Industrials and manufacturing
How would you describe the impact of COVID-19 on your business?
Seventy-four percent of respondents in this industry were from North America or EMEA, and 16% were from LATAM. Overall, a high number of respondents said they were in the recovery (50%) and reshape (32%) phases. Eighty-four percent of respondents did not consider pandemic a key risk prior to COVID-19, and just 21% had a pandemic plan in place prior to this event. Nearly half (46%) of respondents said their business had been impacted by COVID-19 but had remained resilient. Ninety-one percent of respondents expect the impact to last between six months and two years. Forty-five percent of respondents stated that their supply chain faced demand issues due to COVID-19. Additionally, 24% of respondents faced supply challenges when sourcing materials. Sixty-three percent of respondents felt that their risk management response efforts were sufficient.
The manufacturing industry suffered more than most in dealing with the unpredictability of supply and demand throughout the pandemic. Disruptions in the availability of materials triggered production slowdowns and, in some cases, delays in releases. This underlines the continued focus of the industry on protecting people and assets. Leaders in manufacturing and industrial companies will learn from the pandemic and look to reshape in several areas. Supply chains will be reviewed, with many manufacturers looking to decouple their supply chains, in some cases reducing their dependence on China and other parts of Asia. Cost management will also be a priority, with permanent reconfiguration and design changes to factory floors, both to maintain the ongoing safety of employees and to drive efficiencies. Underpinning this will be continued adoption of smart manufacturing and automation, where capital expenditure budgets will allow, to maintain and grow revenue.
Proportion of organizations facing supply chain issues
In addition, rapid adoption of new products, such as electric vehicles, will create new skills requirements of workforces and help satisfy growing stakeholder demand for environmentally friendly products and processes. It is perhaps not surprising to see economic disruption and another health crisis top the list of future shocks for manufacturers, since the industry is one of the most exposed to volatility in markets. Respondents also ranked technological disruption, with its impact on cyber risk, in the top five future shocks. This could be partly due to recent high-profile cases in which operational ransomware threatened to close plants down. As the industry embraces automation, this risk is only likely to increase.
- Economic disruption
- Another health crisis/pandemic
- Geopolitical tension
- A major cyber event
- Technological disruption