Since the outbreak of COVID-19, Australian manufacturers responded with varying degrees of success. One common thread was the ability to meet customer demands through digital selling, writes David Bray.
There’s no doubt 2020 will be remembered as a year that challenged people and business. The coronavirus provoked change across every sector in one way or the other. During this time, we saw Australian companies respond to the outbreak in different ways, and it has become increasingly clear that some were better prepared to deal with those changes than others.
A common thread that runs through all businesses that responded best to the COVID-19 outbreak is the ability to meet customer demands through digital selling. Following widespread lockdowns of non-essential businesses, the easiest way for customers to buy from a brand was online.
What did these societal changes mean for the future of Australia’s manufacturing industry and what has the sector learned from the initial wave of the virus?
Manufacturing to lead the pandemic recovery?
Advanced manufacturing is one of Australia’s most pivotal sectors in the COVID-19 recovery – it already contributes $100bn a year to the national economy. In 2020, the Federal Government recognised this importance by announcing an investment of $1.5bn over four years in the Modern Manufacturing Strategy to allow Australian manufacturers to scale up, compete internationally and create more jobs.
Thankfully, Australia’s manufacturing sector was already an early adopter of 5G, artificial intelligence (AI) and machine learning (ML) technologies to connect, automate and streamline processes on the factory floor and across the supply chain. However, the willingness to digitalise and innovate has in many cases been limited to internal production processes rather than customer-facing and selling initiatives. An Ai Group study revealed 21% of Australian CEOs said competition from imports and online sources were the primary business constraints.
Businesses that have adapted well to the challenges of COVID-19 are those who have shifted their operations – especially those that are externally facing – towards digital environments. We now know it is essential for businesses to boast a strong digital offering, and this is a key learning for industries that lack investment in digital transformation projects.
There are also worrying trends around the industry’s inability to generate sufficient revenue when traditional revenue streams are compromised. This is problematic within the manufacturing industry, which is not as agile or flexible as other industry sectors.
Social distancing has made day-to-day operations very difficult – the idea of working from home is not an option when your job is interacting directly with expensive assets on the factory floor. With physical segregation, zoning and staggered shifts to contend with, productivity within manufacturing plants, distribution centres and warehouses was bound to suffer. There are, however, solutions.
Already adapting
Implementing a process whereby manufacturers utilise all available customer and competitor data to assess the new reality and adjust pricing to remain competitive and profitable, would be hugely beneficial in influencing the supply and demand balance. In a moment where data is sparse, the ability to collect and interpret every bit of information is critical.
We have seen examples of Australian manufactures that have integrated an agile approach to how they sell. Before the onset of COVID-19, world-leading manufacturer Saint Gobain processed approximately 10% of its orders online. Now, more than 80% of orders go through an online platform.
Like Saint Gobain, Australian manufacturers that invest in digital platforms to process market data quickly are in the best position to offer a personalised and profitable quote to customers. Having the capability to sell to customers through multiple channels has meant that businesses can adapt rapidly to changing scenarios, protect brand reputation and maintain healthy and profitable sales.
While 2020 was a tough time for manufacturers, the industry has a great opportunity to bounce back in 2021, provided companies continue to put a digital selling strategy in place with appropriate controls to benefit from online demand. The important next step for these companies is to embrace technology beyond just the factory floor so that they can benefit from their adaptable manufacturing teams’ work.
This is a rapidly changing market, and businesses need to listen to their customers and adapt accordingly.
David Bray is the Managing Director – Australia and New Zealand at PROS