Inside Google Cloud

COVID-19 reshapes manufacturing landscape, new Google Cloud findings show

After facing severe headwinds from COVID-19, ranging from decreased orders to negative impacts on operations, manufacturers around the world have started to revamp their operating models and supply chain strategies—and now feel more prepared to successfully navigate future pandemics, according to our new research released today. 

The key for manufacturers' ability to transform—despite the ongoing pandemic—is their embrace of digital enablers and disruptive technologies. In fact, more than two in five manufacturers have increased their use of data and analytics, digital productivity tools, and public cloud platforms, irrespective of their location in the world. 

“Manufacturers have always prepared for unpredictable events that could adversely impact operations,” said Bob Parker, Senior Vice President, Enterprise Applications, Data Intelligence, Services, and Industry Research for IDC. “But what makes COVID-19 so unique is its sustained nature that touches the supply chain, irrespective of geographical location, in a way we haven’t seen in our lifetime. As a result, we’re seeing an urgency from manufacturers to quickly put the right technological levers in place, sooner rather than later. While there may have only been initial conversations about digital transformation in the past, we’re now seeing a rapid acceleration of critical tools and technologies being adopted within the industry.”

Below are five noteworthy takeaways we’ve identified within our findings: 

1. Not surprisingly, as with other industries, the pandemic has had a devastating effect on manufacturers overall. Nearly all of manufacturers (95%) believe their manufacturing or supply chain operations have been negatively impacted by the pandemic. The top three adverse impacts include lost productivity (46%), lower sales (44%), and increased lead times, possibly due to supply chain disruptions (39%). About a third of manufacturers have also experienced downward pressure on overall customer demand (35%), labor shortages (34%), and/or the inability to maintain a safe working environment (33%).

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2. To overcome COVID-19-related challenges, manufacturers were forced to pivot their operating models and supply chain strategies. More than three-fourths of surveyed manufacturers (77%) said COVID-19 caused their companies to re-evaluate their operating model strategies. The most common reasons include an inability to collaborate effectively with value chain partners (41%), the inability to collaborate effectively with employees (40%), and a lack of the right technology to operate without a large number of on-site workers (39%).

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3. Technology played the most critical role in maneuvering through the pandemic, particularly “disruptive” AI, robotics, and more. More than three-fourths of surveyed manufacturers (76%) revealed that the pandemic has caused their companies to increase the use of digital enablers and disruptive technologies such as: cloud, artificial intelligence (AI), data analytics, robotics, 3D printing/additive manufacturing, Internet of Things, and augmented or virtual reality. More specifically, the top three digital enablers/disruptive technologies that respondents are further utilizing are data and analytics (46%), digital productivity tools (43%), and public cloud platforms (42%).

Caroline Gorski, Group Director, R² Data Labs, Rolls-Royce/Co-Founder and Former Chair, Emergent Alliance shared: “Digital technology has played a huge role in enabling the continuity of substantial parts of our business and as we pursue our ambitions of pioneering sustainable power, we need people in factories making products, alongside technologies that improve efficiency, accuracy and productivity.”

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4. Interestingly, despite many manufacturers not being prepared for COVID-19, most now feel prepared to successfully navigate future pandemics. As mentioned earlier, nearly (95%) believe their manufacturing or supply chain operations have been negatively impacted by the pandemic. That said, 82% of those surveyed now feel prepared to deal with another COVID-19-like event in the future. This sentiment could be related to how manufacturers successfully ventured into new verticals, such as providing ventilators and PPE during shortages and resuming investments in new digital factory plans.

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5. Finally, the pandemic—and its aftermath on the manufacturing industry—has differed greatly by country.
  1. In Japan, approximately half of manufacturers who cited a negative impact (51%) say that the pandemic has led to lower sales, compared to 44% globally. 
  2. In Korea, more than two in five manufacturers who cited a negative impact (43%) said that the pandemic hindered their ability to maintain a safe working environment, compared to 33% globally. 
  3. In France, nearly half of manufacturers (48%) felt equipped with the right technological tools to maintain business continuity in the first 1-3 months of the pandemic, compared to 37% globally.
  4. In the UK, more than two in five manufacturers (43%) said that dependency on legacy technology has created more risk for their respective business operations over the next year, compared to 30% globally. 
  5. In Italy, more than a third of manufacturers (35%) felt that their IT systems lacked necessary redundancies, which undermined their overall operational resiliency, compared to slightly less than a quarter of overall surveyed manufacturers (23%). 
  6. In Germany, for 86% of manufacturers, COVID-19 has caused an increased use of digital enablers and disruptive technologies, compared to 76% globally. 
  7. In the United States, 64%of manufacturers have increased their use of data and analytics, compared to 46% globally.
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To learn more about these findings and more, download our full report here and our infographic here.


Research Methodology
The survey was conducted online by The Harris Poll on behalf of Google Cloud, from October 15 – November 4, 2020, among 1,154 senior manufacturing executives in France (n=150), Germany (n=200), Italy (n=154), Japan (n=150), South Korea (n=150), the UK (n=150), and the U.S. (n=200) who are employed full-time at a company with more than 500 employees, and who work in the manufacturing industry with a title of director level or higher. The data in each country were weighted by number of employees to bring them into line with actual company size proportions in the population. A global post-weight was applied to ensure equal weight of each country in the global total.