapping gases. Sustainability has emerged as the linchpin across industries and is defined as ‘meeting the needs of the present without compromising the ability of future generations to meet theirs’. It has three main pillars: economic, environmental, and social. These three pillars are informally referred to as people, planet, and profits.
Globally, we are on an unsustainable path, and there are issues across the board. But there is hope, and an increased collective intent to act by all stakeholders. Today, many companies are shifting to sustainable and green operations. It is not just about mitigating risk; it is about delivering value. ARC’s survey on the topic revealed that 90 per cent of global energy and chemical companies had sustainability initiatives in place, and over three quarters of them believe digitalisation was an important factor in achieving their goals.
What are the technology trends most likely to dominate in 2022? (e.g., 5G, Cloud/Edge Computing, AI/ML, AR/VR/MR, Robotics, Predictive AI)?
The automation industry appears to be evolving at a faster rate right now than at any time in its history. Commercial technologies continue to infiltrate the industrial automation space, especially wireless and mobility solutions. From a manufacturing industry standpoint, mobility also includes autonomous mobile robots (AMR). Now, with the industrial space becoming much more complex, dynamic, and infused with Big Data, manufacturers are turning to advanced analytics, artificial intelligence, and machine learning to support predictive and prescriptive analytics solutions. One key part of this new growing infrastructure are edge devices or intelligent gateways. These collect, aggregate, filter, and relay data close to industrial processes or production assets. Today’s edge devices target device-to-cloud integration to further industrial internet-based strategies designed to improve business performance. The trend of digital twins for performance and operations will gain traction this year as it enables companies to perform simulation, testing, and optimisation in a virtual environment before committing actual resources.
In my opinion, 2022 will be all about Industrial 5G. 5G holds the promise of freeing connectivity from the limitations of wired infrastructure, enabling disruptive new applications. 5G’s low latency, high data rates, and massive capacity will accelerate adoption of Industrial IoT edge capabilities in areas, such as AI/ML, AR/VR, edge computing, and mobility to enable truly autonomous robotics, logistics, and other manufacturing operations.
(The views expressed in interviews are personal, not necessarily of the organisations represented)
G Ganapathiraman is responsible for managing ARC Advisory Group's operations in India. Raman's range of responsibilities at ARC includes supporting the global offices in preparation of market research reports (worldwide, regional, and India specific), organising ARC Asia forums, and sales/technical promotion in the areas of automation and enterprise. He handles and nurtures analyst relationships with domestic and global clients. Additionally, he collaborates with industry organisations, such as NASSCOM, CII, ISA, and others, as well as with the media. Prior to joining ARC he superannuated as Executive Director of Electronics Division (EDN) of BHEL.