Join our Advanced Manufacturing and Mobility leaders as we explore the critical business issues impacting our industry today. We also discuss reshaping the future, including the effects the COVID-19 crisis is having on our industries, and offer practical insights on how to move forward into the new normal.
How mobility companies seek ways to stay relevant amid disruption
In this episode, Akshi Goel, EY Global Advanced Manufacturing & Mobility Analyst, shares her insights about the key themes discussed by mobility sector leaders during the second quarter earnings calls.
The COVID-19 pandemic quickly became a global threat in the first quarter of 2020 and mobility companies found themselves facing complex decisions, as several production sites worldwide closed down and supply chains were disrupted. There were no surprises in the second quarter as well. Mobility companies are in a dire situation as the crisis has intensified supply chain issues in an already complex ecosystem.
Operating costs: targets for cost management programs were increased by many companies. The crisis has led to widespread cost-restructuring programs and austerity measures, including layoffs and furloughs. Financial initiatives: mobility companies are working on their capital management strategies to secure financial stability. Also, discretionary spending and capital expenditures are delayed or suspended, and companies are actively using credit and debt financing strategies to achieve a strong liquidity position. Product and service innovation: original equipment manufacturers (OEMs) are struggling to support their internal combustion engine legacy businesses, and simultaneously investing in the transition to electric vehicles.
How manufacturers are exploring every avenue to stay resilient
In this episode, Julia Rosenthal, EY Global Analyst for Advanced Manufacturing, shares her insights about the key themes discussed by leaders during the second quarter public earnings calls.
As COVID-19 became a global threat in the first quarter of 2020, manufacturers had to make some very complex decisions. For advanced manufacturing companies, the second quarter proved to be just as difficult as the first one. This was the quarter in which some of the most widespread lockdown activities were taking place around the world. Companies reduced costs and shifted their focus to long-term growth, as COVID-19 caused many of their customers to shut down operations.
On financial initiatives — some manufacturers said that they would remain committed to their R&D investments while others pulled back as part of cost-reduction strategies. Share buyback and dividend activities have picked up. Operating costs — many companies raised the targets in their cost management programs. Leaders talked about restructuring programs, more offshoring of operations and new automation efforts. Culture and talent — overall, there has been a greater focus on enterprise-level cost savings from reduced headcount.
How manufacturers can future-proof their supply chains
Over the years, companies have committed to cost-effective, just-in-time supply chains. This lean and linear approach has been a successful strategy for limiting inventory and minimizing working capital. But as the erratic demand and unprecedented disruption from the COVID-19 pandemic take their toll, the lack of resiliency of modern supply chains is coming into greater focus. Granted, the current pandemic is one of the more extreme examples of disruption in recent history, it certainly isn’t the first and is unlikely to be the last. How can manufacturers reinvent supply chains that can flex under pressure without a total loss of cost-effectiveness? Further, how can they gain greater visibility to better anticipate and plan for the next disruptive event?
Most traditional and modern supply chains do not have the capability to be very resilient or flex with a major disruption due to their linear nature. To build supply chain resiliency, manufactures should think through all the scenarios that can happen, review business continuity plans, look at just-in-time models, perform stress tests, and conduct an annual risk mitigation plan and review. Digital process mining and digital twins are powerful technology tools that can visualize the effects of disruptive events such as the COVID-19 pandemic, and therefore help companies come up with contingency plans and achieve business continuity.
How transportation will be revolutionized by data analytics
In this episode of the Advanced Manufacturing and Mobility Business Minute, Kevin Custis, our Global Transportation Industry Leader, shares his insights on the critical issues the transportation sector is facing as we emerge from the COVID-19 pandemic.
During the podcast, Kevin discusses:
How is the COVID-19 crisis impacting the transportation sector; is it different from other crises? What are some of the important trends in transportation that are transforming the marketplace? What are the demand trends that will impact the transportation sector? How important is the adoption of technology in transportation post-COVID-19? Will hiring practices in transportation match the new normal? Given the ongoing transformation, how important are collaboration and partnerships now in transportation? As companies are looking to build up their supply chain resiliency, how can the transportation sector support their clients in this effort? Key takeaways:
Consumer buying behavior has influenced supply and demand during the crisis. Disruptive technologies will play a large role as businesses review supply chains and asset utilization. Utilization of AI, data analytics, automation and blockchain will greatly impact transportation, potentially improving core metrics by 5 to 10 times.
How to build a resilient automotive supply chain to plan for the next crisis
In this episode of the Advanced Manufacturing and Mobility Business Minute, David Sanders, our Global Advanced Manufacturing & Mobility Advisory Leader, shares his insights on the critical issues automotive supply chains are facing as we emerge from the COVID-19 pandemic.
During the podcast, David discusses:
How is the COVID-19 crisis different from other crises we’ve faced, and why is a resilient supply chain so critical? Why do today’s supply chains seem so vulnerable during this pandemic? How can automotive companies prepare to make their supply chains resilient in the face of local, regional and global disruption? What are the steps that companies need to consider when designing and building a resilient supply chain? What is the most important thing companies should be doing now for their supply chains? What are your clients’ biggest challenges as they begin to restart their operations? Key takeaways:
Having visibility is key to optimizing supply chains both from an efficiency and agility standpoint during normal production. But it is critical given current events. COVID-19 has impacted both supply and demand, shocking both sides of the supply chain. Digital twins are a key supply chain planning strategy for economic unknowns. Stress tests and early warning systems are imperative for identifying potential risks and building a more resilient supply chain. Worker safety will be paramount as the automotive industry restarts operations.
How manufacturing can improve resilience through liquidity management
In this episode of the Advanced Manufacturing and Mobility Business Minute, David Gale, our Global Advanced Manufacturing Transactions leader, shares his insights on a critical concern for manufacturers during the COVID-19 pandemic – liquidity and cash management.
During the podcast, David covers the following liquidity topics:
Why is maintaining liquidity so critical for manufacturing companies during the COVID-19 crisis? What actions should companies be taking to protect their liquid assets? What effects can manufacturers expect as a result of the pandemic? What other considerations should be taken to address liquidity issues? What are some best practices in managing liquid assets you’ve seen during the crisis? Key takeaways:
It is critical for companies to understand and control their liquidity position. Companies should assess their financial resilience, evaluate the need for a cash office, limit their discretionary costs, pause non-essential spending, maintain uncommitted credit and build a cash buffer wherever possible. The longer it takes to “flatten the curve” of the COVID-19 pandemic, the more companies will be forced to shut down as they run out of capital. Communicating frequently with stakeholders and demonstrating transparency will establish trust during this uncertain time.