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2. March 2020
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Develop your business model, without costs
6. May 2020

After the crisis is before the crisis – how to increase the resilience of your company with digitalization!

Businessman on blurred background with broken crisis arrow 3D rendering

T he corona crisis is a deep cut and shows how vulnerable our economic system has become. I am therefore all the more convinced that the current crisis will accelerate digital change in many areas. Similar to the stock market, the expected recession will lead to economic challenges for many companies, but long-term trends and developments will not be affected.

In an initial white paper, futurologists assume four different scenarios for the period after the Corona crisis. The possible ideas range from total isolation of the individual nation states, a retreat into the private sphere or the possibility of a permanent crisis mode, to a “resilient society”. If we compare the scenarios with the megatrends, I firmly believe that the fourth scenario is the most likely.

In the description of this scenario it says: “The world learns and emerges from the crisis stronger. We adapt better to circumstances and are more flexible in dealing with change. The global economy continues to grow, but at a much slower pace, and in some places stagnation is already apparent. Companies in such environments need new business models and must become less dependent on growth.

This clearly shows that despite numerous short-term measures, companies must not lose sight of long-term developments! The acceleration of the digital change will lead to the fact that the chances for digital solutions as well as an optimization in the own process flow should be advanced quickly. All with the aim of making companies more resistant (= more resilient).

In my opinion, there are three concrete approaches for companies to achieve this:

(1) Their own processes should be made significantly more efficient and flexible thanks to digital tools.

(2) New technologies should be used to reduce dependence on third parties.

(3) Solutions in the form of products and services should be more strategically oriented towards future trends.

Digitisation is not only relevant for large companies, but is a great opportunity for small and medium-sized enterprises in particular to maintain their competitiveness. The biggest advantage of SMEs for the post-crisis period is their flexibility, which is particularly valuable for future value-added networks. Influenced by the megatrend of individualization, products will have to be flexibly manufactured in small or very small quantities in the future, and all this at costs that have so far only been possible in mass production. The flexibility of modern machines and plants and their communication with each other in real time according to Industry 4.0 standard opens up completely new opportunities in production.

The flexibility in medium-sized companies is now contrasted by a lack of process transparency and lack of software support. Furthermore, although existing products are being further developed, they are not sufficiently considered in completely new contexts and approaches to solutions. This attitude, which is usually firmly anchored in the company and the minds of the employees, leads to waste, i.e. minimization of potential profit. In the worst case, it can even threaten the company’s existence if, for example, a customer demands new standards in the control and documentation of processes that cannot simply be changed in production. So it is high time that even a small company makes a change.

make processes more efficient, then select suitable software

The future pictures in industry show highly automated production “Industry 4.0” in clean industrial halls, independently moving means of transport and workpieces which, thanks to digital twin, find their own way through production. When exactly this vision will become reality across the board is not yet foreseeable. What is certain is that the current situation, especially in small and medium-sized companies, is still far from this and is predominantly analogue.

There are many reasons for this, including a lack of investment in new technologies and a plan of what goals a company wants to achieve with digitalization. Often considerations in this direction fail because of the willingness of the employees to accept necessary changes. In many companies, calculations and processes have been run in for decades and are no longer questioned.

Disruptions in this process immediately reveal the weaknesses, components are sought, documentation is not available, information or even a commercial calculation of the process disruption is not available. This means there is a lot of wasted resources to manufacture and deliver the product still in the desired quality.

To reduce waste, it must be identified first of all. Process transparency plays a special role here. With the help of simple software, processes can be documented from the quotation to the order, production, quality control and invoicing. This not only shows where a component is currently located in the process, but also where there is room for improvement.

The software is only the tool, the underlying process is the decisive factor. After an ACTUAL analysis of processes in operation, a TARGET description can show the target state. The identified gaps can be closed by appropriate restructuring. It is important to involve the employees closely and to tackle the big problems in the implementation first, not to tackle everything at once. If suitable software is then selected on this basis, there is a realistic chance of sustainable changes.

