In late March, the US Executive Branch invoked the Defense Production Act, a wartime act, ordering General Motors to produce ventilators in response to the growing need brought about by the COVID-19 pandemic. GM isn’t alone though, as many other companies, both in the US and around the world, have shifted at least partially to the emergency production of ventilators and other products that spiked in demand due to the pandemic.
Table of Contents
- Repurposed production
- Not an easy task
- Strategy guide
- Looking at the long road ahead
It’s a lot more than just toilet paper — the World Health Organization has compiled a list of several items that are now deemed “critical” due to COVID-19. Many companies have risen to the challenge, both as a humanitarian response to the crisis, as well as a means to continue production and maintain at least some semblance of revenue.
Distilleries are a good example, with many repurposing ethanol, which they already use in the distilling process, to make hand sanitizers. Tesla and Dyson have also jumped on the ventilator-production train, while many others, like Apple and Hanes, have committed to producing PPE (personal protective equipment) such as face shields and face masks. Even machine shops and military accessories suppliers have started to do their own thing, producing face masks and something they call a “Covid Key”.
Not an easy task
Pivoting and repurposing production sounds simple on paper, but the challenges companies face are immense. What’s more, there have been rejections for a variety of reasons, such as failing to meet medical standards, or being insufficient to meet the needs of COVID-19 patients.
Pre-crisis, companies that wanted to pivot production usually went through a complex process before they could successfully launch a new product; add the current circumstances in and you have an entirely different monster altogether. Here are some of the hurdles faced by firms that are pivoting production:
Lack of knowledge of the new industry
Before entering a new industry, companies typically conduct A LOT of research, such as determining business needs and demand for the product, assessment of current players / competition, the requirements and permits needed (especially in healthcare), and so on. But the demand drummed up by the coronavirus crisis has many companies essentially “winging it” and hoping for the best.
Production feasibility and product development
Without sufficient research, it’s difficult for a brand to determine how much of a new product to make — especially given the general uncertainty of when the crisis will end, and questions like, “Is there going to be a second wave?” or “How many more people will need these products?” And since the need right now for critical items is immediate, companies are understandably pressured to produce results as fast as possible.
Even for players who already are in a critical industry, ramping up production isn’t as easy as simply making more — given social distancing guidelines that affect manpower and operating hours, the difficulty in sourcing raw materials, the availability and capacity of current machinery and equipment, and other concerns. Another complicating factor is cost, which is made even more essential because of the economic downturn caused by the crisis.
Given the speed at which these new products are needed, another challenge is for companies to maintain the quality of the products, as well as ensure that these meet the requirements of the industries that need them. Mass-producing these items, only to have them rejected later waste both precious time and resources.
A strategy guide
With those challenges in mind, companies should at least take the time to determine what strategy they should take — both short-term and long-term — if they do decide to repurpose production.
Set definite and realistic goals based on as much data as possible
Don’t bite off more than you can chew. Having definite goals will help you assess the current funds, resources, and materials available to you, as well as your current production capacity. Utilize tools such as the WHO’s “surge calculator” for essential supplies. A successful run can be replicated or expanded, while a failed one serves no one.
Coordinate with other firms
A study has shown that more than 2,700 manufacturing facilities belonging to major US companies can be repurposed to meet the need for critical items in the US. Especially for small and medium-sized companies, it might be better off for everyone if they coordinated with each other, creating a collective effort to make products together instead of trying to do everything (usually from scratch) by themselves. With various companies sticking closer to what they know how to or can make, an assembly line of sorts can be established which would arguably be a more efficient way to go about pivoting production.
A good example of this is what the National Additive Manufacturing Innovation Institute in the US is doing: it created a comprehensive online database where institutions that need certain equipment can be put in touch with a manufacturer, where manufacturers can submit their production capabilities, and where designs for a number of critical supplies and equipment can be accessed. In addition, regulatory bodies and agencies can instead coordinate with institutions like these for testing, approval, permits, and whatnot, instead of these companies or manufacturers having to undergo the regular bureaucratic process by themselves one by one.
Looking at the long road ahead
Until a vaccine is found, the future for manufacturers (and the rest of the world, really) remains uncertain. For many though, these efforts not only immensely help the response to the crisis and earn goodwill with customers, but also provide a way for them to keep their lights on. It’s important for companies to prepare for the resumption of normalcy (or whatever semblance of that we get) in the future.
Staying on top of news and trends and adapting will not only help firms avoid unnecessary competition as well as production and resource waste, but also help them transition into the “new normal” and support their regular customer base.
LUCI, our proprietary AI, was able to detect changes in the market due to the outbreak of COVID-19 as early as February 7th. What protective measures could your company have taken against it with this information on hand, right when you need it? The speed of change is stuck on fastforward, so don’t wait for change to happen — lead it with Worthix.
Junior Marketing Analyst with a passion for Market and Workplace Psychology, Gaming, and Strategic Analysis.