How does COVID-19 affect industrial production in Mexico?
The global changes in industrial production brought by the COVID-19 pandemic have serious operational, social and financial implications. This is forcing companies to simultaneously adapt their response and risk management plans, personnel safety practices, manufacturing operations and new ways of working.
Until now, industry leaders have focused on the immediate challenges necessary to maintain maximum business stability. For example, 23 million people are teleworking and, e-commerce grew by 81% in Mexico during 2020. On the other hand, rapid response teams have been formed to better understand their changing production needs, worker support issues, and supply chain ecosystem constraints.
At the same time, they need to focus on creating a business that is as future-oriented as possible, using new technology solutions to do so. Such a strategy will not only improve business resilience, protect production and provide the necessary support for workers during the downturn but will also help maintain a competitive edge, which will accelerate business growth when the economy begins to recover.
5 Actions to increase the agility you need now and in the future
Understanding the impact of demand disruptions
Demand priorities in product portfolios have changed dramatically. Here we see three main options for developing the situation with production asset participation:
- Manufacturers are shifting to take advantage of opportunities to create fast-growing businesses.
- Manufacturers are retooling existing lines to create new products to meet community needs.
- Manufacturers are reducing volumes or phasing out production in areas where there is a sharp decline in demand or supply chains have been severely disrupted.
In all three scenarios, manufacturers must quickly identify the most critical products to achieve stability and growth, strengthen their supply chains, and align the knowledge and skills needed to meet near-term and future demand.
Solving security and personnel flexibility issues
The COVID-19 pandemic has created major problems with personnel availability and protection, as well as labor productivity. Due to illness or other reasons, the number of absentees may increase and, due to the introduction of quarantine, support for remote workplaces may be required.
All of these factors are likely to lead to a decrease in productivity, as workplaces will need to implement new work processes that can ensure hygiene and social distancing of staff, as well as review the skills needed to expand employee roles or launch other new product lines and processes.
Ensuring the vitality of the productive ecosystem
Ecosystem relationships tend to suffer most during major market shocks. With the increasingly active shift toward ecosystem-based global supply chains, this is becoming a major challenge for manufacturers. They need to uncover the implications of the COVID-19 pandemic and the contract terms for each of the key ecosystem stakeholders, including material suppliers, contractors, co-producers and logistics providers.
Balancing the assets of physical production networks
Rapidly changing demand and product mix, coupled with labor and ecosystem issues, can significantly disrupt the operation of existing physical production networks in industrial plants. Organizations must make quick and informed decisions about the investments and actions needed to reallocate underutilized assets or to provide more flexibility in current assets in the short term. At the same time, their decisions must not hinder their future growth.
Leveraging digital opportunities
Digitization is critical to enable rapid change and increase sustainability in industrial production. This includes a variety of functions, including demand and portfolio analysis, supply and demand scenario analysis, job definition and scheduling, telework opportunities, ecosystem collaboration, and network analysis.
Companies using Big Data, Data-Driven, IoT, AI, will be able to respond faster, more accurately and more successfully to the impact of COVID-19. We are already seeing an unprecedented rate of adoption of remote working methods both in the enterprise and in the production environment; now is the time to further develop these ideas within the existing digitization plan.
Coronavirus and industrial production: a look into the future
The COVID-19 pandemic will also have long-term implications for the future of industrial production. This suggests that business urgently needs to become more responsible, agile, responsive and resilient in terms of manufacturing operations.
All manufacturers need to be careful with their end-to-end operations to assess how safely and quickly they can respond to future shocks. This means taking a close look at existing operating models: where, how, and why work gets done, challenging legacy ways of working and providing greater transparency and use of smart technology across all key aspects of the workforce, ecosystem partners, and the physical production network. Most companies still have enormous work to do to become digital or “digital-agile”, resilient and flexible organizations that can adapt quickly in a crisis situation.
Today’s challenge is an opportunity to learn, develop and change production for the future. And you should start this process right now.
If your company is looking for a warehouse or industrial building to adapt to the new reality, VYNMSA is the best option. We like to work closely with our clients, always adapting to their requirements and exceeding their expectations.
At VYNMSA we would like to help your company establish itself in Mexico. We have almost 30 years of experience and have delivered more than 450 projects to satisfied international clients. We are one of the leading industrial real estate developers in Mexico. We have the know-how to develop customized or Build To Suit projects. We also work actively with industrial brokers as business partners; we have around 20 inventory buildings ready for immediate occupancy, totaling 2 million square feet of space in the Northeast and the Bajío region.
Contact us and find out why VYNMSA is your best industrial real estate business partner in Mexico.