A good example is the introduction of a production data acquisition terminal (PDA), in which all order and production-related data is recorded in production. This terminal not only helps to record and analyse data for the production manager, but also creates complete transparency for the employees. The introduction of such a terminal, at which the orders must be scanned after individual work steps, often fails at the site. If it is hung up in a remote corner, the distance from the workplace is so long that the recording is not carried out completely under time pressure or with very small quantities.

use of new technologies for greater independence and cost savings

In addition to process design, new technology is of enormous importance if companies want to act more flexibly in the future. This begins with the investment in modern machinery, which is not only geared to the production of a special workpiece. In addition, new machines and technology can help to increase overall flexibility as a supplier of products.

A good example of this is 3D printers, which are already capable of producing a wide variety of materials in very good quality. These are particularly suitable for use in the field of “rapid prototyping” or for small series production. Although it takes a long time to produce the individual component, the 3D printer is not bound by the limitations of conventional systems.

In the medium term, even a small company with some know-how is able to produce individualized and optimized components for its customers, which are manufactured individually on demand and all this at not much higher costs. In this way the companies create more independence from suppliers and their willingness to produce and deliver even smaller series quickly.

Another example that is particularly evident in the current crisis is the change in the office and working world. Since almost all companies in Germany have sent their employees to the home office, video conferences are the new standard. In the past, they used to be something for those with an affinity for technology, but now many employees have taken a liking to them. The digital tools are already so sophisticated that they work without any major problems. For companies, this not only saves on travel costs, but above all increases the productive time of their employees. At the same time, new office concepts will be able to manage with significantly fewer desks than employees, as home offices are accepted as an integral part of a modern working environment.

aligning strategies with the trends of tomorrow

The current economic crisis may well be shaping everyday business life, but after the trough the development will again move in the direction of mega and macro trends. In many areas, the attainment of the trends will tend to accelerate, as the above comments make clear.

It is all the more important for companies to know their customers with their needs of tomorrow in order to make the right decisions today. These trends can be concretized very concretely on the basis of innovations already coming into the market today. The companies should know their topics in detail and find ways to inform themselves regularly about current innovations and trends.

After all, the very next idea of an innovative start-up could put their industry under massive pressure. There have been enough examples of this in the past, from the mp3 file-sharing platform Napster, which is considered the mother of all streaming services and has allowed the CD to degenerate into a collector’s item. All the way to TESLA, which is driving a large established industry ahead in terms of electromobility and user experience.

Besides simply observing the market and competition, companies should also think for themselves in terms of new products, services and business models. Digital applications play a particularly important role in this context, as product characteristics will in future be determined primarily by software features. The good news for small and medium-sized businesses in this respect is that there is now very good support for innovation monitoring, and when it comes to developing innovative products for the customers of tomorrow, companies can definitely rely on the creativity of their employees, as long as they create the organizational conditions for this.

What are you starting with tomorrow?

The current crisis, and especially its rapid emergence, has shown that companies must become significantly more flexible and resilient in the future. The digital change has gained momentum with the crisis, no company can escape it anymore.

The biggest problem in small and medium-sized companies is the lack of transparency about processes and the exact work status, or rather the costs involved. Many managing directors manage their company from the gut and calculate with their thumbs based on years of experience. All true to the motto “this has always been so right and if there is enough left at the end of the day, that is already good”.

This attitude works reasonably well in normal operations and since it is not really transparent where waste could be reduced, there is little reason for change. At the moment of crisis, for example the loss of an important customer or external events such as the current corona proliferation, lead to uncontrolled reactions, as it is not at all clear at which points it is best to intervene in a controlling manner.

Therefore there are four recommendations to make your company crisis-proof:

  1. create clarity and transparency in your company, identify the wastes in the ACTUAL process and develop an ideal TARGET process.
  2. use state-of-the-art technologies in hardware and software to make yourself more independent of third parties and to be able to offer better services in flexible value-added networks. This can be new machines such as a 3D printer for single-part production or AI-based software products that help you with forecasting and processing.
  3. identify the trends and use them to get to know your customers of tomorrow. Find new solutions based on your expertise, even outside your current industry. Do not only think in new products, but build new business models.
  4. involve your employees in all steps and use their full creative potential. Look for external support to accompany the above mentioned topics.

 

I firmly believe that the current crisis situation is an accelerator for many of the issues mentioned in this article. Not wanting to shape the digital change in your own company now and thus, above all, to sustainably increase the company’s resilience is grossly negligent.

 

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#simple