In addition to dealing with the significant societal changes coming in the next few months, industrial companies may want to consider strategies for addressing some of the persistent issues affecting the sector to avoid the next crisis. For example, they may want to minimize supply-chain risks by increasing local production or dividing production among more sites. Other imperatives include sustainability, workforce flexibility, and adaptability to accommodate changing tariffs. Above all, companies need early-warning systems to detect risks such as the coronavirus and get a head start on preparation.
We see two notable examples of reform emerging in the industrial sector. First, the spread of COVID-19 has already led to greater workforce flexibility, with teams adapting to remote or virtual ways of working. Additionally, companies have added flexible work hours, so that workers can care for children and elder family members during the crisis. In the next normal, we expect to see enterprise-wide flexible employment contracts at scale and more opportunities for remote working, which will allow better leverage of the global talent pool.
In another shift, industrials are likely to make fundamental changes to supply chains to improve their resilience. The current pandemic has revealed the global dependencies of most supply chains, and many industrial companies have shown a lack of contingency planning. With the high level of uncertainty arising from the pandemic, supply-chain leaders are placing more emphasis on forecasting efforts to help them determine global ramp-ups and improve reaction times. Going forward, we expect that local-to-local supply chains will provide more flexibility and that vendors will be more accommodating. We also expect that companies will increasingly adopt digital and analytical tools as they recognize the real value of predictive monitoring and supply/demand matching.
For more than 200 years, the advanced industries sector has underpinned economic and societal progress that has dramatically improved lives. Its technologies have had a flywheel effect, enabling other sectors of the economy and increasing productivity, and its future success will be critical to the world economy and the advance of technology. The new five-step approach can help automotive and industrial companies weather this pandemic and rebound quickly when it abates.
About the source(s)
Joe Dertouzos is a partner in McKinsey’s Detroit office; Heike Freund is a partner in the Munich office, where Andreas Tschiesner is a senior partner; Michael Mischkot is a